What Happens When You File a Dispute on Your Credit Report?

Credit

When you have inaccurate information on your credit report, it’s important to dispute it, especially if the negative information lowers your credit score.

man viewing disute letter

It’s your responsibility and in your best interest to fix your credit history whenever you see a problem, and there are legal steps you can take to resolve most issues.

Sometimes negative information can show up on your credit report that doesn’t belong to you. It could be from identity theft, or perhaps the credit bureaus have mistaken you with a family member or someone else with a similar name as you. It’s even possible that they have the wrong address or social security number as well.

Duplicate accounts have also been known to appear, or older information improperly deleted from a database. If you find credit report errors, the Consumer Financial Protection Bureau recommends that you contact the credit bureaus and file a credit report dispute.

If you recognize the nature of the mistake, it will help to gather documentation to prove the validity of your credit dispute to the credit reporting agencies. You can find more information about mailing credit dispute letters here. Make sure you always send the dispute letters via certified mail.

Do the credit bureaus actually investigate disputes?

Yes, the three major credit bureaus are obligated by law to investigate credit report disputes. The question is how well they do it. According to the FCRA, they are required to investigate your disputes unless they consider them to be “frivolous.”

If your dispute is valid, the credit bureau will correct your credit report, but it could take some persistence on your part. After receiving your dispute letter or online dispute, it’s their responsibility to look into the matter.

Why do they have to investigate?

According to the Fair Credit Reporting Act (FCRA), section 611:

if the completeness or accuracy of any item of information contained in a consumer’s file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable investigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the credit file in accordance with paragraph (5), before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute from the consumer or reseller.

In other words, when you submit a dispute request, they must investigate it free of charge within 30 days or remove the item. If they don’t have proof of their verification, they have to fix the problem.

Understanding How Credit Bureaus Investigate Disputes

Knowing how they conduct their investigations or don’t conduct them can make it easier to understand why it’s often difficult to get items removed.

Even though you make an effort to correct a matter, the credit bureau often won’t make the same effort on their end. The reason is that most credit bureaus handle initial disputes using a computerized system that doesn’t necessarily correct the issue.

This system is known as e-OSCAR, and all three major credit reporting agencies use it to investigate disputes.

It may resolve the problem in some cases, but it’s not guaranteed to provide a solution. It’s also not considered sufficient, according to case law, which has shown it to propagate the same bad account information repeatedly.

Problems with computerized investigations are twofold. On one hand, they rarely represent a reasonable investigation. They can’t ensure the validity of given items when mistakes are propagated across multiple databases.

On the other hand, sometimes a weak debt validation comes back repeating the same bad information and including more bad information of a different nature. The credit bureaus will often take this additional bad information and include it in your personal credit report, which only adds insult to injury.

The Way It Really Is

Ideally, credit bureaus would thoroughly investigate disputes. However, in reality, they can’t be bothered and can’t easily be held accountable.

Beyond using computer programs that often repeat negative information, their most common method of investigating is to claim items are valid without investigating anything.

Case by case, there’s no good way to confirm or deny what they claim to be doing. So, unfortunately, if persistence doesn’t fix the problem, the only solution is often filing a lawsuit against them.

What if my credit report dispute is not resolved?

If a credit bureau doesn’t resolve your disputes, it can mean several things:

  • the original information providers who reported the item were able to prove its accuracy to the credit reporting agencies
  • the information that was investigated was incomplete
  • the credit reporting agencies have deemed your dispute “frivolous” and won’t pursue it
  • or the CRCs are being lazy and refusing to look into the matter. There are a few things you can still do.

Adding a Statement to Your Consumer Credit Reports

One step you can take in any of these cases is to request that a statement of your dispute be put into your future credit reports. This brief statement will show you contested entries even though the credit bureau did not remove them.

Providing such a statement shows you disagree with the validity of the information. The statement might not be useful in many instances and won’t repair your credit, nor will it necessarily help you when you need better credit scores.

Those who pull your credit will often never read such a statement because they are only interested in looking at the numbers representing your credit score.

If you do choose to ask for such a statement, you can also ask the credit bureau to send the denial statement to everyone who recently received a copy of your credit report.

Note: Some bureaus may request payment for this service.

Pursuing Disputes and Investigations Further

To pursue the matter further, it’s your right to request information on the method the credit bureau used to obtain their verification, as well as the details of said verification.

You can find more about this procedure in section 611 of the FCRA, which states:

(5) Treatment of Inaccurate or Unverifiable Information
(A) In general. If, after any reinvestigation under paragraph (1) of any information disputed by a consumer, an item of the information is found to be inaccurate or incomplete or cannot be verified, the consumer reporting agency shall–
(i) promptly delete that item of information from the file of the consumer, or modify that item of information, as appropriate, based on the results of the reinvestigation; and
(ii) promptly notify the provider of the information that the information has been modified or deleted from the file of the consumer.

Proof of Verification

According to the law, it is your right to receive proof of the verification, and if that proof is missing, to have the inaccurate entry deleted from your credit report. In addition, if there is no evidence or it’s unsatisfactory, you can rechallenge it or file a suit in court.

If you want to pursue the investigation further, use the phone number on your returned credit report or letter in which verification is claimed. Call the credit bureau and let them know you would like proof of the verification method and details about it.

If the credit bureau asks you to open another dispute, agree to do so. If they need more information, use whatever information, or lack of information (names, numbers), you initially found when you sent your first letter of dispute.

If they still refuse to offer proof of the verification method or details about it, inform them you will sue them for non-compliance under section 616 of the FCRA.

Seeking Legal Redress from Credit Bureaus

It is your right to seek a legal remedy when they won’t work with you according to the rules and guidelines established by law.

When faced with a potential consumer lawsuit, the credit bureau might find it easier to remove the information from your credit report and fix your credit history, but you’ll need to have a good case.

You can let them know you will sue for non-compliance under section 616 of the FCRA. Or you might be able to sue for defamation. Let them know you’ve been talking to an attorney and that you know your rights.

You might need to contact a lawyer to send an “intent to sue” letter. Finally, you can also file a complaint with the Federal Trade Commission.

Lauren Ward
Meet the author

Lauren is a Crediful writer whose aim is to give readers the financial tools they need to reach their own goals in life. She has written on personal finance issues for over six years and holds a Bachelor's degree in Japanese from Georgetown University.