Credit Report Disputes Can Prevent Mortgage Pre-Approval

Did you know that dispute remarks on your credit report can stall the loan pre-approval process? Well, it can. This is a lesson learned through personal experience. I was disputing some things on my credit report, however all of the items that I disputed were not removed. Those that remained maintained the dispute remarks and that was the first correction requested by the lenders that I submitted my application to. Yes, I said lenders, plural. I was shopping around within my 14 day window for the best options in my unique situation. (We'll discuss that more on another blog.)

One would think that a letter to the credit bureaus would resolve the issue since it took a letter to create it, right? Wrong! To have these dispute remarks removed, you must call each bureau and personally request to have the remarks removed. The calls will be lengthy due to their identity verification process and depending on the time of day that you call, but to obtain loan approval it will be well worth your time. (See end of blog post for each bureau's phone number and hours of operation. )

So, if you are in the process of cleaning up your credit, be sure to review your credit report for a few things to start:

1. Removal of disputed items

2. Removal of dispute remarks for items remaining on your report

3. For optimal results, a credit score of at least 620. However, a credit score of 640 or higher should be the goal

4. Minimal credit inquiries. The recommendation is no more than two per year.

5. Late payments: again, for optimal results, don't have any. If you do, no more than two in any given year and they shouldn't be consecutive. If you have them, be prepared to explain the circumstances surrounding the time of the late payments.

One thing to keep in mind for mortgage loan pre-approval is that they are truly granted on a case by case basis. It is your complete credit profile that is considered. So for example, if your credit score is less than optimal, but meets the minimum requirement of 580, you have a great chance of surviving underwriting if your resources are sufficient, credit utilization is within the recommended range of 30% or less and other credit accounts are in good standing.

Preparation is key and should be ongoing. We should always want to be in the best position to seize any opportunity available. Minimum requirements will get you through just barely with little to no room for negotiations or options. If you are needing help with preparation, reach out to me. I'll be happy to help.

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Credit Bureaus

1. Equifax - (888) 378-4329

2. Experian - (866) 617-1894

3. Transunion - 800-813-5604

During the pandemic, you are allowed to receive a free credit report every 7 days. Visit annualcreditreport.com