In previous articles when I stressed the importance of tracking your credit history for accuracy, this is where it can come into play and may result in the need for you to know the FHA Guidelines On Disputed Accounts. A lot of borrowers I work with on a daily basis may not be sure what a Disputed Account is, so I will go over them first. A disputed account is a debt that is on the your credit report that has been determined to be a mistake or not reported properly. When you notice items on your credit report which are normally collection or charge off accounts you can write a formal request to the 3 credit bureaus and let them know you want to dispute a certain account or accounts on your credit report. Once a dispute is placed on a debt, the credit bureau will go through a fact finding exercise where they will gather information from both parties to determine the validity of the debt and if the borrower is responsible for this debt. Also, it should be notated that for debts that are being disputed, the negative effects that it has on your credit report will be temporarily removed for the time it is being investigated and you will definitely see an increase. On the flip side of this, if the debt is found to be correct your credit score will be negatively affected once the dispute is removed and the debt is put back to its old status.
Now that we are fairly comfortable with what disputed accounts are, we can dive into the FHA Guidelines On Disputed Accounts. The one place where disputed accounts are acceptable is on medical collections because FHA Guidelines On Disputed Accounts don’t calculate medical collections into your debt to income ratio so having a dispute on them might actually increase your credit score when looking to get approved for a loan. Per the FHA Guidelines On Disputed Accounts there is a $1,000 cap enforced on disputed accounts and if a borrower has more than $1,000 in non-medical disputed accounts the loan will have to be manually underwritten if it is to have any chance of approval. This means that an underwriter will physically have to go through your file and come to a conclusion if they will issue an approval or not. Given this guideline, there are exclusions to the $1,000 balance and they are:
As you can see, you are going to need to be certain you are disputing the proper accounts or the FHA Guidelines On Disputed Accounts will affect your ability to get a loan approval. This is why you should reach out to me at 630-465-2656 and we can go over your credit report line by line to ensure accuracy and the effects of having disputed accounts while trying to obtain loan approval. In working with Fairway Independent Mortgage Corporation NMLS# 2289 I know I can get your loan done no matter the circumstances, find out today.