Credit Scores and Credit Reports, by Evan Hendricks

Chapter 6

Disputing Errors

As every man goes through life he fills in a number           
of forms for the record, each containing a number           
of questions. There are thus hundreds of little           
threads radiating from every man, millions of           
threads in all... Each man permanently aware of           
his own invisible threads, naturally develops a           
respect for the people who manipulate the threads.           

- Alexander Solzhenitsyn, Cancer Ward  

Disputing errors and otherwise improving both your credit score and credit report is an art and a science. It can also be a "crap shoot" — meaning, sometimes you cannot be sure what will happen.

There is no magic wand that can be waved. There usually is no "quick fix." There is no "one perfect way" to do it. To understand many of the reasons why this is true, you need to read the "advanced" chapters of this book covering the way that credit reports are assembled and the way the three major credit bureaus operate.

There is one potential shortcut: get your credit grant-or to tell the credit bureaus that your dispute is valid and that the error should be removed immediately. While credit bureaus are often skeptical of consumer disputes, they almost always trust the word of creditors, their paying customers.

You should be very cautious about using a "credit repair clinic." The Federal Trade Commission has charged some credit repair clinics with violations of the Credit Repair Organizations Act. (See Chapter 11 for more on credit repair, and on a few companies that say they ethically help consumers clean up their reports and handle their debts.)

In this "beginners" chapter, we will explore many of the straightforward ways that you, by yourself, can go about correcting errors or otherwise improving your credit score and credit report. This chapter will give you the basics of what you need to know and what you need to do to dispute errors and get them corrected. If the system works the way it is supposed to, this chapter may tell you everything you need to know. Sometimes the system actually works as it should — errors disappear within 30 days of a dispute, never to return. If you're lucky, it will work, as it should in your case too.

But proceed with caution and realistic expectations. The reason that credit report errors emerged as a political issue, and the reason Congress has twice amended the Fair Credit Reporting Act in the past seven years, is that the system for correcting inaccuracies does not always work as it should. A few of the well-known problems include:

• Credit bureaus refuse to delete inaccurate data because the credit grantor, through an automated system, "verified" it as accurate.


• Disputed information actually was deleted, but later was reinserted because the credit grantor thoughtlessly re-reported it, and the credit bureaus' "screens" failed to catch it.


• The credit bureaus' algorithms cause them to wrongly mix into your credit report data about people with similar names or SSNs.

Another important consideration is the tremendous volume of disputes that the bureaus must handle and the challenges this presents. According to deposition testimony, approximately 350 credit bureaus employees must process between 7,000 and 10,000 consumer disputes per day.

Because there is an average of three items disputed by each consumer, the credit bureau employees only have a few minutes for processing each disputed item.

To handle this volume, credit bureau employees must quickly enter a two-digit code describing the consumer's dispute, which is then sent via computer to the furnisher of the information. Most furnishers have an automated system, which merely checks to see if the data disputed by the consumer is identical to the data originally furnished by the credit grantor. If it is the same, the credit grantor "verifies" its accuracy and the credit bureau refuses to delete it. However, if the furnisher's original information is inaccurate, this automated exchange between it and the credit bureau fails to uncover the inaccuracy.

The approaches recommended in this chapter are designed to maximize your chances for resolving disputes with the minimum amount of time and effort. However, if credit bureaus or credit grantors initially fail to correct inaccurate information, these approaches should enhance your ability to enforce your basic right to an accurate credit report.

With these caveats in mind, we can proceed to discuss the basics of the dispute and correction process.

First Steps — A System For Documenting Your Disputes

Whether you look at it as a "project" or "part-time job," it is wise to keep careful track of your dispute-related communications with the three major repositories. You should create a folder for each of the three credit bureaus in which you can store copies of letters and attachments. It also is wise to maintain a log that records the date and time of your communications. The log is particularly important if you choose to conduct your disputes mainly over the Internet or by phone.

The fastest way to dispute errors is online, through each CRA's Web site. The second fastest was to dispute is over the telephone. But unless you are forced by the circumstance of a pending mortgage application or other high-pressure deadline, it is generally most prudent to conduct all disputes in writing via First Class certified mail. It will cost you $2.47 for each certified letter (or $7.38 for three). With the number on the certified mail receipt, you can go to the U.S. Postal Service's web site (www.usps.com) and verify that each credit bureau received your dispute letter. Print out a copy and place it in your newly created folder. For an extra $1.95 per letter ($5.85 for three), you can go the extra step of a "return receipt requested," which you can include in the folder upon its return from the credit bureau. Remember, keep copies of all letters, receipts, and attachments in the folder corresponding to Equifax, Experian, or Trans Union. If a credit grantor like Sears or MBNA is causing inaccuracies, you will want to create folders for them as well.

