topic Re: does dispute comment lower score? in Mortgage Loans

does dispute comment lower score?

Anonymous — Mon, 06 Dec 2010 16:16:43 GMT

Ive been in the dispute process and Ive had a couple of deletes thanks to help on here! but i had two CO come back verifyed and the disputed by consumer comment is still on the report.

1. Does dispute comments on credit report lower your score. if so why?

2. once i call the CRA and creditors to remove the comment will my score go up or down since the two were verified?

thanks!

Re: does dispute comment lower score?

Anonymous — Mon, 06 Dec 2010 17:11:34 GMT

dispute comment does not affect score, but will need to be fixed prior to getting a home loan in most cases. They do not like open disputes.

Re: does dispute comment lower score?

Anonymous — Mon, 06 Dec 2010 18:08:58 GMT

@Anonymous wrote:
dispute comment does not affect score, but will need to be fixed prior to getting a home loan in most cases. They do not like open disputes.

Having accounts in dispute can affect your scores. While accounts are in dispute it is possible they are removed from FICO scoring. Once dispute is removed it is possible to have an increase and or a decrease in FICO scores and sometimes no change at all. That is a reason why when applying for mortgage they want the disputes removed.

Re: does dispute comment lower score?

Lel — Mon, 06 Dec 2010 18:13:54 GMT

@Anonymous wrote:
Ive been in the dispute process and Ive had a couple of deletes thanks to help on here! but i had two CO come back verifyed and the disputed by consumer comment is still on the report.

1. Does dispute comments on credit report lower your score. if so why?
2. once i call the CRA and creditors to remove the comment will my score go up or down since the two were verified?

thanks!

As I understand it, when certain types of tradelines (such as credit card accounts, mortgages, and charged-off accounts) are in dispute, some aspects of those tradelines are excluded from scoring. When in dispute, the payment history (including late payments) and utilization, if applicable, are excluded from scoring. However, the "non-money" aspects of the tradeline are still included, such as account age and mix mix of credit.

So, if someone diputes a 90 day late on 10 year old CC account, $100 balance on a $2000 credit limit, the late payment and the 5% utilization are excluded from scoring, but its age is still factored into the average age of accounts.

This does not apply to 3rd party collection accounts or public records. Even if in dispute, they will still have a negative effect on one's credit score.

For the situation in question, because charge-offs are being dispute, I believe it is more likely that your score has increased because of the open dispute. However, as mickie08 and JM-AM have already mentioned, open disputes can block a mortgage approval.

Re: does dispute comment lower score?

Anonymous — Mon, 06 Dec 2010 19:59:19 GMT

thanks for the help. The only two baddies on my cr are the two collections and I have a 120 day late student loan thats paid off 0 balance. one of the collections has came back verified and waiting on the other one. only one has the comment customer disputes, so any guess on how many points i will lose if i get comment removed?

when would a score go up if disputes are removed?

Re: does dispute comment lower score?

Anonymous — Mon, 06 Dec 2010 20:24:49 GMT

To clarify to other posters... The OP asked about dispute comments (not opening up a dispute)...which are typically the comments left on the CR when the dispute is over. So NO, that dispute comment is not affecting scores and removing them, while probably required for a loan approval, will not affect FICO score.

Re: does dispute comment lower score?

Anonymous — Mon, 06 Dec 2010 20:29:29 GMT

RAD

Removinc comments has no affect on score. During the initial dispute some items may be taken out of the FICO scoring calculation pending a decision. Techinically this neither lowers or raises your score, it just creates a differnet score based on a different credit profile. Once the disputes are resolved the score will update to reflect any changes. If all disputes were verified the score should go back to the original score (unless any other factors have changed to cause a difference). IF some items were removed then the score MAY go up some. IF in the process, items are reported back with more neg comments than before it may go down. (this is not uncommon as sometimes an item may only show up as 30 days late or something that was actually more late, etc...) This is why you never dispute a negative item that is reproting better than it actuall was... After all that process finishes, you end up with either removed items, items corrected to the proper status, or items that are verified and will be marked disputed. Once they are verified, the comments mean nothing in the scoring equation. They are just a sidenote.

Re: does dispute comment lower score?

Anonymous — Mon, 06 Dec 2010 20:33:40 GMT

oh so does opening a dispute lower your score? and why? i did open the disputes on the two CO (other accounts also, but those TL were deleted) one does remain from the 120 day late.

should i expect an increase or decrease when i remove the disputes?

