The Wrong Way to Dispute Your Credit Report
Posted by Matt Douglas
Disputing negative credit items with the credit bureaus Equifax, Experian, and Transunion can often be a challenge. Many times the bureaus respond to a dispute with a letter indicating they verified the disputed item. Accordingly, you are stuck with the information being reported about you.
In paragraph number two of a credit bureau dispute response the bureaus encourage you to add a 100-word consumer statement to your report. This is where many people add a short essay on why they deserve credit.
It may be difficult to resist the urge to proclaim your innocence by way of a consumer statement. You may feel the need to explain that the bad credit simply was not your fault or beyond your control.
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.
People often send in statements like this: “I fell behind on my credit card bills, but I have since caught up. My boss laid me off from my job of 20 years. Even though I could not pay my bills, it was only a temporary situation and now I am current.”
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.
Credit bureaus really could care less that your inability to pay your bills was due to no fault of your own. They see things in black and white. You either paid your bills on time (according to the creditor) or you did not pay your bills on time.
Her inability to make payments is seen as a sign of weakness and/or irresponsibility. They believe that she should have emergency money to pay bills during times of emergency.
Attaching a 100-word statement is really bad for three additional reasons: (1) Such a statement confirms that Yes - you really were late on those payments. (2) The credit bureaus will ignore any future disputes you mail because you already admitted fault. (3) Should you apply for new credit in the future; every creditor will see your candid admission that you are not able to pay your bills during times of emergency - and therefore a bad credit risk. As you can see, attaching a 100-word written statement to your credit report could possibly be the worst step you can take. In fact, it is only an option because it was part of the original Fair Credit Reporting Act enacted in the 1970’s. Thirty years ago bankers actually manually reviewed credit applications and read those statements personally.
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.
Tags: Finance
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