Credit Reporting Dispute Process

If you are in the market to purchase a home (or refinance your mortgage), it may be a good idea to check your credit well in advance of house shopping.  

According to a FTC consumer report, an estimated one in five consumers have an error on their credit report.  You may either request a correction via a mailed letter to the credit repository reflecting  the reporting error, or you may request correction via online disputes.  I strongly encourage the online dispute process.

MyFico.com has written up an excellent sample letter if you have a specific account you would like to dispute, or you can follow the link under "online dispute resolution" section of this email to expedite the process stamp free.  Remember, evaluate each of the three credit reporting agencies for inaccuracies.  

If you would like more simple credit tips, please click here.  Arizona and California residence in the mortgage market can contact me directly for further guidance and a no cost evaluation in 10 minutes or less.

Sample Credit Report Dispute Letter of Explanation

ONLINE DISPUTE RESOLUTION:
All 3 of the credit bureaus now accept filing of disputes online. To find out how to initiate a dispute online, click here.

Tell the credit bureau in writing what information you believe is inaccurate. Include copies (NOT originals) of documents that support your position.

You may want to enclose a copy of your credit report with the items in question circled. Send your letter by certified mail, return receipt requested, so you can document that the credit bureau received your correspondence. Keep copies of your dispute letter and enclosures.

Date Your Name Your Address Your City, State, Zip Code Complaint Department Name of Credit Bureau Address City, State, Zip Code   Dear Sir or Madam: I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received. This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information. Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible. Sincerely, Your name Enclosures: (List what you are enclosing) Source: http://www.myfico.com/crediteducation/rights/sample-credit-report-dispute-letter-of-explanation.aspx

USDA Arizona Mortgage Eligibility Changes October 1, 2014

Prospective home buyers should get pre-approved for a USDA home loan soon. Buyers need to have a complete application approved by their lender and sent (and maybe approved) to their respective state’s USDA office by end of business on September 30, 2014.

Two major changes are on the horizon for USDA mortgage loans in Arizona (and the United States):

1.)   Property eligibility is changing effective October 1, 2014.  This will impact several areas which were previously eligible in the Arizona market - notably the city of Maricopa becomes ineligible.  You can learn more about areas impacted here:  Future USDA (Arizona) Ineligible Property Map - (click here) - effective October 1, 2014

from USDA:
Barring Congressional action, USDA will begin using 2010 Census data to determine eligible rural areas for Rural Development housing programs on October 1, 2014.  Changes to eligible areas can be viewed by selecting the applicable program listed under future Eligible Areas at http://eligibility.sc.egov.usda.gov.  NOTE:  Complete applications received prior to October 1, 2014, will continue to use the existing eligible rural area definitions based on 2000 Census data.

2.)  New fee structure will be effective October 1, 2014.  The annual fee structure for both purchase and refinance loans will increase to 0.5% of the unpaid principal balance, up from 0.4% currently in place.  

**Effective for all loans with Conditional Commitments issued on/after October 1, 2014**

A new fee structure will be effective October 1, 2014.  The annual guarantee fee structure for both purchase and refinance loans is increasing to 0.5 percent of the unpaid principal balance.  There will be no change (2%) to the upfront guarantee fee structure.  Because the new fee structure applies based on the issuance of the Conditional Commitment, underwriting turnaround times for the local USDA offices must be taken into consideration.  As an example, one of the local offices in AZ is currently underwriting loans received 10 days ago, which means that loans would need to be submitted to that local office for a Conditional Commitment by mid-September in order to be eligible under the current annual guarantee fee. Unfortunately, we cannot verify turn times for each of the local offices, and we expect that these turn times will increase as we get closer to the implementation date of the new fee structure, so please keep in mind that your loan may need to be re-qualified at the higher annual guarantee fee if a Conditional Commitment is not obtained prior to October 1^st.

Please feel free to contact Craig Turley at 480 385 1422 for further guidance in relation to the upcoming USDA changes.

Craig Turley is a mortgage and finance consultant.  He has 20 years professional business, finance, and management experience as an entrepreneur and corporate executive.  Craig is a 1993 graduate of the University of Arizona with a degree in Business Administration, emphasis finance. 

Collections? Your FICO Credit Score Could Improve This Fall.

Have you been turned down or penalized for a loan due to medical collections or paid collections reporting on your credit report?  If so, you may be in for an improved credit score this Fall. FICO® will leave out or discount medical debt from its scores, boosting the credit record of many borrowers, while helping lenders better assess risk.  

**Update September 3, 2014- Fannie Mae and Freddie Mac — are not planning to use the new score model in evaluating loan applicants for the foreseeable future.  Those planning on applying for a mortgage should note that if they are ordering FICO scores from the myfico site in the fall they may have very different scores in comparison to what the lender pulls**

Contact me today to find out how this update in the near future may benefit you in the Pre Qualification process for the purchase of a home or an existing refinance.  

More from the FICO 9 Link

FICO (NYSE:FICO), a leading predictive analytics and decision management software company, announced the new FICO® Score 9 introduces a more nuanced way to assess consumer collection information, bypassing paid collection agency accounts and offering a sophisticated treatment differentiating medical from non-medical collection agency accounts. This will help ensure that medical collections have a lower impact on the score, commensurate with the credit risk they represent. These enhancements help lenders because it leads to a more predictive score. The median FICO®

 Score for consumers whose only major negative references are medical collections will increase by 25 points.

FICO® has used sophisticated modeling techniques to make the new FICO® Score 9 more predictive of a consumer’s likelihood to repay a debt than previous versions. This latest version of the FICO® Score, the industry-standard measure of U.S. consumer credit risk, captures recent consumer behavior to give lenders better risk assessments across the credit lifecycle and all credit products. It will be available to lenders through the U.S. credit reporting agencies starting this fall.

FICO Score 9 also supports the desire of lenders to better assess the risk of consumers with limited credit history – so-called thin files. In the model development process, FICO data scientists represented a consumer’s repayment behavior in degrees of risk. For example, instead of classifying a consumer as someone who paid or didn’t pay her bills in absolute terms, the various degrees of the consumer’s payment history have been quantified. The end result is a score with an improved ability to assess the risk of thin files.

“FICO Score 9 uses a more refined treatment of consumers with a limited credit history and those with accounts at collection agencies, so that lenders can grow their credit and loan portfolios more confidently,” said Jim Wehmann, executive vice president for Scores at FICO. “By applying innovative predictive modeling techniques on recent data to capture consumer credit behavior, FICO Score 9 will extend FICO’s leadership in providing the credit score that most accurately and fairly defines U.S. consumer credit risk.”

Craig Turley is a mortgage and finance consultant with Southwest Direct Mortgage in Scottsdale, Arizona.  He has 20 years professional business, finance, and management experience as an entrepreneur and corporate executive.  Craig is a 1993 graduate of the University of Arizona with a degree in Business Administration, emphasis finance.