If you are planning to apply for a Conventional mortgage loan and you have ever disputed one of your credit accounts, you may need to do some homework before making your application. First, it is important to understand why disputed accounts can be a stumbling block in getting a Conventional loan. When you have a disputed account the credit line is excluded from your FICO credit score, thus making it possible that the credit score is inaccurate, even inflated. This makes it difficult for the lender to know your true credit worthiness.

So, what’s to be done? We recommend that you first get a copy of your credit report and examine it to see how the disputed account(s) appear on the report. If the underwriter flags your application because of a disputed account there are steps you may be able to take so that your credit report no longer reflects the account as disputed. If that’s the case, we can obtain a new credit report and everything should be fine. However, if we are not able to get a clean credit report it will be much more difficult, if not impossible, to get the loan underwritten. If that’s the case, your loan officer may likely consider another loan program for you.

What can you do?  If you have a disputed account on your credit report, discuss the issue and the details with your loan officer upfront, so you can together decide on the best loan program as well as the best plan of action for you. Also, make sure you always keep good notes and document any conversations with creditors when dealing with disputes. Consider refraining from disputing any credit accounts, unless of course you suspect criminal activity like fraud and identity theft.