The In-effective Credit Dispute Method
Posted by Matt Douglas
Credit bureaus respond to consumer credit disputes via mail. They will either delete or verify the information. If the item is verified, it means the bureau is keeping that information on your credit file.
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 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.
However, do not be misled by the “opportunity” to add a consumer statement to your credit report.
Do not mistake the 100-word statement for good faith on the part of the credit bureaus. As you will see, such a statement is usually used against your best interests.
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.”
It may seem unreasonable to punish somebody for losing her job. Especially if she caught up on all her bills.
Credit bureaus interpret a late payment one way. They interpret it as an indication of a bad credit risk.
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.
The 100-word statement also has additional hidden dangers. For instance, adding such a statement confirms your guilt. It is direct proof that you were late on those payments. Moreover, you put yourself on perilous footing should you decide to hire a credit correction law firm in the future. The credit bureaus will ignore any future disputes on your behalf because you have already admitted guilt. There is no reason for them to conduct an investigation. Finally, you have put yourself into a category of consumers that potential creditors avoid. Any potential creditor may avoid giving you credit out of fear that you will likewise default on payment should you run into a rough financial patch in the future.
Nowadays applications for new credit such as a credit card or car loan are based upon your score - not your statement. Therefore, the statement is only a weapon that the bureaus can use to ignore your credit report disputes.
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: Finances
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