Archive for September, 2008
Dispute Credit – Avoid This Common Mistake
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If you have ever tried to dispute items on your credit report, you may have received a response from the credit bureaus stating they performed their “investigation.” The bureaus may also tell you that they “verified” whatever item you disputed. This means that negative item will remain on your credit report.
The Fair Credit Reporting Act (FCRA) allows you to attach a 100-word essay to your credit report. This is the opportunity to explain the negative information and argue that you deserve new credit.
It is surely tempting to tell your side of the story by way of the “consumer statement.” It appears as your opportunity to explain why you have negative items on your credit report. There probably is a good reason why you were late on that payment. Perhaps you were sick or got laid off from your job.
Do not fall into the trap of adding a consumer statement to your credit. It is almost never a good thing.
This “concession” by the credit bureaus is not a concession at all. In fact, the 100-word statement will only make matters worse for you.
Let’s assume that you were to attach a statement like this: “I was only late on my credit cards because I was laid off from work. Once I found another job I caught up on all my bills and have never been late since.”
Losing her job due to no fault of her own seems like a rotten reason to give her bad credit.
However, the credit bureaus and creditors read such a consumer statement entirely different. They don’t see a good person who went through some brief and unexpected hard times.
Credit bureaus interpret the situation as somebody who is irresponsible. They see her as a bad credit risk because she does not have enough savings to cover bills then things get tough.
Writing a 100-word statement can damage your credit for three more reasons. First, such a statement only cements the fact that you paid your bill late. Second, the credit bureaus already have confirmation that the late payments are accurate. Thus, should you dispute the items in the future, the credit bureaus will ignore that dispute or deem it “frivolous.” Third, any future creditor will expect you not to pay them should you run into another financial emergency.
As you can see, attaching a 100-word written statement to your credit report could possibly be the worst step you can take. In fact, it is only an option because it was part of the original Fair Credit Reporting Act enacted in the 1970’s. Thirty years ago bankers actually manually reviewed credit applications and read those statements personally.
In today’s digital world most applications are reviewed electronically. Thus, such a statement only serves as another way for the credit bureaus to ignore your credit report dispute.
In sum, ignore the temptation to tell your side of the story. Resist the urge to “justify” your being late on that credit card bill or car payment. Steer clear of adding the deadly 100-word consumer statement.
