Do you know how to dispute data on your credit report?

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 in the past. 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 could lead consumers to pay more for products such as insurance and auto loans, it’s essential 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 you do come across such information, you may wonder about your options to fix your credit reports. The answer is a credit dispute.

By submitting a dispute, you are requesting that the credit bureau look into this information’s accuracy, correct it, or remove it from your credit report if they cannot verify that it is accurate. Essentially, a dispute is a request sent to the credit bureaus for them to investigate questionable information on your credit report.

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 the information in the credit reporting companies’ files. 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 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.
  3. At a loss for words? Don’t worry; the Federal Trade Commission has a sample letter you can use and adjust to your situation. The main points you need to cover are:
  • Identify each item that you challenge.
  • Explain why you challenge the information and go into detail.
  • Request that the negative thing is removed or corrected.
  1. 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.
  2. Contact the data furnisher.
  3. The data furnisher is the entity that provided the information to the credit bureaus. This can be the creditor, lender, or financial institution that initially offered the loan or a collection agency.
  4. 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.
  5. If the furnisher has reported a late payment or incorrect debt amount, you could directly contact them. In cases of inaccurate personal information, it should primarily be reported to the credit bureaus.
  6. Wait for the credit bureau’s response.
  7. 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 data furnisher’s response, although they won’t remove the error if they stand by their claim.
  8. 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.
  9.     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 incorrect, without proof
  1. 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.
  2. Review the results
  3. If the information you challenge is verified as accurate by the data furnisher, the item will remain on your credit report. Otherwise, the article will be updated or deleted.
  4. If you disagree with the dispute results, 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 a lender accesses your report. Some lenders only look at numbers, but it may help, for example, if a potential landlord pulls your report during the tenant approval process.
  5. Check updates on your credit score.
  6. Filing a dispute has no impact on your score; however, your credit scores could change if the 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.

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 inaccurate, untimely, misleading, incomplete, ambiguous, unverifiable, biased, or unclear can be challenged. Even though it may be harmful, anything accurate 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. 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 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 the 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 claim the credit bureau in court.

Credit Disputes and Your Credit Score

It is vital 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.