Can a lender deny a loan because of the presence of an unresolved dispute on the borrower's credit report? I'm not sure if this might be covered by the provision in the ECOA which states that lenders are prohibited from discriminating based on the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act.

Thanks.

Well, you are not denying them because they disputed the transaction. You are denying them because you need to wait for the outcome to see how it impacts their credit. I can't dispute everything on my credit report and then apply for a loan and get a pass.

You're correct. We'd be denying them because we need to confirm the actual amount of the debt and how it impacts their credit. In that case, what would be the proper reason to list on the AA Notice? Should we list "unacceptable type of credit reference"?

I think "Unable to verify" credit references is more appropriate than "Unacceptable" - or perhaps "unable to verify debit to income ratio".

FYI

"credit references" are like individuals that you put on a resume. Credit references have nothing to do with a credit report.