8 August 2008
The In-effective Credit Dispute Method
Posted by Matt Douglas under: Cars .
If you have ever tried to dispute items on your credit report, you may have received a response from the credit bureaus stating they performed their “investigation.” The bureaus may also tell you that they “verified” whatever item you disputed. This means that negative item will remain on your credit report.
The Fair Credit Reporting Act (FCRA) allows you to attach a 100-word essay to your credit report. This is the opportunity to explain the negative information and argue that you deserve new credit.
It is surely tempting to tell your side of the story by way of the “consumer statement.” It appears as your opportunity to explain why you have negative items on your credit report. There probably is a good reason why you were late on that payment. Perhaps you were sick or got laid off from your job.
Be cautious about adding a consumer statement to your credit file.
It may look like the credit bureaus are doing you a favor by adding your consumer statement. However, it is really just another technique the credit bureaus use against you.
Here is a common consumer statement: “The late payments you see on my credit file were not my fault. My employer fired me due to no fault of my own. I quickly found a new job and now pay my bills on time every single month.”
The unexpected loss of employment may sound like a reasonable explanation to be late once or twice on a credit card bill. Plus, I would give that person credit for catching up on her bills and staying current since the bad financial spell.
However, the credit bureaus and creditors read such a consumer statement entirely different. They don’t see a good person who went through some brief and unexpected hard times.
Instead, the credit bureaus see somebody who isn’t smart enough to have an emergency fund to cover basic minimum payments should something go wrong financially.
Writing a 100-word statement can damage your credit for three more reasons. First, such a statement only cements the fact that you paid your bill late. Second, the credit bureaus already have confirmation that the late payments are accurate. Thus, should you dispute the items in the future, the credit bureaus will ignore that dispute or deem it “frivolous.” Third, any future creditor will expect you not to pay them should you run into another financial emergency. As you can see, there is no benefit to the consumer when they attach the consumer statement. In fact, the purpose of the statement is so old and out-dated that it probably should be simply abolished. It was part of the original Fair Credit Reporting Act enacted by Congress in the 1970’s. The statement has no purpose nowadays since most credit applications are reviewed electronically.
In today’s digital world most applications are reviewed electronically. Thus, such a statement only serves as another way for the credit bureaus to ignore your credit report dispute.
To summarize, the 100-word statement is out dated and dangerous. Avoid the temptation to explain bad credit. Instead, use the formal channels to challenge misleading credit information such as dispute letters and creditor interventions.