The LO said that if the CO is older than two years i may not have to pay it before getting a loan but the disputes would need to be removed. If i do have to pay the CO before im going to see if i can do it at closing so it doesnt hurt my score.(ive read co arent suppost to hurt score by paying them but that it happens sometimes and im to close to the 620 score to risk it)

the LO said that she would run it through Automatic writer to see if i would need to pay it? would the uw make me pay before?

Re: does dispute comment lower score?

Anonymous — Mon, 06 Dec 2010 20:41:06 GMT

thanks mickie08 thanks for explaining. I had one student loan that came back as paid as agreed, but its still flagged as neg, then i had a wells fargo that is 30 days late and is not flagged as neg but it still has comment of disputed by consumer i think is how its worded.

ive read that sometimes its hard to get the dispute comment removed so im going to start after this last dispute is done in dec so the comments are hopefully gone by feb when i apply.

will disputes keep autowriter from going through?

sorry for so many questions, you guys are so patient and helpful

Re: does dispute comment lower score?

Anonymous — Mon, 06 Dec 2010 20:41:29 GMT

It is up to the UW if they will allow you to pay at closing..

Again, a dispute does not really affect your score unless the dispute process causes a change in your file (i.e an item is updated with a change in status or removed). They will temporarily in some cases remove an item from the scoring formula while it is being resolved, but unless that item is changed, the long term affect of a dispute on your score is nothing. OF course if they remove it your score will likely increase (but not guaranteed). IF they update it with more recent negative info, your score could drop, and if it is just validated as is your score will stay the same. Once you have initiated the dispute there is no way to prevent this process. Once the items are either updated or validated, then you score should be correct. If there are then comments left that an item is in dispute, you can ask to have the dispute remarks removed. This will NOT affect the score.

Re: does dispute comment lower score?

Lel — Mon, 06 Dec 2010 21:09:20 GMT

Let me make sure I understand things correctly:

Do you currently have open and unresolved disputes? Or have your disputes been fully investigated and are now closed, but the comments remain?

Are you disputing collection accounts or charge-offs?

Lastly, what were your grounds for the disputes? Was there actually erroneous information on your credit report that needed to be removed?

Re: does dispute comment lower score?

Anonymous — Mon, 06 Dec 2010 22:28:50 GMT

lel two are resolved disputes and one is unresolved. one was 30 day late that they said was verified ( it was the last payment when i asked for pay-off, i think it cleared in time but apparently not) ive tried to gw..no luck. comment still remains

the other two are co ( one was verified the other is pending)

I dont know how they state the one is verified (it was a lease that i completed as the terms stated and paid a pet deposit. orginally when i got a call from collection agency about it they said it was for damaged carpet and paint, and i told them i paid for pet deposit and reg deposit that they kept for the one spot on carpet and i ask ahead of time if i could paint and they said yes and approved color) so idk what else to do with it, they are saying 3100 and on report it says current payment of 150 which i havent made because i dont owe them 3000. any advice?

Re: does dispute comment lower score?

checkach — Tue, 07 Dec 2010 05:26:35 GMT

I don't know if it lowers your score, but I am trying to get a mortgage now and there was one old account that had been disputed over three years ago, and I have to get the notation that it was disputed off my credit report before I can go to final underwriting. What is so annoying is that I disputed it and then we resolved it, so the fact that it was disputed should have been removed three years ago. I didn't know to watch out for that when I was planning on applying for a mortgage.

Another thing - I had disputed an incorrect merchant charge on my current credit card (I had the receipt showing the correct charge so it was resolved pretty fast). However, it showed up as a dispute (against my credit card???) even though it was in 2008. I also had to get that resolved before I can move forward with the mortgage.

What a pain, and how irrelevant to everything, especially since the information was no longer accurate!

Re: does dispute comment lower score?

Anonymous — Tue, 07 Dec 2010 16:03:25 GMT

checkach that is frustrating! My LO also told me the same thing and ive read that eq and tu can be difficult to get the comment removed also that you have to call the creditor and ask them to remove it. So i hope my one pending dispute is resolved soon so i can start the process of removing any comments left.

good luck to you! post back if you have any tips to removing the comments quick!

Re: does dispute comment lower score?

