All consumers have the ability to dispute incorrect items on their credit report. However, home buyers should be conscious of the affect that this may have on obtaining financing. This article offers important details on disputed trade accounts and the affect on Philadelphia or New Jersey home purchases.
Getting Ready for a Home Purchase
If you are thinking of buying a home in the future, be diligent about reviewing your credit score far in advance. This gives you the opportunity to find and resolve errors prior to applying for a mortgage. Preferably, you would want any disputes addressed before starting the home buying process. If you do have any active disputes, inform your mortgage consultant early in the process. Do not presume that it was seen on your report at the pre-approval stage.
What Are Disputed Trade Accounts
If you uncover an error on your credit report, you have the ability to dispute it by sending a request to the credit bureaus. A note is added to your credit report and the accounts are called disputed trade accounts. Credit bureaus can choose to ignore the specific items when calculating your score, so they might not affect your score during that time. Usually, the notation is removed when the error is settled and, if applicable, the needed corrections are completed. This process can take many months. Although you may not see a reduction of your score, the details of the dispute may cause other issues.
Disputed Trade Accounts And The Affect On Philadelphia Or New Jersey Home Purchases
Many mortgage companies use electronic underwriting systems. Your credit score and other information from your credit report are evaluated by the program. Disputed trade accounts may lead a loan application to be rejected or sent for manual underwriting. Gather all documents and information related to the disputed trade accounts. If it was a debt that you settled but was not properly reflected in the credit reports, have statements displaying the debt owed and confirmation of amounts paid. Also write a letter detailing the situation. All of this may improve your chances of having your financing approved. Keep in mind that some lenders may not approve an application if there is an active dispute, regardless of the specific reasons. This is implemented in an attempt to minimize fraud but, unfortunately, will sometimes hurt consumers with reasonable claims. To be safe, it is best to resolve credit mistakes before applying for financing.