Credit Disputes - How to Initiate One and Improve Your Credit Score

April 2, 2019

credit disputes

One in five people has an error on at least one of their three credit reports, as reported by the Federal Trade Commission.

For example, you may discover information about a credit card you never had on one or all three of your credit reports. You may find a misspelling of your name on the list of alternative names you have gone by. You may see late payment information for a credit line that was never paid late, or even a line of credit still listed as open when you have closed it.

These are just some examples of questionable negative information on your credit report that can adversely affect your credit score and form the basis of your credit dispute. Since the study conducted by the FTC revealed that errors can lead consumers to pay more for products such as insurance and auto loans, it’s important to take immediate action on any errors you find.

What is a Credit Dispute?

A credit dispute is an inquiry sent to a credit bureau about an error on your credit report. If you regularly check your credit reports from all three major credit bureaus, you're likely on the lookout for negative information. If and when you do come across such information, you may wonder what your options are to fix your credit reports. The answer is a credit dispute.

By submitting a dispute, you are requesting that the credit bureau look into the accuracy of this information and to correct the information or remove it from your credit report if they are unable to verify that it is accurate. Essentially, a dispute is a request sent to the credit bureaus for them to conduct an investigation of questionable information on your credit report.

what is a credit dispute

A credit bureau dispute is your way of notifying the specific credit bureau that you are challenging the accuracy of questionable information on a report. This dispute can take the form of a letter sent to the credit bureau, a phone call or an online dispute submitted via the credit bureau's respective websites.

How to Initiate a Credit Dispute

At your request, credit bureaus will initiate an investigation of any credit information that you challenge. The federal Fair Credit Reporting Act promotes the accuracy of information in the files of the credit reporting companies and its statutes obligate the three major credit bureaus to investigate the items in question. They must also forward any data you provide about the error to the data furnisher (the organization that provided the information to the credit bureau).

Here are the steps, in order, that you should take if you find an error on your credit report:

  1. Send a letter to the bureau
  2. The three major credit bureaus — Experian, TransUnion, and Equifax — each have a process in place to dispute inaccurate information on their individual credit report. You can do so online or by sending a letter to their mailing address. We recommend the latter; we’ll address the reasons why further in the article.

    At a loss for words? Don’t worry, the Federal Trade Commission has a sample letter you can use and adjust to your own situation. The main points you need to cover are:

    • Clearly identify each item that you challenge.
    • Explain why you challenge the information and go into detail.
    • Request that the negative item is removed or corrected.

    Equifax TransUnion Experian
    Online How to Dispute Manage a Dispute Dispute Online
    Mail Equifax
    PO Box 740256
    Atlanta, GA 30374-0256
    TransUnion LLC
    Consumer Dispute Center
    PO Box 2000
    Chester, PA 19016
    Experian
    PO Box 4500
    Allen, TX 75013

    Keep in mind that if you are challenging a credit inquiry (a hard inquiry that occurred without your approval), the proper first step is to notify the lender who issued the credit inquiry first. This is especially important if you plan to take the dispute to court. You should additionally mail a letter to the appropriate credit bureau.

  3. Contact the data furnisher
  4. The data furnisher is the entity that provided the information to the credit bureaus. This can be the creditor, lender or financial institution that originally provided the loan or a collection agency.

    Just as with the credit bureaus, data furnishers are obligated to follow the statutes in the FCRA. This means they are responsible for investigating consumer disputes about the accuracy of the information they provided. To take advantage of all your rights under this law, contact both the bureaus and the data furnisher.

    If the furnisher has reported a late payment or incorrect debt amount, you could try contacting them directly. In cases of incorrect personal information, it should primarily be reported to the credit bureaus.

  5. Wait for the credit bureau’s response
  6. Credit bureaus must investigate the items in dispute, usually within 30 days. Once they complete their investigation, they have five days to report the results back to you. You can expect the same timeframe for a response from a data furnisher, although if they stand by their claim, they won’t remove the error.

