You really really really need to have your clients pull their own credit reports before going mortgage shopping. (It’s free once a year from AnnualCreditReport.com — and that’s the only government-authorized source.)
That’s because, starting April 1, FHA won’t back a mortgage if a borrowers has credit disputes totaling more than $1,000. And if FHA won’t back it, good luck getting a bank to issue it.
There are a couple of caveats. If the dispute is more than two years old it won’t count. And a borrower can pay off the disputed amount (or set up a payment plan) — just be prepared to show documentation. And yes, any payment arrangement will then be considered as part of the debt-to-income ratio.
So consider advising your clients to pull their reports — not just a FICO score! — and if there are any disputes get them cleared up, especially if they total more than a grand. (Once again: AnnualCreditReport.com is the place to go.)