Buying a home is a major life event. It is one of the most significant financial decisions you will make, and it can be stressful. Mortgage lenders will review your credit reports to determine if you qualify for a mortgage, and on what terms. The better your credit history, the more likely you are to be approved for a loan and to receive a good interest rate. But what if you are denied a loan due to an inaccuracy on your credit report? There are several steps you should take:
STEP 1: OBTAIN YOUR CREDIT REPORT
The first step is to figure out why you’ve been denied a mortgage loan due to your credit report. Your lender is required to provide you with a denial letter that explains why you were denied and identify the consumer reporting agency that supplied the credit report. There are three major credit reporting agencies that mortgage lenders generally use: Equifax, Experian, and TransUnion. Many mortgage lenders purchase a report called a “tri-merge” report, which is a single report the includes information from the three major credit bureaus. Mortgage brokers may also purchase a “residential mortgage report”, which pulls at least two reports from the “Big Three” credit bureaus. Both “tri-merge reports” and “residential mortgage reports” are typically sold by companies that are separate from Equifax, TransUnion, or Experian. These companies are called, “resellers” because they resell the information purchased from Equifax, TransUnion, and Experian. Resellers include companies like CoreLogic Credco, Factual Data, Credit Plus, and LexisNexis.
Once you learn which credit reporting agency provided the report that caused your mortgage denial, you should obtain a copy of your consumer report from that agency. You can do so by visiting www.annualcreditreport.com, or going contacting the credit bureaus at:
Equifax www.equifax.com
888-548-7878
P.O. Box 740241
Atlanta, GA 30374-0241
Experian www.experian.com
888-397-3742
P.O. Box 4500
Allen, TX 75013
TransUnion www.transunion.com
800-916-8800
P.O. Box 2000
Chester, PA 19016
If your mortgage lender purchased a report from a reseller (i.e., a tri-merge report), then you can obtain a copy of that report directly from the reseller. Alternatively, even if your lender purchased a report from a reseller, you can still obtain your credit report directly from Equifax, Experian, or TransUnion.
STEP 2: IDENTIFY THE INACCURATE INFORMATION ON YOUR CREDIT REPORT
Once you obtain your credit report, you need to review it for any errors or inaccurate information. You are the best resource to know what should or should not be on your credit report. Here are some common credit report errors to look for:
- Accounts that do not belong to you. This could be a sign of identity theft or a mixed file.
- Information that is not yours, including wrong names, phone numbers, addresses, or employment history.
- Inaccurate account payment history.
- Closed accounts reporting as open
- Accounts inaccurately reported as late or delinquent
- Incorrect balance or credit limits listed on an account
- The same debt listed more than once
- Negative information that is older than seven years
- Recent credit applications (inquiries) that do not belong to you
STEP 3: DISPUTE THE INACCURATE ITEMS ON YOUR CREDIT REPORT
If you found incorrect information on your credit report, then you need to dispute the error to get it corrected. There are several options. One option is to submit disputes online. To do so, you can use the following links:
Equifax: https://www.equifax.com/personal/credit-report-services/.
Experian: https://www.experian.com/disputes/main.html
TransUnion: https://www.transunion.com/credit-disputes/dispute-your-credit
You can also send disputes by sending a letter to the credit bureaus, to the following addresses:
Equifax: P.O. Box 7404256. Atlanta, GA 30374-0256.
Experian: P.O. Box 4500, Allen, TX 75013.
TransUnion Consumer Solutions. P.O. Box 2000. Chester, PA 19022-2000
If you choose to send a letter, make sure to send it via certified mail and retain a copy of your dispute letter for your records. Regardless of the method you choose to dispute, it is important that you clearly identify what information is inaccurate, and how it should be corrected. You may also wish to provide supporting documentation along with your dispute.
The consumer reporting agency must investigate your dispute, usually within 30 days. When the investigation is done, the credit reporting agency must send you the results of its investigation along with a copy of your updated consumer report.
STEP 4: REVIEW THE RESULTS OF YOUR DISPUTE
There are generally three outcomes of a credit report dispute: (1) the information is deleted or corrected; (2) the information is modified; or (3) the information is not changed. If the credit bureau corrected the inaccurate information on your credit report, then you should contact your lender and tell them that your credit report has been corrected.
On the other hand, if the credit bureau does not correct or remove the inaccurate information, you can submit a second dispute. You can request the CRA include a statement in your credit report explaining that the disputed item is inaccurate. This may help with some mortgage lenders, to explain that an item of information is inaccurate, and in dispute.
STEP 5: CAN YOU FILE A LAWSUIT WHEN AN INACCURATE CREDIT REPORT CAUSES A MORTGAGE DENIAL?
If you have been denied a mortgage due to an error on your credit report, we strongly recommend that you consult with an experienced FCRA lawyer. The attorneys at Weiner & Sand have litigated numerous FCRA mortgage denial cases, and we have advised hundreds of clients on how to navigate the credit dispute process. We conduct our case evaluations for free, and you may be entitled to damages for the errors on your credit report.