A Federal Trade Commission study of the U.S. credit reporting industry found that 1 in 4 consumers identified errors on their credit reports that might affect their credit scores. That's not all…
The Consumer Financial Protection Bureau’s website states each week they send more than 20,000 complaints about financial products and services to companies for response.
The time for ignoring credit report errors is over. Credit history and scores have permeated all aspects of our financial well-being. Credit history and scores are not only used to determine if you’d be a good risk for credit cards, auto and mortgage loans but other types of businesses like utility companies, insurance companies and cell phone providers are using credit scores to decide whether to issue you a policy or provide you with a services.
Consumers with bad credit may even find it difficult to rent an apartment. Even if you're extended credit, a low score may result in less favorable terms and higher interest rates. There's no denying disputing negative credit can improve your credit history and raise scores. No matter how distasteful, you've got to find out why your credit score is low and come up with a plan for improving it.
Credit repair often involves several strategies and learning how to dispute negative credit is a significant strategy.
Guide to Dispute Negative Credit
1. Request your credit reports
You must dispute negative credit at each of the 3 major credit bureaus – Experian, Transunion and Equifax. This is important because each of your credit reports has the possibility of containing varying information.
Fixing negative credit at one credit bureau does not fix your credit history at all the credit bureaus. Review your credit reports and mark the items to be disputed. All negative information may or may not appear on every credit report so make sure you dispute with the appropriate credit bureau. You can order your credit reports for free every 12 months at annualcreditreport.com.
You can get a free credit report once a year from each of the three major credit bureaus — Equifax, Experian and TransUnion — at AnnualCreditReport.com. That's the only site where you can get the reports for free under the law. Many other sites offering “free” reports have strings attached.
Even if you've already obtained your report for the year, you're entitled to another free report under the law if you believe your file is inaccurate because of fraud or if you've been denied credit, insurance or employment within the past two months. You can also purchase each of your credit reports for a small fee directly from the credit bureau.
2. Look for errors and mistakes
The best way to dispute an account is to find an actual error. I know many consumers dispute “account not mine” with some success but that's not the best way to go. If the account really belongs to you being untruthful can come back to bite you. Factually based disputes are a lot harder for credit bureaus to verify and there may be several facts to dispute.
However, make sure you dispute one factual reason at a time as you may not get the desired result the first time. Save some factually based disputes for future disputes, if needed.
Here are several factual errors that you can look for on your credit reports:
- Outdated information
- Incorrect account numbers
- Accounts that have been re-aged
- Incorrect balance
- Incorrect opening date
- Incorrect credit limit
- Credit card account not reporting credit limit
- Incorrect account type
- Charge off that has been sold or transferred has past due balance instead of zero balance
- Charge-off account showing currently past due
- Open charge-off accounts
- Accounts not included in bankruptcy
- Collection accounts with a credit limit
- Closed accounts reported as open
- You are reported as the owner of the account, when you are actually just an authorized user
- Accounts that are incorrectly reported as late or delinquent
- Incorrect date of last payment, date opened, or date of first delinquency
- Same debt listed more than once (possibly with different names)
- Name misspellings
- Wrong date of birth
- Incorrect addresses
- File merging or identity mix-up (your name may be similar or the same of someone else)
- Reinsertion of incorrect information after it was corrected
- Accounts that appear multiple times with different creditors listed (especially in the case of delinquent accounts or accounts in collections)
- Reinsertion of incorrect information after it was corrected
- Incorrect accounts resulting from identity theft
Carefully review your credit report to find factual errors. Your goal is to get negative information deleted, not corrected. Always request a deletion of negative information. There is no guarantee that you will get a deletion, it may just be corrected, but it does not hurt to ask for a deletion.
3. Gather documents to support your dispute
Disputes that have supporting documentation are in a better position of being deleted or corrected. That may mean locating a document that shows you closed an account on a specific date or finding a canceled check that shows you made a payment listed as delinquent.
4. Avoid Online Disputes if possible
Initiating credit disputes online is convenient but disputing credit mistakes online may lead you to dispute every negative item at once. Do not make this mistake! Disputing every negative item, especially if you have many of them, may lead to your dispute being marked as frivolous. Frivolous credit disputes can prevent an item from being investigated.
