When Inaccuracies Show on your Credit Report …
Credit Scores and Credit Reports are very important …
That’s true whether someone is hoping to buy a home (or refinance) or not. But should you be someone in the hunt for Mortgage financing to purchase or refinance a home, the stakes get higher. Your Credit Scores and Credit Reports become paramount to the success you’ll discover when financing and the end-costs you face.
Most of my Mortgage clients understand this when we speak the first time. Often one of their first questions is: At what point during my Mortgage Pre-Qualification Process will you run my Credit? Unfortunately, there isn’t one definitive answer to their question.
As with most things in Mortgage Lending today, the answer is something of a moving target. Often, the answer lies in the client’s individual financial situation and scenario. I’ve made an analogy regarding this before, but I offer it again here. Truly, no two clients and their financial stories or scenarios are alike. Just like fingerprints and snowflakes, each is distinct and unique.
That said, when that point in a Pre-Qualification is reached and the Credit Report is run, we then go over the report with a fine-tooth comb. Together we thoroughly review the results provided to make sure the Report is accurate and reflects their current debt status.
When inaccuracies are discovered on a Report, emotions can run high. Clients know inaccuracies can drag down Credit Scores. And lower Credit Scores can mean higher costs for lending, certain Mortgage Programs can become unattainable to them, higher Interest Rates can be charged, or they can even being turned-down for their loan.
So what do you do when inaccuracies occur?
Once again the answer depends on the individual. It can also rest on what error/inaccuracy is being shown. Or where in the Mortgage Process you are, etc. I know … I know … what??
Typically when this happens, clients want to immediately go to battle with the Credit Bureaus. They want to confront them, contest or dispute the errors, and get the problems solved NOW. But it’s not always wise to act immediately. And there are right and wrong ways … right and wrong timing for correcting errors found in Credit Reports.
DISPUTED (and disputing) accounts can cause problems for Mortgage Applicants during their underwriting review. The best way to address the errors found on a Report (especially while in the Mortgage Process) is to send the 3 major Credit Bureaus information and hard evidence and documentation that will allow (or force) them to correctly report or delete the account in question.
Be fully-prepared to roll up your sleeves and work hard at correcting problems you think exist. Help the Bureaus to understand your situation in its entirety. Provide the written evidence they need to resolve the issue.
If you have no solid evidence to support a change in the Report, the action of “disputing” the account becomes somewhat pointless. So just like Steve Martin said in the movie “Planes, Trains, and Automobiles”, you need to … “have a point” prior to formally disputing an account.
Working closely with your Mortgage Lender during this time is extremely important. An experienced Mortgage Lender will help guide you through the communications and steps needed to address the Credit issues you are facing successfully and as quickly as possible.