Sounds awesome. So what’s the problem?
When the XB code is present on an tradeline, a public record, or a collection, the FICO scoring system treats it differently than it would if the account was not actively in dispute. FICO does not allow a disputed tradeline to be factored into your credit score AND people do not dispute tradelines that are not negative, therefore when you dispute a late payment or collection account, your credit score can be deemed “not valid” because the bad account is not being factored into your score. The fact that the FICO score is temporarily ignoring these items can cause your scores to be higher. Having said that, the score improvement is temporary and can’t be used to “trick” the system.
If the item has been verified as accurate, then the credit bureaus are no longer investigating it. That means the credit bureaus will remove the “in dispute” language by removing the XB code as well as now take that account into consideration when determining your credit score.
This isn’t new news and lenders also know this, which is why you can’t just go and dispute everything that’s bad on your credit reports, have your FICO scores shoot through the roof, and then go apply for a loan. Trust me, before the crash of 2008, this was an actual strategy used by MANY in the industry. It did not take the Agencies long to figure the game out and put a stop to it. Most lenders require that tradelines DO NOT have the “in dispute” language before they’ll process an application to closing. There are always exceptions which allow disputed tradelines but it’s best to address this situation head on with your loan officer so you can determine if you will have to UNdispute any accounts which could potentially drop your credit score.