Disputing With Your Credit Card Company May Kill Your Refi Application

You may have an 800 credit score and documentable income, but a minor dispute with your credit card company can stop your refinance application.

Fannie Mae and Freddie Mac rejects refinance applications where the borrower has disputed a credit card purchase.

Yes, this little bureaucratic thingy can stop your refinance application cold.

Kenneth R. Harney writes:

Under the Fair Credit Reporting Act, consumers are guaranteed the right to dispute erroneous information on any account in their credit files. Once a consumer challenges that information, a notation to this effect must be made on the file. As long as it remains, most credit scoring systems generally will not factor the disputed account into the computation of the consumer's score.

Does Fannie Mae, currently operating under federal conservatorship, deny loans to consumers simply because they exercised their legal rights? In an e-mail response, communications director Amy Bonitatibus confirmed that the company's automated underwriting system — used by virtually all lenders doing business with Fannie Mae — sends applications with "consumer disputed" items on credit reports back to the lender for what is known as "manual underwriting."