Why You Can’t Buy a Home While in Credit Repair Due to Disputes

If you’re actively working on improving your credit, you’re already on the right track toward homeownership. However, if your credit repair process involves disputing accounts, you might be surprised to learn that this can temporarily prevent you from buying a home. Many buyers don’t realize that open disputes on their credit report can cause issues when applying for a mortgage. Here’s why and what you can do to prepare.

Understanding Credit Disputes and Their Impact on Home Buying

When you dispute a negative item on your credit report, the credit bureaus mark that account as “in dispute.” While this may sound harmless, it creates a temporary roadblock for mortgage lenders. Here’s why:

1. Lenders Need an Accurate Credit Picture

Mortgage lenders rely on your credit report to assess your financial stability. When an account is in dispute, it is temporarily excluded from credit score calculations, meaning the lender isn’t seeing the full picture of your creditworthiness. This can create uncertainty, leading lenders to pause your loan application until the dispute is resolved.

2. Disputed Accounts Can Mask Risk

Some buyers try to dispute negative accounts, thinking it will improve their score. However, lenders know that disputed accounts can hide late payments, charge-offs, or collections. Because of this, most lenders won’t approve a mortgage application if you have active disputes on your credit report.

3. Loan Underwriting Will Flag Disputed Accounts

Even if you have a good credit score, mortgage underwriters will carefully review any disputed items over $1,000. If they see active disputes, they may require you to remove them before proceeding with your loan, delaying your home purchase.

4. Government-Backed Loans Have Strict Rules

FHA, VA, and USDA loans have specific guidelines regarding credit disputes. For example:

  • FHA loans typically won’t approve borrowers with open disputed accounts over $1,000 (unless related to medical debt).
  • VA loans may require disputed accounts to be resolved before approving the loan.
  • USDA loans follow similar guidelines, ensuring that any outstanding credit issues are fully addressed.

How to Avoid This Problem

If you’re currently in credit repair and plan to buy a home, take these steps to avoid unnecessary delays:

  1. Stop Initiating New Disputes – If homeownership is your goal, avoid disputing accounts unless absolutely necessary.
  2. Resolve Any Open Disputes – If you already have disputes, contact the credit bureaus to remove them before applying for a mortgage.
  3. Work with a Mortgage-Approved Credit Expert – Instead of using credit repair services like Lexington Law (which often dispute everything), talk to a lender who can guide you on what actually needs to be done—for free!
  4. Check Your Credit Early – Don’t wait until you find a home to review your credit. Pull your reports early and get a lender’s opinion on what needs to be fixed.

The Best Next Step? Talk to a Lender Now!

If your goal is to buy a home by September, the smartest move is to speak with a lender now. They can review your credit, tell you exactly what needs improvement, and help you get mortgage-ready without unnecessary disputes.

💰 Get connected with a trusted lender today! Visit my lender page here:
👉 Kory White Real Estate Group Mortgage Lenders

📅 Want to chat about your home-buying plan? Schedule a time with me here:
👉 Schedule a Call

Taking the right steps now can help you avoid delays and get you into your dream home faster. Let’s make it happen! 🚀

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