How Do Credit Disputes Work and What Do They Cost?

Yes, credit disputes are always free. All three credit bureaus can accept dispute submissions online or by mail, free of charge. For disputes involving credit reports, the national credit bureaus never charge. You can ask for a dispute if you find information on your credit report inaccurate.

You can submit credit report disputes through the web forms, by phone, or by mail.

What is negative information on credit reports?

Negative information, such as late payments, accounts not paid as agreed, or bankruptcies, typically remain on credit reports for seven years.

Several kinds of inquiries can lower your credit. They are of two types, harsh and soft. When a lender or a company runs a credit check, this is a hard inquiry. Soft inquiries happen when you check your credit on your own. Your credit score is unaffected by soft inquiries.

But just one hard inquiry can impact your credit score, typically by a few points. Multiple credit applications in a short time can give the impression that you are overextending yourself to prospective lenders.

What are credit disputes?

A credit dispute is a process where an individual questions the accuracy of the information on their credit report. This can include late payments, charge-offs, collections, and other negative information that a credit bureau is reporting.

According to the Consumer Financial Protection Bureau, a few consumers may have errors on their credit reports. In addition, a study by the Federal Trade Commission (FTC) found that twenty-nine percent of consumers identified errors on their credit reports.

Consumers can dispute any inaccurate information on their credit report through the credit bureaus, either online or by mail. The credit bureau must investigate the dispute and remove or correct the inaccurate information.

It is essential to monitor your credit report regularly and dispute any errors promptly. This can otherwise impact your credit and ability to obtain loans or credit in the future. You can submit a dispute request if you find information on your credit report inaccurate. When submitting a dispute, for instance, it would be:

1. When you repay your loan, but the account information still shows a balance, you discover that a lender still needs to update the account information.

2. You can submit a dispute for criminal activity, like opening fictitious credit accounts in your name. It can cause new loan or credit card accounts to show on your credit report.

Can credit disputes impact your credit score?

Your credit score isn’t directly affected by filing a credit report dispute. However, modifying, removing, or updating information could affect your credit depending on the type of information. This can impact your score, either positively or negatively, depending on the outcome of the investigation.

Your credit score will likely improve if the dispute removes negative information from your report. Suppose the investigation finds that the disputed information is accurate. Bureaus can re-evaluate the information, which can harm your credit report. 

Additionally, the process of disputing can take a few months to resolve. Your credit report status may be “in dispute” during this time. This can make lenders cautious about extending credit to you during the investigation period, potentially impacting your ability to obtain credit in the short term.

It is essential to ensure that your dispute is valid and that you have documentation to support your claim. You should also stay on top of the dispute process, regularly checking the status if necessary.

When should you dispute your credit report?

Disputing errors on your credit report is essential because your credit report is a record of your financial history. Errors in your credit report can lower your score. This can make loan approvals, credit cards, and even getting rental apartments more challenging.

You should dispute your credit report if you see any of the following errors:

1. Incorrect personal information: If your name, address, or other personal information is incorrect, you should dispute the error.

2. Incorrect account information: If the balance, payment history, or other details of your accounts need to be more accurate, you should dispute the error.

3. Accounts that do not belong to you: If you see accounts on your credit report that do not belong to you, you should dispute the error. This can occur if someone uses your personal information to open an account in your name.

4. Late payments that are not yours: If you see late payments on your credit report that you did not make, you should dispute the error. This could be due to a mistake by the creditor or a reporting error.

5. Accounts discharged in bankruptcy: If your accounts were discharged in bankruptcy and are still showing up on your credit report as outstanding, you should dispute the error.

Of course, disputes can end up the other way around. A consumer statement may help a lender to understand circumstances that might be relevant. Although, a statement can’t improve your credit score or change the information on your credit report.

Can credit repair companies help?

Credit repair agencies or companies can help with credit disputes by challenging negative or inaccurate information on your behalf. They typically review an individual’s credit report for any errors or inaccuracies and dispute with the credit bureaus. The credit bureaus then investigate the conflict and must remove inaccurate information from your credit report.

Credit repair companies may also help people improve their credit by providing education and advice on credit-related issues, such as budgeting and reducing debt.

However, it’s important to note that credit repair agencies can’t remove accurate and negative information from a credit report.

While credit repair companies may help in some cases, it’s also possible to dispute credit report errors on your own for free. The Fair Credit Reporting Act requires credit bureaus to investigate disputes within thirty to forty-five days. Negative information is removed from the report if the dispute is valid.

Additionally, it’s essential to be cautious when working with credit repair companies. Some may use unethical practices, such as promising to remove accurate negative information from a credit report. Some may also charge excessive fees or require advance payments, warning signs of a potential scam.

How to maintain an accurate credit report?

It is crucial to keep an eye out for your credit report. One way to maintain your credit report is to ensure that your payments are on time. You can enable automatic payments or payment reminders to avoid late payments. 

Keep credit card balances low. Ideally, you should aim to keep your credit card balances below thirty percent of your credit limit. Avoid opening new credit accounts. Opening too many new ones in a short time can negatively impact your credit. 

Regularly check your credit reports for any suspicious activity on your accounts, and report any instances of fraud to the credit bureaus immediately. Use credit wisely and have a solid budget to manage your debts effectively. Don’t take out loans you can’t afford to repay.

You must ensure the accuracy of your credit report to maintain good credit and financial health. Additionally, checking your credit report can help you stay on top of any issues that may arise. This allows you to address them before they become a bigger problem.

Endnote

Everyone wants a clear credit report and good credit history. We hope the listed points can help you resolve disputes and repair your credit.

While fixing your credit, you may need help from a credit repair company to raise a dispute. Or hire a credit repair service provider like Cool Credit. Schedule a free consultation with Cool Credit to fix your credit or boost it.