    After the investigation, the credit bureau must provide the results in writing and give you a free copy of your report if the dispute results in a change. This free report does not count as your annual free report.

    It is important to note that credit bureaus are not obligated to investigate a claim they decide is “frivolous,” For instance, a credit bureau may find your claim frivolous if you:

    • submit inaccurate or incomplete information on the dispute
    • try to contest the same item multiple times without new evidence
    • attempt to claim everything on your credit report is inaccurate, without proof

    In these cases, the credit bureau is only required to communicate the reason for deeming the dispute frivolous within five days. If you have updated materials, you can try to submit the dispute again.

  7. Review the results
  8. If the information you challenge is verified as accurate by the data furnisher, the item will remain on your credit report. Otherwise, the item will be updated or deleted.

    If you disagree with the results of the dispute, you can contact the data furnisher directly (if you haven’t already). Their contact information is on your credit report. You can also add a statement of dispute that appears next to the line item whenever your report is accessed by a lender. Some lenders only look at numbers but it may help, for example, if a potential landlord pulls your report during the tenant approval process.

  9. Check updates on your credit score
  10. Filing a dispute has no impact on your score; however, your credit scores could change if information on your credit report changes after your dispute is processed. For example, removing a mistakenly reported late payment could improve your credit score. Updates to personal information have no impact on your score.

initiate credit dispute

Common Mistakes to Avoid When Filing a Credit Dispute

When filing a credit dispute there are a few mistakes that people commonly make. These can stall the process and if done incorrectly, can end up hurting you more than helping.

Not all information can be disputed

Only information that is inaccurate, untimely, misleading, incomplete, ambiguous, unverifiable, biased or unclear can be challenged. Anything that is accurate, even though it may be negative, cannot be formally challenged with the credit bureaus.

If the debt is valid, then you may want to consider approaching the collection agency with a pay for delete letter. This is a negotiation tool that may be useful if your credit reporting time limit is years away since negative credit items aren’t automatically removed from your record when you pay them off.

Choosing to challenge online or by phone

Going through the credit bureau’s online dispute system is convenient and fast. Credit bureaus may even encourage you to challenge credit errors online, but that’s because they are the ones who benefit. In reality, it is best to do everything on paper so that you have a written record.

The space provided to state your claim typically only allows you to make a brief summary. It’s better to supply a full explanation and supporting evidence, especially if you later need to take the credit bureau to court for not properly investigating your case. If you don’t provide enough information for them to examine your case, the credit bureau can claim that they didn’t have enough evidence to go on.

Although you can attach evidence to your online dispute, your best bet is to have a paper trail. This means mailing a detailed letter via certified mail, attaching evidence proving the mistake, and making copies for your records. This makes it more difficult for the credit bureau to claim they didn’t have enough information to investigate.

Failing to read the terms of agreement

Additionally, few of us take the time to read through (or even know to look for) the terms of agreement when purchasing or accepting a “free credit report.” The terms of use may include an arbitration clause, which essentially means that you forgo your right to make a claim against the credit bureau in court.

Credit Disputes and Your Credit Score

It is important to challenge questionable negative information on your credit reports as this information can negatively impact your credit score. It is best to have your credit reports as accurate as possible before applying for a mortgage, car loan, insurance or even a job.

A lower credit score resulting from questionable negative information on your credit report can unfairly prevent you from qualifying for a loan, keep you from getting approved for a low-interest rate, cause your car insurance premiums to increase, or come between you and a new job.

Because of the difficulties many people run into when disputing questionable items with the credit bureaus, hundreds of thousand have turned to Lexington Law, the trusted leaders in credit repair. Lexington Law provides credit bureau disputes as well as a number of other credit repair services designed to help you make the most of your credit.

Call For A Free Credit Consultation

Hundreds of thousand have turned to Lexington Law, the trusted leaders in credit repair, to provide credit bureau disputes to help you make the most of your credit.

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