How to Dispute Bad Credit
Learn how your score is calculated., Understand common reporting errors., Know your rights., Request a free credit report., Study your report., Gather supporting documents., Get the creditor’s address., Insert your address and the date., Open the...
Step-by-Step Guide
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Step 1: Learn how your score is calculated.
Your credit reports contain your history of payment (or non-payment).
With this information, a company called FICO calculates a score, which ranges from 300 to 850 (with a higher score being best).
The factors FICO uses to calculate the score include:payment history (about 35% of your score) how much of your available credit you have used (about 30%) length of credit history (15%) any new credit opened (10%) types of credit used (10%) -
Step 2: Understand common reporting errors.
If you fail to make a payment, open several new credit accounts at once, or are denied new credit, then your FICO score can fall.
However, sometimes creditors report inaccurate information.
You can dispute these inaccurate items and try to get them removed in the hopes of boosting your credit score.
These are common inaccuracies reported to credit reporting agencies:reporting incorrect payment status (such as “past due”) reporting a loan modification as a “foreclosure” stating that an account you closed was instead closed by a creditor refusing to remove negative information after seven years , The federal Fair Credit Reporting Act gives consumers the right to challenge inaccurate or incomplete information.
If the credit reporting agency cannot verify the disputed information, then it must delete or correct it within 30 days.Credit reporting agencies (CRAs) also cannot report negative information that is too old.
For example, negative information more than seven years old should not appear on your report.
Bankruptcies more than 10 years old cannot be reported, either.The law also allows you to seek damages from any violator.
If the CRA does not timely remove unverified information or does not perform a proper investigation, then you might be able to sue in court. , You are entitled to one free credit report every year.
You may request it over the phone, online, or through the mail.To request by phone, call 1-877-322-8228.
To order online, visit annualcreditreport.com and request a report.
To request a copy of your report by mail, send a written request to Annual Credit Report Request Service, P.O.
Box 105281, Atlanta, GA 30348-5281.
You can use the Federal Trade Commission’s form available at http://www.consumer.ftc.gov/articles/pdf-0093-annual-report-request-form.pdf. , Once you receive your report, you should study it closely to find any negative information that is erroneous.
You cannot get negative information removed if it is accurate.
However, you should challenge any negative information you believe has been reported mistakenly. , To strengthen your position, you should try to gather evidentiary support that an error was made.
For example, if you see that a credit card payment is listed as more than 60 days past due, then you should try to find cancelled checks that show payment had been made and accepted before that date.
If a creditor erroneously reported a loan modification as a “foreclosure,” then get copies of the modification agreement. , You should always send a letter to both the credit reporting agencies as well as any creditor who forwarded negative information in error.
Generally, the creditor’s address should appear on the credit report.
If not, then contact the CRA on which the negative information appears and ask for a phone number or mailing address. , Begin your letter by opening a blank word processing document.
You should insert your address first, aligning it with the left-hand margin.
After typing the address, move down two lines and enter the date.Two lines beneath the date, you should enter the credit reporting agency’s address. , You can use a contact person’s name if you have one.
Otherwise, you can open the letter with “Dear Sir or Madam:”., You should use the first paragraph to explain why you are writing.
For example, you can type, “I am writing to dispute the following information in my file.
I have highlighted the items I wish to dispute on the attached copy of my credit report.”, You should use the second paragraph to identify the items you want investigated.
Also request that the item be removed from your report.
You can write, “The item listing a foreclosure is inaccurate, as I received a loan modification instead.
I am requesting that you remove the item from my report.”, In the third paragraph, tell the CRA what documents you have enclosed that support your position.
Be sure to send photocopies because the CRA probably won’t return them.
Here is some sample language: “Enclosed are the loan modification documents.
Please reinvestigate this matter and delete the disputed item as soon as possible.”, Type “Sincerely,” and then leave enough space for your signature.
Below this space type your name.You should sign the letter in black or blue ink.
Remember to type “Enclosure:” at the very bottom of the letter.
Then list any enclosures, such as a copy of your credit report., You should mail the letter first class, return receipt requested to each of the three CRAs.Hold onto your receipts.
They will serve as proof that the credit reporting agency received the letter.
Be sure to keep copies of all of the letters that you send.
Maintaining proper documentation of your communications is critical. , Each CRA has a website on which you can report errors.
Before beginning, identify the credit report number on the credit report that you wish to dispute.
You can reach Equifax’s online dispute system by visiting its website at www.equifax.com and clicking on the “Credit Report Assistance” tab at the top.
Then select “Dispute info on credit report.”To reach Experian’s online dispute system, visit the website at www.experian.com and click “Disputes” under the “Consumer Assistance” heading.You can reach TransUnion’s online dispute system by visiting its website at www.transunion.com and clicking on the “Credit Reports, Disputes, Alerts & Freezes” tab at the top of the page., CRAs may request additional documentation or information from you in order to facilitate investigation.
You should provide this information as soon as possible. , Even if you use the online reporting system, you should still send a letter to each CRA.
By sending a letter, you maintain a hard copy record of your communication.