ShanetheMortgageMan — Wed, 08 Dec 2010 17:30:28 GMT

radtc, if you disputed some accounts, they came back verified, the disputes were closed, but the "disputed by consumer" comment still is attached to your accounts, then your loan officers credit vendor may be able to remove those comments from the report.

Disputed trade lines become a problem with conforming loan programs when there is actually a dispute, because the automated underwriting systems they use can identify accounts that are actually in dispute. Accounts that only have the comments of "disputed by consumer", but aren't actually in dispute, will not come across as disputed trade lines when the automated underwriting is ran.

FHA is different, a lot of FHA program guidelines say that the loan is to be downgraded to a manual underwrite (more stringent guidelines) if there are disputed accounts on credit. FHA's automated underwriting system, called FHA TOTAL, does not pick up on disputed trade lines so it is up to the underwriter to visually review the credit report to see if any accounts are in dispute. The naked eye can't differentiate between an account that is in dispute vs. an account that just has the comments "disputed by consumer" because both types look identical, so in that situation the loan officer should test the credit report by attempting to run automated underwriting on a conforming program (which would then identify any active disputes) or asking their credit vendor to remove the dispute comments (which they often will if it's been disputed by the consumer).

When it's run in automated underwriting and there are active disputes, the following comment will appear in automated underwriting (Desktop Underwriter):

DU identified the following tradeline(s) as disputed by the borrower and did not include the tradeline(s) in the credit risk assessment. The lender must verify the accuracy of the tradeline(s) by determining if it belongs to the borrower and by confirming the accuracy of the payment history. If the tradeline does not belong to the borrower, or the reported payment history is inaccurate, no further action is necessary. If the tradeline does belong to the borrower and the reported payment history is accurate, it must be taken into consideration in the credit risk assessment. To ensure it is considered, the lender may obtain a new credit report with the tradeline no longer reported as disputed and resubmit the loan casefile to DU, or the lender may manually underwrite the loan. If the tradeline is a mortgage that was past due by two or more payments in the last 12 months, or a foreclosure that has been filed within the last 5 years, the loan casefile is ineligible for delivery to Fannie Mae.

*Creditor*	*Account Number*	*Account Type*

If the DU findings do not bring that up, then the account isn’t currently in dispute.

Re: does dispute comment lower score?

Anonymous — Wed, 08 Dec 2010 20:06:36 GMT

thanks shane! I do have an open dispute so i better wait to let her run it though. can a LO tells me anything from my printed Myfico reports of things i need to do or if im likely to be approved or would you suggest me waiting till dispute is done then let her run the AU? my lease is not up until june so Im just trying to get an idea of wear i stand and what I can work on until then (also to find out what my TU04 score and EQ score is so i know if im on target)

my current scores are borderline and ive heard there can be big differences between so it would be nice to see if she could suggest me doing something now instead of waiting till time.

Re: does dispute comment lower score?

Anonymous — Wed, 08 Dec 2010 20:08:07 GMT

sorry i meant EX score and TU 04 or 08 whichever they use

Re: does dispute comment lower score?

ShanetheMortgageMan — Wed, 08 Dec 2010 20:22:40 GMT

Your loan officer can review the myFICO.com reports to let you know if there are glaring issues, but also realize that the comments/reporting information from the credit reports at myFICO.com don't always match the same comments, etc. that appear on a loan officer pulled credit report. It'd be a good plan to have them review now since you have many months to work on anything.

Re: does dispute comment lower score?

Anonymous — Wed, 08 Dec 2010 20:27:33 GMT

just to clarify, let her pull my credit reports to review or let her run it though the AU to review? Plus she said she could let me know if I would have to pay my collection before or if i could wait till closing. How long is a preapproval good for shane? Ive worked so hard to build my credit so i hope my real scores are high enough!

Re: does dispute comment lower score?

ShanetheMortgageMan — Thu, 09 Dec 2010 02:10:22 GMT

Well to get the most accurate pre-approval your loan officer is going to need to run your credit and automated underwriting, they can't do that with your myFICO.com report. Pre-approvals are usually good until the credit report expires, which is 90 days. Of course you can't quit your job, file BK, etc. the day after you get your pre-approval and still expect to get approved if you close within 90 days. Your scores are getting there, I'd say by the time your lease runs out in June your scores should be where they need to be.