A huge road block that gets in the way of purchasing your dream home is a dispute on your credit report. By law, credit bureaus are required to show you a correct report. Credit errors are very common. As a matter of fact, one in five Americans are dealing with some type of error. It could be as small as an incorrect address, or as large as stolen credit. When this happens it is vital that you report the inaccuracy and the credit agency will then mark it as “in dispute”, which temporarily inflates your score.
When your credit score has become inflated due to a dispute, you may not be approved for a mortgage loan. The inflation is in essence, artificial and therefor creates an inaccurate representation of your credit. Lenders are able to require you to have the dispute resolved before you can be approved for a mortgage.
Is There a Way Around This?
An inaccuracy may take months to resolve and can dampen your chances when you are trying to buy or refinance a home. It heightens your interest rate and may delay your ability to close on a loan.
Some disputes can be ignored by lenders, depending on the type of loan your applying for. This can be accomplished with a letter from the creditor or a police report. Of course, your credit score and the type of mortgage you are applying for factor in whether or not this can be done.
It comes down to the fact that credit disputes are not always black-and-white, because everyone’s financial history is unique. There is so much to consider when you are getting ready to apply for a mortgage, especially if you happen to be a first time buyer.
Are you currently working your way through a dispute, or have you checked your credit report for errors recently? Contact us today, free of charge, to clear yourself of credit mistakes.