is it better for the lender to see a disputed credit or a removed credit or a settled credit in credit history.?

Asked by Chris, Otay Ranch Village, Chula Vista, CA Fri Jul 13, 2012

need help in fixing my credit just for the lender to qualify me for a fha loan

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Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Wed Jul 3, 2013
Edwin, have you run DU or LP on a file where there is a dispute on a credit line? I am not sure exactly what you are saying in your first sentence though, where you said "will afect or no", but I will tell you it doesn't matter what kind of account it is, it will be picked up.
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Edwin, , California
Wed Jul 3, 2013

Every situation is different and for someone to tell you that will afect or no without knowing what type of account is they will be lying to you. If you need help with your credit i can help you in that matter if you are still interested in getting help pleas give me a call.

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Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Wed Jul 3, 2013
Although it is true that FHA does not care about disputes on the credit report, the DU system that is used to evaluated a Fannie Mae file before it is underwritten will pick up the fact that there is a disputed credit line, and will want the dispute removed, even if there is a $0 balance and the account has been closed. This is a relatively recent development, I would say within the last 2 years. Unfortunately this is something that loan officers usually find out about when it happens on one of their files. LP, which is the system that is used by Freddie Mac, has a similar requirement. There are also differences in how Amex accounts that are not revolving are looked at by DU and LP. These 2 systems are constantly being tweeked, so who knows what will be next. Unless the application is truly being done as a manual underwrite, with the file never going through DU or LP, this can be an issue.
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Robert Chome…, , San Diego, CA
Tue Jul 2, 2013
The best would be removed, then there would be nothing to see. There isn't a problem with disputed showing on your credit report, but the lender will still count the derogatory item against you. What type of account is this? Below is a blog post I have written about FHA and credit.…
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Chris, Home Buyer, Otay Ranch Village, Chula Vista, CA
Tue Jul 17, 2012
Thanks a lot guys for all the information.
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Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Fri Jul 13, 2012
FHA may not have a minimum FICO, but the banks have their own overlays, and they do have minimums.
If you have a disputed item, when the loan is fun through the desktop underwriting system that item will be a problem. If you settle it, and it says settled for less than agreed, it will have a negative impact on your credit score. The best thing to do is pay it, and have it permanently removed from your report.
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Cory La Scala, Agent, San Diego, CA
Fri Jul 13, 2012
Hi Chris,

I'm not a lender, but I do know that FHA doesn't place a ton of weight on FICO scores, but they do have a minimum. They care mainly that you have a good payment history. If your score is too low for a FHA loan, there must be more than one credit issue. Since no lenders responded yet, what I can do is send you some good information I've collected on credit reports and FICO scores. Reading this will help you see what goes into a score, so any financial decisions you make can be done with your credit score in mind. Just email or call me off forum, and I'll be happy to send them to you.

Also, since you'll be buying with FHA, be sure your lender ROUTINELY closes FHA loans in 30 days or less. There's a lot of competition out there with regular buyers and investors, and you don't need a lender who requires 45 days hurting your changes at offer acceptance.

Good luck to you, and don't hesitate to contact me with questions or for help if you're not already working with an agent.

Warm Regards,

Cory La Scala, REALTOR
Independence Realty
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