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Can you still qualify for a USDA loan with a Disputed Account on Your Credit Report?

December 13th, 2019 by Sean Stephens

Are there unintended mortgage consequences of disputing an account on your credit report?

As per USDA Guidelines under the 3555 Handbook, “Disputed accounts on an applicant’s credit report are not considered in the credit score.” Meaning, the mere presence of a disputed account does not automatically deny an applicant’s USDA loan. However, it does trigger additional scrutiny and guidelines.

Watch today’s video where I explain how a disputed credit account can affect USDA loan qualifying.

Remember, there’s not need to be overwhelmed with all these USDA details because we are here to help. As a USDA Approved Lender, you can rely on our experience and expertise to help walk you through the qualifying process step-by-step. Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

USDA Loan Guidelines for Disputed Accounts

Can you still qualify for a USDA loan with a disputed account on your credit report in FL, AL, TX, or TN?

The presence of a disputed account trigger more stringent underwriting requirements unless one of the following is present:

  1. The trade line has a zero dollar balance, or
  2. The trade line is marked “paid in full” or “resolved,” or
  3. The disputed trade line has a balance owed of less than $500 and is more than 24 months old.

If none of the above are present additional documentation may be required with examples being:

  • Letters of Explanation
  • Verification of Rent
  • More restrictive Qualifying Restrictions

Real World Example

Tampa FL USDA Approved Lender ListTo help put this into perspective here is a real world example:

A homebuyer who was recently having trouble with their lender, was recommended to us for our USDA 2nd Opinion Service (SOS) due in part to a disputed account on their credit report.

After careful review, I found that the disputed account in question actually had no balance. As discussed above, this would not automatically require more stringent USDA manual underwriting guidelines.

As a result, we were able to qualify them for a USDA loan even though a disputed account was on their credit report.

Summary

We realize USDA qualifying guidelines can be complicated, but that is where we step in to help.  We understand how to explore a disputed account and work towards USDA qaulification.

My team and I are built to help. Simply call or email us to discuss your scenario, schedule a convenient callback time, or complete our 1-2-3 online pre-qualifier to get started.

(800)806-9836 Ext. 280
SeanS@MPLX.org

Make it a great day! I look forward to seeing you right here for the next tip of the week.

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE

Avon Park, Lake Placid, Sebring FL USDA Approved Lender

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