Why lenders care

Lenders base mortgage decisions on the credit information in the tri-merge credit report (the combined files from the three major bureaus). Disputed items introduce uncertainty about the accuracy of that data. Underwriters must decide whether a disputed entry is likely correct, an error, or still unresolved — and that choice affects eligibility, rate offers, and required documentation.

(Authoritative guidance: credit bureaus must investigate disputes — usually within 30 days, or up to 45 days if more information is needed — per the Fair Credit Reporting Act and CFPB guidance: https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/disputing-errors-on-your-credit-report/ and https://www.ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act.)

How underwriters typically treat disputed items

  • Automated underwriting systems (AUS) may not flag disputes the way a manual review does. However, many lenders run both automated and manual checks; a human underwriter will often flag disputed tradelines.
  • Common lender responses: request documentation, obtain a written explanation (letter of explanation), treat the item as unresolved negative information, or place a condition on the loan requiring resolution before closing.
  • Treatment varies by investor overlays (Fannie Mae, Freddie Mac, FHA, VA) and by lender risk tolerance. There is no single rule — some lenders will proceed with minor disputes if overall credit is strong; others require removal or proof of resolution.

Practical impact on your mortgage

  • Delays: Underwriting can pause while the borrower supplies evidence or the bureaus complete investigations.
  • Conditional approvals: Lenders frequently issue approvals that require dispute resolution or proof that an item was corrected or removed.
  • Pricing and eligibility: Unresolved negative tradelines can lower effective creditworthiness, possibly raising interest-rate pricing or affecting qualification thresholds.

What borrowers should do (step-by-step)

  1. Pull your tri-merge report before you apply. Review all tradelines, collections, public records, and personal information.
  2. File disputes promptly and keep records — dispute confirmations, dates, reference numbers, and any correspondence. See our guide on documenting disputes for faster correction for templates and samples: Credit Report Errors: How to Document Disputes for Faster Correction.
  3. Communicate proactively with your lender. Disclose open disputes early and provide supporting documents (billing statements, proof of payment, settlement letters, or debt validation).
  4. If a medical or collection error is the issue, escalate with targeted documentation; medical collections are a common cause of disputes and there are proven removal steps: Removing Medical Collections from Your Credit Report: Steps That Work.
  5. Consider delaying application if multiple unresolved disputes exist. Resolving them first often speeds approval and preserves better loan terms.

Example scenarios

  • Single disputed late payment: If you have a strong profile, the lender may accept a letter of explanation plus documentation and still issue approval with minor conditions.
  • Disputed collections or identity errors: Lenders commonly require proof the collection was removed or validated before closing.
  • Multiple small disputes: A cluster of disputes can trigger heightened scrutiny and a manual underwrite, increasing the chance of a conditional denial or delay.

Timeline and expectations

Bureaus generally investigate within 30 days after you file a dispute, with an extra 15 days allowed if you provide additional information. Lenders often wait for the investigation result or ask for alternate evidence (payment records, vendor statements) — expect anywhere from a few days to several weeks of delay depending on complexity.

Quick checklist for borrowers before applying

  • Order and review your full credit reports (all three bureaus).
  • Resolve or document any disputes; keep dated proof.
  • Ask your loan officer how they handle disputed items and what documentation they’ll accept.
  • If time allows, correct disputes before locking rates or submitting the mortgage application.

Links to related guidance

Professional disclaimer: This content is educational and reflects general lending practices and my experience in mortgage advising. It is not personalized legal or financial advice. For decisions about a specific mortgage application, consult your mortgage professional or attorney.

Sources: Consumer Financial Protection Bureau — disputing credit report errors; Fair Credit Reporting Act (FCRA) — investigation timelines and consumer rights.