Also save the receipt that shows that the letter was delivered to the CRA. , A CRA is required to investigate any dispute typically within 30 days of its filing.As part of the investigation, the credit reporting agency forwards the information you provide to the organization that reported the information.The contacted creditor will then investigate the disputed information.
If the creditor cannot verify the disputed information, then it must notify all three national CRAs.Once the CRA completes its investigation, it must send you the results in writing.
It must also send you a written notice that contains the name, address, and phone number of the creditor who reported the disputed information. , Lenders will look at your credit history (including your score) to determine whether to extend a loan.
Other parties also may want to look at your credit history.
For example, many landlords now pull credit reports in order to gauge whether they want to rent to an applicant.
You may also need to give permission to prospective employers to look at your credit history.
In 2012, 47% of employers conducted credit checks., You have the option of submitting a statement of dispute if the CRA does not find that the information was reported erroneously.
The statement can be up to 100 words.
Both Experian and TransUnion allow you to add multiple statements, but Equifax allows you to add only one.The purpose of this brief statement is to explain your side of the story.
You can explain why you believe the disputed item has been included erroneously on your report.
You can also use the statement if you have a legitimate reason for having messed up your credit.
For example, if medical issues caused you to be late in your payments, then you might want to explain that fact in your statement.You should also think about not adding a statement.
Instead, you could explain the reasons for your poor credit to any lender or employer/landlord you eventually meet with in person., If you need to explain a poor credit score to a prospective employer or landlord, begin by acknowledging that your credit is poor.
You want to convey that you take financial fitness seriously, so don’t minimize it or claim it is no big deal.Be brief but honest.
If you got into financial difficulty because of an illness, say so.
Whatever the reason, explain it succinctly.
If you delve into too much detail, you threaten to make your credit history a bigger issue than it may be.You should practice telling your explanation to someone else.
Try to simplify your explanation so that it takes only a single sentence. , Instead of trying to minimize bad credit, explain what steps you are taking to improve your score.You might offer to show proof that you have been making payments diligently for the past year.
If you are submitting an application to a housing rental company, then you can submit four months’ worth of bank statements and paystubs along with the application.
You could also submit a recent tax return.
This information will bolster your argument that you have taken steps to improve your credit. -
Step 3: Know your rights.
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Step 4: Request a free credit report.
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Step 5: Study your report.
-
Step 6: Gather supporting documents.
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Step 7: Get the creditor’s address.
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Step 8: Insert your address and the date.
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Step 9: Open the letter with a salutation.
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Step 10: Explain why you are writing.
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Step 11: Identify which items you dispute.
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Step 12: Identify the supporting documentation included.
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Step 13: Conclude the letter.
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Step 14: Mail the letter.
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Step 15: Use the online dispute systems.
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Step 16: Provide any requested additional documents.
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Step 17: Follow up with a letter.
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Step 18: Wait for results.
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Step 19: Understand when your credit score might be used.
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Step 20: Submit a statement of dispute.
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Step 21: Explain how you got bad credit.
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Step 22: Describe steps you are taking to improve your credit.
Detailed Guide
Your credit reports contain your history of payment (or non-payment).
With this information, a company called FICO calculates a score, which ranges from 300 to 850 (with a higher score being best).
The factors FICO uses to calculate the score include:payment history (about 35% of your score) how much of your available credit you have used (about 30%) length of credit history (15%) any new credit opened (10%) types of credit used (10%)
If you fail to make a payment, open several new credit accounts at once, or are denied new credit, then your FICO score can fall.
However, sometimes creditors report inaccurate information.
You can dispute these inaccurate items and try to get them removed in the hopes of boosting your credit score.
These are common inaccuracies reported to credit reporting agencies:reporting incorrect payment status (such as “past due”) reporting a loan modification as a “foreclosure” stating that an account you closed was instead closed by a creditor refusing to remove negative information after seven years , The federal Fair Credit Reporting Act gives consumers the right to challenge inaccurate or incomplete information.
If the credit reporting agency cannot verify the disputed information, then it must delete or correct it within 30 days.Credit reporting agencies (CRAs) also cannot report negative information that is too old.
For example, negative information more than seven years old should not appear on your report.
Bankruptcies more than 10 years old cannot be reported, either.The law also allows you to seek damages from any violator.
If the CRA does not timely remove unverified information or does not perform a proper investigation, then you might be able to sue in court. , You are entitled to one free credit report every year.
You may request it over the phone, online, or through the mail.To request by phone, call 1-877-322-8228.
To order online, visit annualcreditreport.com and request a report.
To request a copy of your report by mail, send a written request to Annual Credit Report Request Service, P.O.
Box 105281, Atlanta, GA 30348-5281.
You can use the Federal Trade Commission’s form available at http://www.consumer.ftc.gov/articles/pdf-0093-annual-report-request-form.pdf. , Once you receive your report, you should study it closely to find any negative information that is erroneous.
You cannot get negative information removed if it is accurate.
However, you should challenge any negative information you believe has been reported mistakenly. , To strengthen your position, you should try to gather evidentiary support that an error was made.
