As a credit repair agency, one of the hot topics we deal with on a regular basis is the effect of dispute verbiage on a credit report. As a consumer, you could very well have a strong 680 or 720 credit score, but still be denied for a loan because of dispute verbiage.
As a consumer, you have the right to dispute statements on your credit report. When you do this, your credit report generally has a clause that reads, “consumer disputes, investigation in process.” Once you dispute something on your credit, you have a 30-day investigation period where credit bureaus have received your dispute and are actively looking into its legitimacy.
While a dispute statement might seem harmless, it actually can really hurt you change of getting a loan. Most loan programs do not allow you to move forward with a loan until the dispute remarks have been removed from the credit report.
So, why do banks operate this way? After all, you could very well have disputed something that shouldn’t be on your credit statement in the first place. Why should you be penalized for this?
The issue exists because shady loan officers and consumers historically used this 30-day investigation period as a chance to scheme.
So how did we get here and why is this the way things are? Long story short, back in the day, shady loan officers would lock in loans that were being mass disputed during their 30-day investigation period. During this time of investigation by the credit bureaus, the disputes go in to a “limbo” status and it will artificially inflate the consumer’s credit scores. (When scores are under review, they do not negatively affect credit).
Once the investigation is complete and if any of the items are deemed valid, they go back on the report, the scores come back down with it, and now there is dispute verbiage on the report tied to that line item. During the 30-day window, when credit scores were artificially high, though, folks qualify for loans for which they never should have been approved.
As a result of people who took advantage of the 30-day investigation period, most loan guidelines won’t allow a loan to move forward with the dispute verbiage on the report.
In most cases, you can call the creditor associated with the dispute verbiage on the report and let them know you no longer dispute. They, in turn, will report that the consumer is no longer disputing, and generally that will come right off of your report.
Are you a loan officer that runs in to these types of issues with your clients from time to time? Are you a consumer that has dispute verbiage on your credit report that you need removed to move forward with your loan?
Our credit restoration agency receives these types of scenarios practically every day, so we are very experienced in taking care of dispute verbiage. Usually, we can get items removed within five to seven business days.
Contact My Credit Guy today for a non-obligatory, free review of your credit situation and we will get our team of experts to look everything over. From there, you will be provided with a detailed analysis, as well as a personalized game plan for next steps.