Some might find such record-keeping chores to be a "pain in the neck," but it's a greater pain down the road to have to prove that you disputed something when you don't have the documentation. As we will see, the FCRA imposes deadlines on the credit bureaus and credit grantors, and these deadlines can work to your advantage. Your record-keeping system can help show that you did what you were supposed to do, but that they did not meet the deadlines. Under the FCRA, if they don't meet the 30-day deadline for verifying disputed information, they are supposed to delete it and not reinsert it.

The Nature of Your Dispute

An important consideration in deciding how to proceed is the nature of the error or errors that you are planning to dispute. Again, if you are under a high-stakes deadline, where errors have lowered your credit score to the point that a mortgage will cost an extra several hundred dollars per month, you will probably want to dispute the errors online through the credit bureaus' Web sites. You may even want to involve an attorney. If you are applying for a mortgage or refinancing, ask your mortgage broker or lender to enlist the help of a reseller so you can benefit from "rapid re-scoring" of your credit report (see Chapter 3). If you are facing a mortgage or other deadline, say so in your dispute letter. The bureaus prioritize emergency disputes.

On the other hand, let's say you are not faced with a deadline and you have discovered Sears is reporting that last year, you were once 60-days late, and once 30-days late. To the best of your recollection, this was a result of a mistake by Sears, as it sent the bill to the wrong address. You found out about it because Sears called you at the correct phone number. You paid the bill right away. Sears admitted it was their mistake and apologized.

Because you finally obtained your credit report, you've discovered the mistake is showing up on two of your three credit reports. Because you used the online credit score simulator at the Fair Isaac or credit bureau Web site, you see that removing these derogatory tradelines will bump you up to a better risk category. In other words, it's worth getting it deleted because in a few months, you'll probably apply for some kind of credit or be up for an insurance renewal. In this case, it could be most effective to send a friendly, written dispute to the two credit bureaus, along with any supporting documentation, preferably a letter from Sears confirming your story. Again, it's even better if Sears directly notifies the credit bureau that the information should be deleted. In any event, if things work as they should, the information is deleted from your credit report and your credit score improves.

Three Avenues — Mail, Phone, or Online

All right. We have gotten most of the qualifiers out of the way. For the most part, it's best to do your disputes in writing. Here are the three avenues for disputing credit report errors, with a brief summary of their advantages and disadvantages:

• Certified First Class Mail. Advantage: Allows you to prove the credit bureau received your dispute. Allows you to attach supporting documentation. Disadvantage: Takes longer, usually requires more paper shuffling.


• By Phone. Advantage: Allows you to explain your case to a human being. Involves less paper shuffling. Disadvantage: Could make it more difficult to later prove you disputed errors. Requires that you take careful notes of your conversation. Does not allow you to provide supporting documentation unless you can provide it via fax machine. Also, it's possible, and some folks think likely, that CRAs record consumer dispute phone calls.


• Online. Advantage: Dispute is immediate, and is instantly forwarded to the credit grantor, triggering its investigation. Disadvantage: Could make it more difficult to later prove you disputed errors. Requires that you take careful notes, print out computer screens. Does not allow you to provide supporting documentation unless you can provide it via fax machine later.

Here are the addresses and phone numbers for disputes. Please note that the P.O. Box numbers and telephone numbers for disputes are different from the ones used for requesting a copy of your credit report.

Equifax
P.O. Box 740256
Atlanta, GA 30374
(800) 797-7033
[9am - 5:00pm In Your Time Zone]
https://www.econsumer.equifax.com/elsc

Experian
NCAC
P.O. Box 9595
Allen, TX 75013
(800) 583-4080 [9am - 5:00pm In Your Time Zone]
www.consumer.com/consumer/index.html

Trans Union
P.O. Box 2000
Chester, PA 19022-2000
(800) 916 8800 [8:30am - 4:30pm Your Time Zone]
www.transunion.com/investigate

Disputing In Writing Via First Class Mail (Certified)

One advantage to getting the paper version of your credit report is that the last page is the bureau's form for disputing errors in your credit report. In general, the most effective manner for disputing errors is to:

• Fill out the bureau's dispute form, including the confirmation number from your credit report. Be as specific as possible about what information you want deleted or changed, and why. If you prefer not to use the dispute form, integrate all specifics into a concise dispute letter. Avoid poorly focused or rambling letters that don't quickly identify the specifics of your dispute. Limit your dispute to one page and rewrite it until it is that short.