For example, if you see that a credit card payment is listed as more than 60 days past due, then you should try to find cancelled checks that show payment had been made and accepted before that date.
If a creditor erroneously reported a loan modification as a “foreclosure,” then get copies of the modification agreement. , You should always send a letter to both the credit reporting agencies as well as any creditor who forwarded negative information in error.
Generally, the creditor’s address should appear on the credit report.
If not, then contact the CRA on which the negative information appears and ask for a phone number or mailing address. , Begin your letter by opening a blank word processing document.
You should insert your address first, aligning it with the left-hand margin.
After typing the address, move down two lines and enter the date.Two lines beneath the date, you should enter the credit reporting agency’s address. , You can use a contact person’s name if you have one.
Otherwise, you can open the letter with “Dear Sir or Madam:”., You should use the first paragraph to explain why you are writing.
For example, you can type, “I am writing to dispute the following information in my file.
I have highlighted the items I wish to dispute on the attached copy of my credit report.”, You should use the second paragraph to identify the items you want investigated.
Also request that the item be removed from your report.
You can write, “The item listing a foreclosure is inaccurate, as I received a loan modification instead.
I am requesting that you remove the item from my report.”, In the third paragraph, tell the CRA what documents you have enclosed that support your position.
Be sure to send photocopies because the CRA probably won’t return them.
Here is some sample language: “Enclosed are the loan modification documents.
Please reinvestigate this matter and delete the disputed item as soon as possible.”, Type “Sincerely,” and then leave enough space for your signature.
Below this space type your name.You should sign the letter in black or blue ink.
Remember to type “Enclosure:” at the very bottom of the letter.
Then list any enclosures, such as a copy of your credit report., You should mail the letter first class, return receipt requested to each of the three CRAs.Hold onto your receipts.
They will serve as proof that the credit reporting agency received the letter.
Be sure to keep copies of all of the letters that you send.
Maintaining proper documentation of your communications is critical. , Each CRA has a website on which you can report errors.
Before beginning, identify the credit report number on the credit report that you wish to dispute.
You can reach Equifax’s online dispute system by visiting its website at www.equifax.com and clicking on the “Credit Report Assistance” tab at the top.
Then select “Dispute info on credit report.”To reach Experian’s online dispute system, visit the website at www.experian.com and click “Disputes” under the “Consumer Assistance” heading.You can reach TransUnion’s online dispute system by visiting its website at www.transunion.com and clicking on the “Credit Reports, Disputes, Alerts & Freezes” tab at the top of the page., CRAs may request additional documentation or information from you in order to facilitate investigation.
You should provide this information as soon as possible. , Even if you use the online reporting system, you should still send a letter to each CRA.
By sending a letter, you maintain a hard copy record of your communication.
Also save the receipt that shows that the letter was delivered to the CRA. , A CRA is required to investigate any dispute typically within 30 days of its filing.As part of the investigation, the credit reporting agency forwards the information you provide to the organization that reported the information.The contacted creditor will then investigate the disputed information.
If the creditor cannot verify the disputed information, then it must notify all three national CRAs.Once the CRA completes its investigation, it must send you the results in writing.
It must also send you a written notice that contains the name, address, and phone number of the creditor who reported the disputed information. , Lenders will look at your credit history (including your score) to determine whether to extend a loan.
Other parties also may want to look at your credit history.
For example, many landlords now pull credit reports in order to gauge whether they want to rent to an applicant.
You may also need to give permission to prospective employers to look at your credit history.
In 2012, 47% of employers conducted credit checks., You have the option of submitting a statement of dispute if the CRA does not find that the information was reported erroneously.
The statement can be up to 100 words.
Both Experian and TransUnion allow you to add multiple statements, but Equifax allows you to add only one.The purpose of this brief statement is to explain your side of the story.
You can explain why you believe the disputed item has been included erroneously on your report.
You can also use the statement if you have a legitimate reason for having messed up your credit.
For example, if medical issues caused you to be late in your payments, then you might want to explain that fact in your statement.You should also think about not adding a statement.
Instead, you could explain the reasons for your poor credit to any lender or employer/landlord you eventually meet with in person., If you need to explain a poor credit score to a prospective employer or landlord, begin by acknowledging that your credit is poor.
You want to convey that you take financial fitness seriously, so don’t minimize it or claim it is no big deal.Be brief but honest.
If you got into financial difficulty because of an illness, say so.
Whatever the reason, explain it succinctly.
If you delve into too much detail, you threaten to make your credit history a bigger issue than it may be.You should practice telling your explanation to someone else.
Try to simplify your explanation so that it takes only a single sentence. , Instead of trying to minimize bad credit, explain what steps you are taking to improve your score.You might offer to show proof that you have been making payments diligently for the past year.
If you are submitting an application to a housing rental company, then you can submit four months’ worth of bank statements and paystubs along with the application.
You could also submit a recent tax return.
This information will bolster your argument that you have taken steps to improve your credit.
About the Author
Nancy Gomez
Enthusiastic about teaching hobbies techniques through clear, step-by-step guides.
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