Thanks to federal regulations, when you dispute an account on your credit report and the dispute is resolved in your favor, the credit reporting agency is required to remove or correct the account. Credit reporting agencies often don’t do this, though, and the Washington Post notes that it can come back and interfere with your next home loan application.
If you have a disputed account on your credit report, both Fannie Mae and Freddie Mac will automatically kick your application back to your bank for manual underwriting. If your bank really wants that loan, they’ll underwrite it themselves before sending it back upstream. But if they can’t or don’t want to do that, they’ll just reject your application and blame it on Fannie or Freddie.
Before you buy or refinance a home, pull copies of your credit report and clean it up if necessary. If you see any disputes that were resolved in your favor but that you can’t get the bureau(s) to remove, look for a lender that will offer in-house underwriting.