This is a YouTube video titled "Disputes on Credit 🤔" containing an explanation about how credit disputes work, the roles of credit bureaus, creditors, and consumers, and the impact of disputes on credit scores, especially in the context of different types of home loans such as FHA and conventional loans. The content was created on June 16, 2023, and provides detailed insights into credit report disputes and their implications for loan underwriting.
Let's say that a creditor on the credit report says that somebody had a missed payment or a late payment, and they report that to the credit bureaus. Well, the client or consumer disagrees. They say, no, I made that payment, or there was a misunderstanding. Well, they can file a dispute. And the way that disputes work is you've got the credit bureaus kind of referee it. You've got the creditor, like the credit card company, for example, and then you've got the consumer kind of going head to head. So when a dispute happens, the credit bureaus kind of temporarily side with the consumer and say, hey, we'll just act as if this was settled and we'll kind of wipe clean or, or waive that missed potential payment. Even though it's not quite settled, it's still under investigation. So this can help boost the person's credit score. Sometimes it's correct, sometimes it's artificially. It's still yet to be determined. So when that person goes to try to get a home loan, each different loan type looks at it a little different. Conventional, doesn't necessarily have a problem. If Fannie Mae or Freddie Mac approve, then they approve. You don't have to waive disputes or remove them. Fha, however, does want disputes removed. If the combined balances of all disputed accounts are over $1,000. So it's not much room for error there. So let's say you have over 1000 dol dollars in disputes. You have to get those removed because that could then change the credit score. Generally speaking, if disputes are removed, it drops the credit score. But that's why FHA is so keen to this. They don't want an artificially higher score. So it's almost like unwinding it, hitting the person for the potential late or missed payment, and then letting the score kind of fall where it falls. So there is a reason why underwriting has to ask for this if it's an FHA loan. Conventional case by case. But it's important to know all the little ins and outs of your credit.
