Wait…did I really mean to say that there can be BAD consequences to disputing information on your credit report. You betcha, baby!
While it is your legal right to dispute incorrect information on your credit report, it is also important to note that disputing information on your report is NOT A WAY TO AVOID ACTUAL DEBT. But why would I say this when I run a credit restoration company that has helped thousands??? Because if you choose the wrong company it may just come back to bite you in the butt.
What could some of these consequences be?
The newest, latest and greatest that I have seen – Automated Underwriting Systems being set to sort and sometimes reject based on whether a client has disputed items on their credit report.
I always stop a dispute process if the client is making a large purchase, i.e. home, car in the next 30-60 days because anything that is currently is dispute is NOT included in your FICO score. Well, that makes sense because, well duh, a decision has not been made on that particular trade-line so how could they include it any scoring model. Okay, everyone is with me so far. This sort of makes sense, but what about the trade-line the shows it was disputed??? Past tense. Not current?!!?
My client was given a conditional approval for a VA loan. There was a debt that was from several years ago, far past the statute of limitations for his state, long past the time that it COULD be reported on his report, however it was a “zombie debt” that had been resold over and over to several collection companies violating laws under both the FCRA and the FDCPA.
So, because this was not legally supposed to be reporting the client exercised his right to dispute the item several years ago. Unfortunately, like so many others he didn’t get past the gates at the bureaus and gave up.
Now this debt is so old that it is not severely affecting score like a NEW adverse account would.
Here is where Credit Restoration can get tricky. Do you chance a lower score if the item does not come off in the first dispute thereby possibly creating a NEW ADVERSE account or do you dispute it knowing the law is on your side but the client may not get it removed in time???? Well, at this point he doesn’t have a choice but to dispute it again. The reason, as I learned were the Automated Underwriting Systems at the VA are being set to detect disputed items. This requires now manual underwriting, letters of explanation by the broker or loan officer and client, and possible delay of a sale. Many loan officers don’t or won’t do this.
Now the decision to move forward is with a human underwriter. The VA guidelines state that they may use their “best judgement”. Seriously???! The lenders are all about “shutting the barn door after the horse has escaped” as my grandmother would say. Now we find lenders so fearful and uneducated about what is in a credit report they believe that a bureau report is an indicator if credit risk. Puhleeze.
This is just one example of the intricacies of working with credit. Like any other profession there are good and bad “credit repair” companies. Make certain that you clearly state your objected goal, i.e. better credit, home purchase, education, etc.
Consumer Credit Files Rights Under Federal Law
You have the right pursuant to 15USC§1681i to dispute the completeness or accuracy of any item contained in any file maintained by any consumer credit reporting agency.
What do you think about a system that auto-selects to deny your loan application based on exercising your legal rights??? And just because you have the right, should you use these to dispute anything you don’t care for on your report??? Please let me know what you think.
We are always here to answer questions or assist you in your Credit Restoration needs.
Call us at (800) 811-3078 for a free credit report consultation or visit www.CreditAgenda.com to learn more.