Disputed Trade Accounts And The Impact On PA Home Financing

Everyone has a right to correct incorrect items on their credit report. However, home buyers must be conscious of the impact that this may have on obtaining a mortgage. This blog includes important information on disputed trade accounts and the impact on PA home financing.

Before Starting Your Home Search

If you are planning to buy real estate in the future, be sure to review your credit score far in advance. This gives you the time to identify and resolve errors well before you apply 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 as soon as possible. Do not assume that it was seen on your report at the pre-approval stage.

What Are Disputed Trade Accounts

If you uncover a mistake on your credit report, you have the right to correct it by submitting information to the credit bureaus. A notation is made in your credit report and the accounts are marked as disputed trade accounts. Credit bureaus can opt to ignore the particular items when calculating your credit score, so they might not lower your score during that time. Typically, the notation is cleared once the error is resolved and, if applicable, the needed corrections are made. This process can take a few months. Even though you may not see a reduction of your score, the information on the dispute can result in other issues.

Disputed Trade Accounts And The Impact On PA Home Financing

Many mortgage companies utilize electronic underwriting systems. Your credit score and other information from your credit report are reviewed by this system. Disputed trade accounts may lead a loan application to be rejected or diverted to manual underwriting. Gather all paperwork and supporting material on disputed trade accounts. If it was a charge that you paid off but was not properly reflected in the credit reports, have statements displaying the debt owed and confirmation of payments made. Also write a letter clearly explaining the situation. All of this will better your chances of getting your mortgage approved. Keep in mind that many mortgage companies will not approve an application if there is a dispute on file, regardless of the circumstances. This is implemented in an effort to reduce fraud but, unfortunately, can often impact buyers with warranted claims. To be safe, it is best to fully address credit issues before submitting an application.