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Posts: 1
Registered: ‎10-08-2013
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Couple of questions about disputes and FICO score

We're currently working on getting a mortgage and building a house.  My husband's credit score is pretty low--645, but this particular lender will go as low as 620.  The only problem right now is an old item from mid-2006.  It's from an apartment we rented and when we moved out, they royally screwed us.  So, my husband disputed the item, and it shows up as such on his report.  The mortgage guy told my husband that since it's in dispute status, it's not counted in his credit score, so that's why it's as high as 645.  He said before underwriting will consider giving us a mortgage, it needs to be paid off.  

 

My questions are this:  1.  It says on the report that "This item is scheduled to continue on record until October, 2013."  Does that mean that the next time the collection agency updates with the bureaus, this item will be dropped off since it's so old?  2.  If we go ahead and pay it off, will the "dispute status" go away?  If so, how much will this affect his score?  If the dispute is no longer on his report, it would just show up as an old unpaid debt, right?  So his score would go down.  But if we pay it off in full, wouldn't his score go up a little?  3.  What are the chances that this will actually drop off his credit report?  How would that affect his score?  

 

Any and all advice/input is appreciated.  And THANK YOU in advance!! :smileyhappy: 

Valued Contributor
Posts: 1,977
Registered: ‎04-07-2009
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Re: Couple of questions about disputes and FICO score

To try to answer your questions

 1.  It says on the report that "This item is scheduled to continue on record until October, 2013."  Does that mean that the next time the collection agency updates with the bureaus, this item will be dropped off since it's so old?  There is what is called a credit reporting time peiod which means how long information can stay on your credit report.. The bureau is stating that this will drop off the credit report then. It does not mean you no longer owe the money. Sometimes these things keep having a life of their own. I would pay the debt  off once and for all.

 2.  If we go ahead and pay it off, will the "dispute status" go away? No you will need to send a letter stating you are dropping the dispute.. If so, how much will this affect his score?  Hopefully the trade line will fall off the report and it will have zero impact. What is the status of the account now.?   If the dispute is no longer on his report, it would just show up as an old unpaid debt, right? While a trade line is in dispute it is almost neutral in the score calculation. When the trade line is no longer in dispute it will be fully factored in the score.  So his score would go down.  But if we pay it off in full, wouldn't his score go up a little? Paying off a debt like a collection account does not make the score go up. 

3.  What are the chances that this will actually drop off his credit report?  How would that affect his score?  The questions was answered as a part of another question

Equifax My FICO score 815 5/28/2012, 818 on 7/28/2014 . Average of Accounts 12 years and no Installment accounts. MyFICO TU 810 6/26/2012 809 4/21/2013 MyFICO XPN -805. 2/26/2014 Discover TU FICO 813 App free since 9/2011
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Posts: 22,406
Registered: ‎01-17-2008
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Re: Couple of questions about disputes and FICO score

Collection accounts are not removed during scoring.  They are fully factored in.  Or should be. 

 

Only certain aspects of an OC account are removed from scoring, not the entire TL.

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