What is the impact of a credit dispute on my credit reports?

Collections--qmWhen you get a copy of your credit report you should review it for accuracy.  If you find any errors on your credit reports you should contact the credit bureaus and dispute the information. The credit bureaus have 30 to 45 days to complete their investigation pursuant to your dispute. These are your rights and you should do this at least once a year.

Dispute indicator

The account in dispute will be coded on the credit report to indicate that it is being investigated.  Disputed accounts are all but ignored by credit scores, but are not removed from your credit report while they are being disputed.

If the account in dispute is past due, it can have a negative impact on your scores.  Since it is in dispute, it is not being considered by the scoring models and your scores could improve, albeit temporarily. If the results of the dispute are in your favor, the account is updated or removed permanently, or until the furnisher responds.

Disputing all negative

Some companies will advise their clients to dispute all negative information on their credit reports just before applying for a loan.  The reason is that disputed accounts are almost totally bypassed by credit scores and your scores will likely increase. This tactic isn’t new.

Credit bureaus are allowed to ignore frivolous disputes, per the Fair Credit Reporting Act.  And, lenders are familiar with this tactic and may wait until the disputes have been investigated and resolved prior to approving a loan.

It’s best to dispute the items that you believe are incorrect or cannot be verified.

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, founder of www.creditexpertwitness.com and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  You can follow John on Twitter here.


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