Dispute verbiage removal impact??

[Anonymous]

I got pre-approval with a soft pull using the credit scores off here for mortgages. However, I was previously using Lexington to repair, which put some disputes on collection accounts.

I found the perfect home at a steal of a price and am now under contract with close slated for early August.

I have one large collection $6,700 that I'm worried may crush my score and kill the deal. Any thoughts on true impact?

I saw my Experian score was 652 prior to dispute removal and it dropped 7 points after the dispute was removed.

I'm sitting here on pins and needles waiting for my LO to run my credit once I know the disputes are gone early next week.

[JVille]

You have reason to be concern. Is the collection Paid Off? How old is it. Concerned about any lender who would give a PreApproval with one or more collections or late pays “Masking” the true Fico Score.

[Anonymous]

Not paid off, was charged off in 2015. Think I will have to pay prior to approval?

I have funds sitting around just in case. Should I do a PFD or just pay off the balance when the time comes?

[homeloanexpert]

I have commented on this several times on this very subject. Here is the real deal, if you are financing using a  Conventional Loan Program, you will need to remove all open disputes. Period!

If you are financing using an FHA, VA or USDA RDL, dispute do not have to be removed. But if left on, your loan will be downgraded to a Manually Underwritten loan which carries more underwriting conditions i.e. a VOE (Verification of Rent), more reserves, possibility of a higher rate, etc. On the other hand, if you want to be approved on the AUS (automated underwriting system) and have a smoother process, I strongly recommend calling the bureaus and resolve all open disputes and add this comment, "Dispute resolved, consumer disagrees". I have done this little trick countless times over the years. For a government insured loan, the word "Resolved" is the key. To the bureaus, it still a dispute which is way it doesn't effect your score, but to an Underwriter, your the dispute is resolved.

NOTE: I just had one my borrowers resolve at least 7 disputes and the score dropped 0 points. That's right! ZERO points. Conversely, when a dispute is removed,  you can count on your scores dropping. How much? That is depending on how long that dispute has been sitting there.

Hope this helps!

[Anonymous]

Going the FHA route, wow! Thanks for the info. So I should call the bureaus myself and add that verbiage?

Can you send me a PM @homeloanexpert?

[homeloanexpert]

As requested, PM sent.