News:
It seems to me that I am hearing a panic around the industry for clients getting denied because of an account in dispute. FCI has developed a system to help in this situation to get the dispute status removed.

The reasoning behind this extremely frustrating dilemma is because of a mishap in the new FICO scoring system. What has been happening is an account in dispute has not been affecting the credit score because the computer is not recognizing the account in the system. Thus creating a huge jump in the fico score of a client. Fannie Mae has now put in place, in their system, any account that is under dispute status will automatically be flagged and or denied. However why should we suffer for the incompetence of a credit scoring system and a company that is putting a strain on our economy?

Because this is new territory for all us, and many loans are getting denied (credit scores even above 750), the Federal Trade Commission is being hit every day with complaints and this will eventually work itself out, but until the trusted government (I say sarcastically) steps in to take over once again:

Did you know?

The Fair Credit Billing Act (FCBA) states a client may question:

• unauthorized charges. Federal law limits your responsibility for unauthorized charges to $50;
• charges that list the wrong date or amount;
• charges for goods and services you didn’t accept or weren’t delivered as agreed;
• math errors;
• failure to post payments and other credits, such as returns;
• failure to send bills to current address – provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends; and
• an explanation or written proof of purchase along with a claimed error or request for clarification

The Fair Credit Billing Act also stipulates that the creditor provide lawfully requested information concerning clients account upon request in a timely manner. Therefore a client that disputes an account and does not ask the creditor to state account in dispute this is a violation. Also upon request the creditor WILL have to remove the information.

Further more if a client is acting in the guidelines of the FCBA and gets denied credit because the creditor put a dispute on their credit, this violates the Equal Credit Opportunity Act.

§ 1691. Scope of prohibition
(a) Activities constituting discrimination
It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction—

• on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract);

• because all or part of the applicant’s income derives from any public assistance program; or

• because the applicant has in good faith exercised any right under this chapter.

The Equal Credit Opportunity Act clear states:

The creditor may not threaten your credit rating or report you as delinquent while your bill is in dispute. However, the creditor may report that you are challenging your bill. In addition, the Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants who exercise their rights, in good faith, under the FCBA.

Simply put a client cannot denied credit simply because they disputed a bill.
*(All Acts provide through the FTC website)

FCI now has in place a series of letters that will help client in this situation. If you have a client that is being denied approval for a loan because of a dispute status we can help the process, by sending violations to the credit bureaus as well as the creditors. Please note that it will take some time because of all the new policies in place with dispute letters, account statuses, and response time through mail.

Credit Tips:
Avoiding this situation is unrealistic as so many clients are uneducated in the credit process. Clients hear all the time, “Well just dispute it and if they can’t verify the info it gets removed in 30 days.” Clients need to understand what the law states and through the FCI process we help them have a better understanding of how to properly dispute items, what can or should be disputed, and how to properly handle any negative accounts.

Do not have client dispute an account that they know is theirs to try to boost credit rating.
Do not have client dispute all lines in their credit file.
Do not tell clients a quick fix to their credit challenges is to dispute collection accounts and negative accounts.

FCI has put in place a step by step guidance to help clients. We educated client on what they can do themselves for free, how they can help their current situation, and proper steps needed to help get them qualified.

If we can be of any assistance to you and your business please contact us.