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FHA Mortgage Loans with Credit Disputes

Credit Disputes and FHA Loans

Qualify for a FHA Mortgage Loan with Credit Disputes

To qualify for a FHA Mortgage Loan with credit disputes strict FHA guidelines must be followed during the mortgage application and mortgage approval process.  What is a credit dispute?  A credit dispute is when a consumer challenges/disputes a derogatory credit item or tradeline on their personal consumer credit report.  Their goal is getting it corrected and/or deleted completely from their consumer credit report/profile. An example of a credit dispute would be if you had a charge off on your credit report from Chase Bank and you would like to get it deleted from your consumer credit report.  You can get it deleted from your consumer credit report by disputing the Chase Bank derogatory mark because it is not yours, it is reported incorrectly or the charge off is not correct to the three major credit reporting agencies, TransUnion, Equifax and Experian.  Countless consumers do credit repair or hire credit reporting companies to delete derogatory items.  There are hundreds of credit repair companies and credit repair does work.  Credit collection accounts, late payments, charge offs, bankruptcies, foreclosures, and tax liens can be removed from your consumer credit report.

Using Credit Repair / Benefits of Credit Repair

There are countless numbers of credit repair companies in the United States, seemingly new credit repair companies popping up all the time.  Common sense would suggest if their are continual credit repair start ups and literally thousands of companies then credit repair must work and provide a benefit to consumers.  Just like any business there are credible reputable credit repair companies and those that are not credible or reputable.  Most anything a credit repair consultant can do the consumer can also do but it will require time and patience, the professionals that do this daily understand the tricks of the trade so to speak and they often have repore with associates within creditors.  During the 2008 meltdown I personally had to negotiate some of my debt responsibility and made the necessary calls to a couple of my creditors.  The result was frustrating, they didn’t know me I was a number and their immediate resolve was to increase the penalties and interest on my credit line, therefore increasing the payment.  When I resolved to the fact I did not have time to navigate through the process on my own I met with a professional.  Their group had an agreement to settle my debt and stop the negative reporting with only a couple of conversations.  When I ask why it became known one of the negotiators used to work for the creditor in question and made a call on my behalf.  The same holds true within the credit repair side after the derogatory has been reported, those professionals in the field know the ropes and can navigate to end result of removing derogatory marks rather quickly. I have witnessed and seen credit repair remove judgments, bankruptcies, foreclosures, charge offs, collection accounts and even tax liens removed from a person’s consumer’s credit report in a matter of a few months.  The Larry Stepp Team has seen Credit Fix Advisors remove items and I cannot tell you how they do it, but they do. They have good reviews and I have seen positive results.

Medical Disputes and FHA Mortgage Loans

FHA Guidelines allow a borrower to qualify for a FHA Mortgage Loan with credit disputes on medical collection accounts.  Medical collection accounts are treated entirely different by FHA than non-medical accounts.  A borrower or mortgage applicant can have several credit disputes for medical collection accounts and still qualify for a FHA Mortgage Loan.  The key part is disputes on unpaid MEDICAL collection items.

Credit Disputes On Non-Medical Collection Accounts And Charge Offs and FHA Mortgage Loans

FHA does allow credit-disputes on non-medical collection accounts with zero collection balances.  FHA will allow credit disputes on unpaid collection balances up to $1,000. However, if the unpaid collection balance exceeds $1000 total a borrower/applicant will need to have the credit disputes retracted off of your credit report. You cannot have any credit disputes on any charge off collection accounts, if you do then to proceed with he mortgage application process you must retract the dispute.

Retracting Disputes will impact your Consumer Credit Scores

If you are just beginning to consider becoming a homeowner and you have open credit disputes then you may decide to retract them early.  When you do retract your credit disputes from the credit reporting agencies, TransUnion, Experian and Equifax then you credit scores will drop.  Keeping this in mind before you make application for a mortgage may help you in making a decision based on good information.  Your credit scores dropping will not be permanent, over time your credit scores will improve rebounding from your retractions of your credit disputes after the disputes have been removed.

The Larry Stepp Team @ Gustan Cho Associates is available 7 days a week, holidays and weekends for your assistance or resource.

Larry Stepp     407-922-4755     LarryS.HomesNetwork@gmail.com

The information contained on HomesNetwork.org website is for informational purposes only and is not an advertisement for products offered by Loan Cabin or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates and do not reflect the policy of GCA, its officers, subsidiaries, parent, or affiliates.

2 Comments

  1. Gustan Cho NMLS 873293 says:

    Credit disputes need to be carefully reviewed by loan officers prior to issuing credit approvals. Whenever a borrower retracts a credit dispute, the credit scores will drop. The amount it will drop depends on the longevity of the collection accounts and/or derogatory information. Whenever a credit dispute is recorded on one’s credit report, consumer need to realize that the derogatory information is omitted on the calculation of the credit scores so the credit scores gets spiked up. When the credit dispute is retracted, the derogatory information is recalculated into the credit scoring model so therefore the consumer credit scores will drop. If borrowers have recent medical collection accounts that are reported on their credit report, do a credit dispute and your credit scores will go up because that tradeline will be omitted for the credit score calculations by all credit bureaus so therefore their credit scores will increase. Medical collection accounts are exempt from credit disputes.

    Gustan Cho NMLS 873293

    • Larry Stepp says:

      Thank You Gus. Your Expertise in the area of FHA Mortgage Loans is unparalleled by anyone in the Mortgage Industry. Thank You for your continued support and Guidance

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