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Credit Reports: How to Dispute Any Negative Item 
 
by Brian Thompson August 26, 2005

Many people believe that improving a credit report with negative items literally takes years. In reality, with a little knowledge of the law, almost anything on a credit report can be disputed. Even better, the burden of proof in regards to determining if a negative item belongs on a person's credit report lies with the credit bureaus.

Of all the records in a person’s life—from bank records to driving records—a credit report seems to be the one true permanent record. For a person with past credit problems, a credit report is probably the one record that is feared the most. In fact, many people with credit problems try to avoid looking at their credit report simply because it brings back memories that they would much rather forget.

Even worse, once bad payment histories have been placed on a credit report, it seems almost impossible to remove the negative marks. If you listen to many of the financial gurus, they will tell you that it takes years to remove late payments histories and charged-off accounts from a credit report.

In reality, however, the opposite can be true. Most people do not realize that when it comes to removing items from their credit reports, the law is actually on their side. With a little knowledge, and the proper tools, removing negative items from your credit report can take mere months—not years.

The information contained within this article is not theory or pie-in-the-sky ideas. They are tried and true methods that have been used by others to quickly and easily repair a negative credit report. The real secret to using this information successfully is using the techniques diligently—and not getting frustrated by the process. The financial gurus may be wrong that negative marks cannot be removed from a credit report, but they are correct in saying that a negative credit report was not created overnight—so it will not be repaired overnight, either.

Credit Reports: A Quick Lesson

For those people who have ever been turned down for a credit card or loan, they have probably had to quickly get educated about a credit report. Credit reports are records of payment histories. When a credit card of loan is taken out, the lender typically reports how a person pays on that loan to the three major credit bureaus—Experian, TransUnion, and Equifax.

If a person always pays their credit cards and other loans on time, the lenders report this to the credit bureaus. However, if you are a month late—or worse, two months late—this is also reported. The more records that show late payments, and the longer the duration of the late payments, the lower your credit score becomes. Lower credit scores usually resort is more difficulty acquiring credit cards and loans, and higher interest rates when you do.

Besides late payments, there are other things that can lower a person’s credit score. Of course, the biggest hit that a credit report can take is a bankruptcy. However, many people do not realize that applying for a lot of credit also lowers their credit score. Every time that a lender obtains a copy of your credit score, a record of that—called an inquiry—is noted on your report. Having several inquiries in a three month period results in a lower score.

In addition, opening several new lines of credit at the same time can lower your credit score. This is viewed as a problem because other lenders view having access to too much new credit as a potential risk. People who experience financial hardships often rely on their credit cards, regardless of whether they can make the payments at the end of the month.

Finally, it is important to realize that payment histories of past credit cards, loans, and bankruptcies remain on a credit report for 7-10 years. The past two years of payment histories are usually the most important, but the record of a charged-off credit card can remain for a decade.

The credit bureaus make their money by storing your information, and then selling it to companies who want to check up on your credit history before extending a loan. Many people are under the assumption that these companies are doing a public service, and by virtue of that public service have some sort of obligation to make sure that their information is 100% accurate.

In reality, while these companies do make every attempt to keep accurate records, they are in the business of making money. They make that money by selling their records, not by being fact-checkers and researchers for the masses. The fact that many people have inaccurate information on their reports is what helps the person who wants to clear negative information that is correct from their report.

What the Law Says

Federal credit laws state that any item on a credit report can be disputed to the credit bureaus. The beauty of this is that the laws also state that any dispute must be invested, and the burden of proof lies with the bureaus—not the individual.

In addition, the credit bureaus have 30 days from the time they receive the dispute to investigate it. After 30 days, if they cannot confirm the dispute with the lending company, then they must remove the record from the credit report. All of this is much to the advantage to the consumer.

When the credit bureaus investigate a disputed item, they typically contact the lender either by phone or with some type of message. Well, let’s consider that lenders are constantly sending data to the bureaus, as well as being asked for information concerning disputes. It is easy to see that not all disputes receive a reply. In fact, some lending companies are pretty good and not answering disputes. This is another plus for a person trying to erase negative information

Finally, and perhaps most importantly, the law says that anything can be disputed—even if it is accurate. So, if you have negative marks that are true, they can still be disputed and must be investigated by the bureaus. This includes open lines of credit, inquiries, and even bankruptcies.

How to Write a Dispute

The best and most effect way to dispute items on a credit report is in a letter. Many companies offering access to credit reports now give online methods to dispute items. In addition, the credit bureaus themselves have their own forms and methods. The bottom line is simple: DO NOT USE THEM!

The reason for this is that it makes the job of the credit bureaus easier. If you use their forms, they typically do not take the dispute as seriously. A written letter from the consumer shows that you have taken the time to investigate your credit report, and you believe something is incorrect and needs investigation.

When writing to the bureaus, it is important to include certain things, and to leave out others. First, you want to state that you have reviewed your credit report and have found mistakes. Then, you want to list each mistake. Next to each item you are disputing, simply list that the record is not yours. Do not give any further details. The more information you give, the less work the credit bureaus have to do—and the more likely they are to confirm the item and leave it on your report.

After your have listed each item that you wish to dispute, the final paragraph of the letter should read something similar to that listed below:

“Please investigate these inaccuracies and remove them from my report. Under the Fair Credit Reporting Act, 30 days constitutes a reasonable time to remove the mistakes. In addition, if you confirm any of these items, you must supply the names and addresses of the people contacted.”

This tells the credit bureaus that you understand your rights under the law, and that you are serious about wanting to correct your credit report!

When to Dispute

There are certain times of the year when disputing items with the credit bureaus can be more fruitful. The best time to send disputes to the credit bureaus is December. The time between Thanksgiving and New Year’s is filled with holidays. This gives the bureaus less time and fewer people to investigate disputes. In addition, the companies to whom they are sending disputes have less time and fewer people to respond.

Another important piece of information is that dispute letters can be sent every month. Simply because your dispute letter in July did not bring favorable results does not mean that you should stop. Send another one in August. Every time that a dispute is sent, an investigation must be done. This is one area where persistence can truly pay off.

Addresses

ExperianP.O. Box 2002Allen, TX 75013TransUnionP.O. Box 1000Chester, PA 19022

EquifaxP.O. Box 740241Atlanta, GA 30374


 




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