If you dispute a credit tradeline and it’s noted on your credit report, Fannie Mae and Freddie Mac will make it more difficult for your mortgage to get approved, according to a report in the LA Times.

The pair, which own or guarantee a large chunk of mortgages these days, recently changed their automated underwriting guidelines to kick back any files that show signs of credit disputes.

While a credit dispute isn’t inherently a bad thing (it shouldn’t hurt your credit score), the mortgage financiers wants to make sure the dispute(s) is legit, as there are certainly companies and consumers out there gaming the system.

You know, those credit repair companies that claim to remove negative items from your credit report even if they are legitimate and accurate.

While it may seem like an unnecessary, untimely bureaucratic move, it’s a measure to reduce fraud, because mortgage delinquencies continue to rise at the pair of government sponsored entities.

They won’t decline your mortgage application outright, but they will force it into manual underwriting, which will slow the process and lead to a lot more scrutiny.

That means there’s a greater chance your home loan application will get pushed to the bottom of the pile, or possibly never get processed if business is flowing relatively smoothly otherwise for loan originators.

All that said, if you believe a creditor is reporting something in error, you should attempt to fix it; learn more about how to dispute an item on your credit report.

Similar Posts:

• Will a government shutdown mean no bad credit mortgages?
• Credit Score Q&A: Does Getting Denied Credit Hurt Your Credit Score?
• Fair Credit Reporting and Consumer Credit
• Former Mortgage Co. CEO Pleads Guilty in $1.5 Billion Fraud
• Data breaches result in 4X increase in identity fraud