Disputing All Credit – Not Getting Mortgage Approval

Minimum Credit Scores for mortgage loans are going to continue to be stiff, in our opinion.  The reason we believe this is because of the fact that the Government is winding down it’s program to buy government backed mortgages, and with Fannie and Freddie still in unsettled water – the Washington Regulators want to be sure ALL of the Mortgages being made are to the MOST qualified Home Buyers.  Because of that, we are seeing more people who believe the Urban legend, and are disputing all credit on their credit report.

We talked to a Veteran today who wants to buy a house, First Time Home Buyer, who was referred to a “Credit Repair Company” a couple of years ago… they, of course, disputed EVERYTHING on his credit report.  They also suggested that he obtain a Secured Credit Card (which he did) and maintain a balance roughly equal to half of the credit line (which he did).  His scores went up – and he called us about getting pre-qualified to buy a house.

We ran him through Freddie Mac’s Automated Underwriting System (LP) and it was referred, which means the Automated Underwriting System Flagged our request for an approval, and did not approve his application for a VA Loan – Because everything on his credit report is in dispute.  That’s what he paid the Credit Report Company to do.  I don’t think the Veteran KNEW that’s what they were disputing all credit on his credit report – but that OLD PROCESS of just disputing everything on your report is NOT going to help you get a mortgage these days.

This is not the first, second or third time that we’ve seen someone turned down by the Automated Underwriting System – because everything on their credit report (except the one open trade line with the Credit Card Company) is in dispute!

Again, you can see from the bottom “comment” that the borrower only “Insufficient trade lines” – but that TOP comment basically says, “HEY!  This person is trying to Scam the system by disputing everything!”  We seriously told the borrower that they may have to go back and “un-dispute” a few items in order to get approved…

Plus they need some more credit.  We know that in order to get approved,  in most cases, you will need at LEAST 2 credit cards open with Available Credit on each one.  If you have a score that is at that “almost” point of being eligible for a mortgage, we OFTEN tell folks to pay the debt down to 1/2 of the high credit limit – or pay it down to like $50.

Because your credit report is a snapshot of your credit at a particular moment in time, new information is constantly flowing to your unique report. Literally every credit action you take to apply for credit, make a payment, change your address, or an inquiry from a prospective creditor will impact your score.

So what happened 3 years ago, is not really as important as what happened 18 months ago!  If it is a MEDICAL COLLECTION – there’s a possibility it won’t have to be paid… most judgments and liens will have to be cleared before you can get a mortgage.

Those companies that are advertising all over Johnston County right now with signs that say – “Make Bad Credit Disappear for $199” are really not doing you any favors.

Are there legitimate reasons to reasons for disputing all credit? YES!  But don’t get caught in a trap by just disputing EVERYTHING!

So again, it’s important to remember that your credit score is just a snapshot of what your credit looks like at a given moment.  What I’m trying to say is… If you don’t currently have the credit scores you need to buy a home in NC – don’t give up.  ANYONE can increase their scores to be able to buy a home, and normally we can help someone do that in as little time as just a couple of months.

If you have questions about pre-qualifying for a mortgage loan in North Carolina- please call us!  Steve and Eleanor Thorne 919 649 5058.  We know how to get borrowers in NC approved, we know what credit scores and reports the Underwriters will take.  We’ll call you back, and if you need to add another credit card, or pay something off – we’ll work with you.  Here’s some GOOD CREDIT Advice (and it’s FREE!)!  We want to help you get into that NC Dream House!