Hard Inquiry Ding

[jmonye21]

I am in the middle of underwriting and the lender noticed a dispute with a student loan. I'm working overtime to get the bureaus to remove that language from my report. The lender said that they will have to "rescore" once the language is removed. Is this a hard or soft pull?

I applied on 7/12/2024 - which is the date that shows a hard inquiry on my credit report. Fico 5 (Equifax) has gone down 11 points since then. It's now a 617, whereas it was a 628. The progam that I qualified for requires a 620. How do lenders treat scores that have been dinged as a result of their inquiry? I have not used any credit, all bills are on time, and I have not applied for anything else.

[ShanetheMortgageMan]

When they re-check credit it'll be a hard pull.  The reason why they require a new hard pull after the dispute has been removed is because it's believed that when you are disputing an account it is removed from the credit score calculation, so they want the dispute removed and the credit scores to reflect that it is no longer in dispute.

If they use the middle credit score to qualify (as most mortgage programs do) then you'll want to make sure that at least 2 of the bureau's mortgage credit scores are at least a 620 when they re-check your credit, otherwise an additional hard inquiry will be needed once your scores get to the required 620+ level.

To answer your question though, there is no leniency when it comes to a credit score being dinged due to any inquiries, whether it was theirs or another creditor.

[jmonye21]

Thank you. 

I asked my broker and he stated that I would not be penalized for the drop as a result of their pull. My other two scores are currently Fico 4 = 623 and FICO 2 = 679. 

The lender required a 600. The down payment assistance requires 620 , I believe. Hopefully, I still qualify. If not, I have the cash to pay. I was simply taking advantage of the funds available. 

Are you saying that the dispute language is making the credit score higher than it should be? I am no longer disputing it. I just think the language hasn't fallen off yet. So, they are manually removing it. 

[ShanetheMortgageMan]

If the mortgage you are applying for is Fannie Mae, Freddie Mac, FHA, VA or USDA then the lender will go by the new scores.  The only reason to remove a dispute comment is because the current report cannot be used due to having the dispute comment verbiage on it.

I cannot say for certain what the down payment assistance program would go by.  It's possible that the loan program would use the new report but the down payment assistance program would be OK using the original report with the 620+ score.

Regarding the impact of disputing an account, it is believed that when an account is in dispute it is removed from the credit score calculation.  I've seen disputed accounts, once removed from dispute, increase as well as decrease the score.  The impact it'd have just depends on the details of the account that was being disputed as well as the makeup of the rest of your credit report. 

Most loan officers have a "simulator" that can estimate what a certain action, like removing an account from dispute, will do to someone's credit scores.  You can ask your loan officer if they have feature they can run for you.

[jmonye21]

Thank you. 

[jules79]

Hi @jmonye21

I read your post, and am very sad to say, I am going through the same stuff. I wanted to see if you may be able to assist me:

(1) Your broker might be able to help me if he or she is licensed in PA State. May i get their info to see if i might be a candidate?

(2) Which lender are you using to close your FHA loan?

(3) What steps did you take to have all 3 CRAs remove the dispute verbiage from your credit reports? and how long is this process?

THANKS so much

[ShanetheMortgageMan]

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@jules79 wrote:

(3) What steps did you take to have all 3 CRAs remove the dispute verbiage from your credit reports? and how long is this process?

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Best way to remove them is to contact each credit reporting agency tell the customer service representative you are not disputing the __________ account and to remove it from being in dispute along with removing the dispute comments.  The most thorough way to do that is to request a free copy of your credit reports at https://www.annualcreditreport.com/index.action first and then call Experian at 855-414-6048, TransUnion at 800-916-8800 and Equifax at 888-378-4329 or 404-885-8300.  When you call them you need to tell them two specific things:

1. I am no longer disputing the account
2. I need the dispute comments removed from my credit report

And then usually the dispute remarks will be removed within 72 hours, sometimes even immediately.  It's all free too.  

[jmonye21]

**UPDATE**

I closed on my home on 8/16. I'm so happy and relieved! My score did take a dive after removing the verbiage, but it was still good to move forward and close. With down-payment assistance and seller credits, I was only out of $1K at closing! 🎊

[ShanetheMortgageMan]

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@jmonye21 wrote:

**UPDATE**

I closed on my home on 8/16. I'm so happy and relieved! My score did take a dive after removing the verbiage, but it was still good to move forward and close. With down-payment assistance and seller credits, I was only out of $1K at closing! 🎊

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Congrats!   Enjoy your new home!