How To Dispute a Credit Report Error Without Accidentally Hurting Your Score
Getting a free copy of your credit report each year gives you a snapshot of your current score and the items that are influencing it. However, the credit bureaus aren’t perfect and it is possible to find an error on your report. A loan you fully paid off may still show up in your report and incorrect limit and balance amounts are some of the errors that can drag your credit score.
In most cases, you can dispute your credit report without any negative impact on your credit score. Some exceptions apply, but they are rare.
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Credit Bureaus Cannot Hurt Your Score
The actual act of disputing a credit report will not hurt your credit score. The Fair Credit Reporting Act requires lenders and credit bureaus to review any disputes thoroughly without hurting your credit score. These institutions can’t reduce your credit score out of spite.
A credit bureau must investigate the dispute within 30 days. The countdown goes to 45 days if you provide any additional information after filing your initial dispute. In the unlikely event that a credit bureau ignores your complaint, you can directly contact the Consumer Financial Protection Bureau to resolve the issue.
Some Errors Are Improving Your Credit Score
The main way you can hurt your credit score by disputing a report is if the errors were actually helping you. For instance, if you have a $10,000 credit limit and it shows up as a $15,000 credit limit on your report, that higher credit limit is actually helping your credit score. High credit limits improve your credit utilization ratio, which makes up 30% of your FICO score.
However, a credit bureau isn’t allowed to nose around in your report. If you dispute a late payment for one of your credit cards, the credit bureau can only review the credit card and the late payment in question. Not questioning these rare types of errors and focusing on mistakes that are actually dragging your credit score can help you capture the upside of credit report disputes.
Updated Credit Age
Another risk is that the person who is correcting your credit report may change your debt’s age by mistake. For instance, if you took out a loan five years ago and are disputing a late payment on your report, the credit bureau may accidentally say you took out the loan this year instead of five years ago.
That error will reduce your credit history, which translates into a lower credit score. That’s why it is good to get a copy of your credit report after corrections have been made and see if any new have appeared in it.
How To File a Dispute With a Credit Bureau
After you have gathered the paperwork and highlighted the mistakes on your credit report, you must file your dispute with Equifax, Experian or TransUnion. All three of them let you file disputes online, but you can also mail your dispute to one of their headquarters.
Contacting one of the major credit bureaus is a good start, but you should also contact the original creditor. Let them know an error showed up in your report and ask them to verify that it is an error. A creditor who determines it is an error is legally required to inform all major credit bureaus about the mistake.
Then, it comes down to waiting for the investigation results. If it’s in your favor, you may see a small increase in your credit score. Just make sure you do not file a dispute right before getting an important loan like a mortgage. Most lenders will not want to do business with you during an ongoing dispute.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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