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Disputes on Credit Must Be Removed

Mortgage and Lending NMLS # 234057

I like to share what happens on in my real world of lending. 

We lenders know that in order to submit a loan file, any disputes on the credit report must be removed, in writing, by the borrower.  Once removed, the credit report must be updated and rescored.

Depending upon the dispute, this may or may not cause an issue.

If the dispute is for one late payment or for an account that the borrower feels is not theirs, the impact may be minimal if at all.

However, that is not the case if the trade line dispute in question is for a serious deliquency.  I recently had a borrower with a revolving charge report serious 30/60/90 late payments.  The account was in dispute.  When the dispute was removed and the credit score updated, the credit score dropped by 30 points.

This massive change in credit score is the reason that FNMA wants the disputes removed.  When a trade line is in dispute, it is not calculated into the overall credit score.  Once the dispute comment is dropped, the line is calculated into the score and it will impact.

Another great reason to review the complete credit report and not just the scores!