Why using a credit repair company before getting a mortgage is a bad idea.
Credit repair is helpful if there is a lot of incorrect information on your credit report. If you have hired a company to dispute all of your bad credit, it most likely will delay or stop you from getting a mortgage.
Most credit repair companies will dispute everything on your credit report that is derogatory. When a trade line on your credit report is disputed the credit score is not accurate, because the disputed tradeline is removed from the credit scoring model until the dispute is removed. The mortgage industry is aware of this tactic how to artificially increase your credit score.
FHA will allow up to $1000 is disputed trade lines, excluding medical bills. After $1000 the file is downgraded into a manual underwrite vs. an automated underwrite. The difference between the two different underwrites is significant. The automated underwrite will allow higher debt ratios and more derogatory credit on the credit report.
VA is the same as FHA when it comes to disputes except they do not have a maximum dollar amount. VA could force you to do a manual underwrite with only $100 in disputed tradelines.
Conventional lenders will turn down a customer who has usually 2-3 disputed tradelines.
If you are planning on getting a mortgage in the near future do not use credit repair. My company looks over credit reports every day and can inform the customer what they need to do to increase their credit score. We also do manual underwriting, which only about 5% of all lenders in the country will do.