The credit reporting agencies can reject further disputes for up to 12 months. Additionally, online disputes limit the facts on which you can challenge a negative credit item and may prohibit you from sending any documentation in support of the dispute.
Unless you are doing a simple dispute like a negative item is obsolete and too old to be on your credit report, written disputes are generally better.
5. Write Your Dispute Letter
Writing a straightforward, precise dispute letter is imperative. You want your letter read, acted upon, and not discarded as frivolous. Keep good records as you may need them later.
The credit reporting agencies have 30 days after receipt of the dispute to conduct an investigation and resolve the matter. If you have documentation to support your dispute include that with your dispute letter.
Send one dispute letter at a time and only include a few negative items per dispute letter. Wait for your results and follow-up with another dispute if necessary but wait at least 60 days.
6. Create An Emergency
The credit bureaus receive a vast amount of disputes daily so make sure you create an emergency in order for the dispute to be taken seriously.
Let them know you are in the process of obtaining a mortgage or auto loan and the errors in your report are hurting your chances of being approved or causing the lender to only offer subprime interest rates.
You may even be job hunting and need a clean credit report to get hired. Those are just examples but you get the drift.
7. Collection Agency Debt
Starting the dispute process may alert debt collectors you are attempting to repair your credit. Be aware that once you begin the dispute process you may have to deal with debt that is still within the state of limitations which means you could be sued by a debt collector.
8. Where to start the dispute process
Begin the dispute process with the credit reporting agencies first. You may get the negative item deleted and no further action has to be taken. If you start disputing directly with a creditor first, you could end up engaging in a longer battle to get an item deleted.
9. Make deletion your goal
Request full deletions when disputing credit, especially for credit score killing items such as collection accounts. Correcting a date or amount on a negative credit item still remains a negative.
But deleting a negative credit item might result in a change in credit score. For example, a paid or unpaid collection account holds the same weight as they are both viewed as negative tradelines. See Deletions
10. Know when NOT to awaken the sleeping giant
Be careful about disputing old debts. You could bring the debt back to life by disputing it and awaken the creditor’s or collection agency’s interest in collecting the debt.
If the debt is within the Statute of Limitations you could get sued. If the statute of limitations has expired, you are safe from a lawsuit.
Be careful not to do anything that may re-start the statute of limitations by acknowledging, making a payment or even agreeing to pay on the debt. As a negative item gets older, the percentage it's calculated into your credit score dramatically decreases.
Keep in mind your credit score is calculated primarily using the two most recent years of your credit history.
11. Get Strategies and information on the following:
- How to Dispute Late Payments
- How to Dispute Judgments
- How to Remove a Bankruptcy from credit reports
- How to Dispute a Tax Lien
- How to Dispute a Charge-off
- Car Repossession and Credit Disputes
- What to know before disputing a collection account
- How to Dispute Collection Accounts
- How to Request Debt Validation
- How to remove credit inquiries
- What to do when a deleted item is Re-Inserted
- Steps to take if an account has been Re-Aged
- What is the Date of Last Activity (DOLA)
- How to Request Method of Verification for Verified Disputes
- What is the E-Oscar Method of Investigation
12. What to do if your dispute is verified as accurate
You have options if your dispute is denied. File a complaint with your State Attorney General's Office and with the Consumer Financial Protection Bureau (CFPB).
The CFPB has regulatory authority over the reporting bureaus. Consider hiring an attorney experienced in credit reporting, the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.
You must file an official complaint with the credit bureaus before you can take legal action. Many attorneys will take your case on contingency. There are have several big jury awards in the news lately pertaining to credit bureaus that would not fix errors.
13. Disputes marked as frivolous
Because the major credit reporting agencies deal with millions of bits and pieces of information for millions of consumers, mistakes occur on a regular basis. Errors are made, inaccurate and even erroneous information is reported and you have every right to dispute that information. During the dispute process just remember that credit repair is legal and you have the legal right to question negative items in your credit files.
Disputing bad credit is a process, one that takes time and can be tedious.
But don't give up – never accept no for an answer!
14. New Credit
During the dispute process try to curtail applying for new credit. Credit repair does involve adding positive information to your credit files but wait until you have completed the dispute process.
15. Make a game plan
16. Consider hiring a credit repair specialist
If you do not have the time to dispute bad credit, consider Lexington Law that removed over 4 million negatives from consumers' credit reports in 2022.