Everyone has a right to dispute mistakes on their credit report. However, home buyers should be conscious of the effect that this may have on obtaining financing. This article offers important information on disputed trade accounts and the effect on MA mortgages.
Preparing for a Home Purchase
If you are thinking of buying real estate in the future, be sure to review your credit report far in advance. This affords you the opportunity to identify and address mistakes prior to applying for a loan. Ideally, you would want the disputes cleared before beginning the home purchase process. If you do have any pending items, notify your mortgage consultant early in the process. Do not assume that it was noticed on your report during the pre-approval process.
What Are Disputed Trade Accounts
If you identify an error on your credit report, you have the ability to dispute it by sending information to the three credit bureaus. A note is made in your credit file and the accounts are considered disputed trade accounts. Credit bureaus may opt to disregard the specific items when calculating your score, so they might not impact your score while in process. Usually, the notation is removed when the issue is resolved and, if necessary, the needed corrections are made. This process can take many months. Even though you may not notice a reduction of your score, the information on the dispute can cause other problems.
Disputed Trade Accounts And The Effect On MA Mortgages
Many mortgage companies utilize electronic underwriting systems. Your credit score and other information from your credit report are analyzed by the program. Disputed trade accounts may lead a loan application to be denied or diverted to manual underwriting. Gather all paperwork and information related to the disputed trade accounts. If it was a debt that you settled but was not correctly reflected in the credit reports, have statements displaying the amount owed and verification of amounts paid. Also prepare a letter explaining the scenario. This may improve the likelihood of getting your financing approved. Keep in mind that many mortgage companies may not approve a loan if there is a dispute on file, regardless of the circumstances. This is in place in an attempt to reduce fraud but, unfortunately, can often hurt buyers with reasonable claims. To be safe, it may be best to fully address credit disputes before submitting an application.