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According to federal law, you have the right to dispute information that appears on your credit report with the reporting bureau and the business that provided the information. Filing a dispute is free of charge, and the credit reporting agencies may make adjustments in light of the data you submit.
If your credit report improves and your credit score rises, this can be very good news. But it’s possible that your credit score actually suffers when information on your reports is altered.
Here’s a closer look at the reasons your credit score might have decreased following a dispute, along with some other typical causes.
Let’s face it, credit reports can be a confusing beast. Comprising technical terms and intricate algorithms, comprehending their operation and navigating them can resemble climbing Mount Everest while wearing flip-flops. Don’t worry, brave credit explorer—we’re here to help you understand the world of credit report disputes and provide an answer to the crucial query: will a dispute negatively impact your credit?
Spoiler alert: disputing inaccurate information on your credit report is your right, and it doesn’t directly impact your credit score. However, depending on the outcome of the dispute and the changes made to your report, your score might see a positive or negative shift. Buckle up as we delve deeper into the fascinating world of credit report disputes and their impact on your credit score.
Dispute, Dispute, Dispute: Your Right to Challenge Inaccuracies
Imagine this: you’re applying for a loan only to be denied because of a mystery late payment on your credit report. You know you’ve never missed a payment so what gives? This is where the power of the dispute comes in. You have the right to challenge any inaccurate information on your credit report, be it a late payment, an unfamiliar account, or even an incorrect address.
Filing a Dispute: A Step-by-Step Guide
- Identify the Inaccuracy: The first step is to pinpoint the erroneous information on your credit report. This could be anything from a late payment that never happened to an account you never opened.
- Choose Your Weapon: You can file a dispute directly with the credit bureau (Experian, TransUnion, or Equifax) or through the creditor who reported the inaccurate information.
- Gather Your Evidence: The more evidence you have to support your claim, the better. This could include payment receipts, account statements, or even a signed affidavit.
- Submit Your Dispute: Each credit bureau has its own online dispute portal where you can submit your claim. Make sure to include all the relevant details and evidence.
- Wait and See: The credit bureau has 30 days to investigate your dispute and respond. They may contact you for additional information or clarification.
The Outcome: What Happens After You Dispute
There are three possible outcomes to a credit report dispute:
- The Information is Corrected: This is the ideal scenario. The credit bureau verifies your claim and removes the inaccurate information from your report. Your credit score may improve as a result.
- The Information Remains: The credit bureau investigates and finds the information to be accurate. In this case, the information stays on your report, and your credit score may not change.
- The Information is “Processed”: This means the credit bureau updated or deleted the information from your report. However, if the information is later verified by the data furnisher, it may be re-added to your report.
Dispute and Your Credit Score: A Delicate Dance
While disputing inaccurate information doesn’t directly impact your credit score, the changes made to your report as a result of the dispute can have an effect. Here’s how:
- Removing Negative Information: If a dispute leads to the removal of negative information like late payments or collections, your credit score may increase.
- Adding Positive Information: If a dispute results in the addition of positive information like a previously unreported account, your credit score may also increase.
- No Change: If the disputed information is found to be accurate or if the dispute doesn’t lead to any changes, your credit score will remain the same.
Dispute and Your Credit Score: A Few Caveats
- Timing is Key: If you’re planning to apply for new credit soon, it’s best to wait until after your dispute is resolved. This ensures that your credit report reflects the most up-to-date information.
- Multiple Disputes: Filing multiple disputes in a short period can raise red flags with lenders and potentially harm your credit score.
- Credit Score Models: Different credit scoring models may weigh disputed information differently. So, even if a dispute results in a change to your credit report, it may not affect all your credit scores equally.
Dispute: Your Powerful Tool for a Healthy Credit Report
One of the most important things you can do to keep your credit score high is to dispute false information on your credit report. You can raise your creditworthiness and get better loan terms and rates by taking the time to dispute inaccuracies and make sure your report is accurate. Recall that you have the right to dispute anything, so don’t be afraid to do so if you think something is wrong.
Additional Resources for Your Credit Report Journey
- Experian Dispute Center: https://www.experian.com/disputes/
- TransUnion Dispute Center: https://www.transunion.com/credit-help/disputes
- Equifax Dispute Center: https://www.equifax.com/personal/disputes/
- Consumer Financial Protection Bureau (CFPB): https://www.consumerfinance.gov/ask-cfpb/if-i-dispute-a-debt-how-does-that-show-up-on-my-credit-report-en-1363/
Remember, knowledge is power when it comes to your credit report. By understanding how disputes work and their potential impact on your credit score, you can take control of your financial future.
Late or Missed Payment
Your credit score is largely determined by your payment history, or whether you have a history of making on-time debt payments. In fact, it makes up 35% of your FICO score, which is calculated by the Fair Isaacs Corporation. Your score will likely fall if you make late payments or if you miss payments entirely.
Correcting Errors on Your Credit Report
You can dispute an error you find on your credit report by contacting the credit reporting agency. You might need to submit a separate dispute to each credit bureau because the error might be on your credit report with them all.
If there is a dispute form available from the credit reporting bureau, you must use it to submit your disagreement in writing. Include documents that support your dispute, and be sure to keep a record of what you send.
To make sure that your credit score is as accurate as possible, disputing information on your credit report can be crucial. You won’t be penalized for disputing something, but if the information in your dispute negatively affects your credit, there’s a chance it could lower your credit score.
Keep close tabs on your finances and make sure you always make your payments on time if you want to keep your credit score high. To help you stay on track, SoFi offers free credit score monitoring, spending breakdowns, and financial insights.
Do Credit Disputes Affect Your Chances of Getting A Loan?
FAQ
Does disputing charges hurt your credit?
Why did my credit score go down after a dispute?
Will my credit score go up if I win a dispute?
Is it a good idea to dispute credit report?
What happens if I dispute my credit report?
The credit bureaus must investigate your dispute and then tell you the outcome in writing. Under most circumstances, the bureaus have to respond within 30 days. The bureau will remove the item and send you a new copy of your credit report. Review the new report to make sure it’s right.
Does disputing a credit card charge hurt your credit?
Disputing a credit card charge does not hurt your credit. However, if the information on your credit report changes because of the dispute, your score may change accordingly. Credit agencies can also note the dispute by placing the “XB” code on your account, which simply means the dispute is under investigation. This will not impact your credit.
Can a dispute change a credit report?
A dispute only changes the contents of your credit report if the challenged information is inaccurate. Experian and the other national credit bureaus send the dispute to the source of the information to verify it before changing a credit report.
Does disputing a credit report affect your credit score?
Disputing credit report inaccuracies doesn’t affect your credit, but some changes made in response to disputes can help your credit scores. The removal of inaccurate late payments, new-credit inquiries or bankruptcies could result in credit score increases.