• Attach any supporting documentation, like a copy of a cancelled check, showing that a trade line was paid on time or paid in full.


• Attach your own version of "Dispute Sample Letter 1" (see Page 98)


• Send your dispute "package" Certified First Class Mail to both the credit bureau and the credit grantor (furnisher)


• Keep all copies and the mail receipt in a dedicated folder


• Note the Activity on your Log


• Mark on your calendar 35 days from when you send the letter to check for a response and to send a follow up letter (if necessary)

Fill Out The Dispute Form.

One advantage of the dispute form attached to your credit report is that it has your identifying information pre-filled-in, thereby authenticating you. The form also makes it easy to fill in the company name and account number of the trade line you are disputing.

It includes boxes you can check explaining the reason why the information is inaccurate, including "Not My Account," "Paid In Full," "Payment Never Late," or "Payment Status Incorrect," "Account Closed," and "Account in Bankruptcy," or "Paid Before Sent To Collection." Importantly, these forms include the category "Other," and space to explain in more detail.

If there are details that support your dispute, concisely write them on the form. Also important, if there are documents, like cancelled checks, or user agreements that support your dispute, attach copies and make it part of the dispute package. The FCRA requires that the credit bureaus provide to the credit grantor (furnisher) all relevant information provided by the consumer so that the credit grantor can see that the dispute is supported.

Recent testimony before Congress suggested that the credit bureaus are not always complying with this requirement. As noted before, the bureaus try to cope with the volume by describing the dispute with a two- or three-digit code that can be sent via computer to the furnisher. This automated message exchange does not very well accommodate transmission of paper attachments provided by the consumer. But the FCRA mandates that the credit bureaus "provide" all of your relevant material to the credit grantor. Thus, there is a tension between customary industry practice and what seems to be an obvious legal requirement, which has not yet been resolved by the courts.

Another potential tension is the requirement that the credit bureaus forward the consumer's dispute to the furnisher within five business days. Testimony before Congress raised questions as to the extent this was happening.

I mention this so you will know to fashion your dispute to fully take advantage of the rights afforded you by the FCRA. That brings us to "Sample Dispute Letter #1."

Sample Dispute Letter

This letter serves two purposes. First, it puts the cred-it bureau and credit grantor on notice that you are serious about getting errors corrected and that you know your rights. Second, it provides an opportunity to provide any extra details or explanations that you were unable to fit on the dispute form. (If you do not use the dispute form, include the identifiers needed to authenticate you: Name, address, SSN, date of birth, previous addresses, and spouse's name.)

You will also notice that the sample letter takes on a respectful, non-threatening tone. Remember, a human em-ployee, likely trying to handle huge volumes in a stressful environment, must process your dispute. Credit bureau officials state that a threatening or nasty tone does nothing to encourage their employees to effectuate your ultimate goal of correcting errors. They also say that it helps to get right to the point and not ramble. On balance, it is always better to treat other humans with respect, particularly when you want them to facilitate the correction of errors. (See sample letter, next page.)

Sample Letter⁶⁷

To: Equifax, Experian and/or Trans Union (Address)

Dear Credit Bureau:

I am writing to dispute the following inaccuracies in my credit report:

1. Sears Account No.: 123456789-01 —
   Dispute: Never late
   (Canceled check showing timely payment attached)


2. MBNA Account No. 987654321-03 —
   Dispute: Not Mine — My ex-spouse's account
   (Statement of Divorce & Confirmation letter from ex-spouse attached)


3. Previous Address —
   Dispute: I never lived at 444 Elm St
   (Utility bill with current address is attached. I've lived at this address for four years).

Please forward this letter and the enclosures to any of the creditors. If you do not send a copy of my letter and the enclosures to any of the creditors, I request that you promptly advise me so I can take additional steps to protect myself. Thanks for helping me in this very important matter.

Sincerely Yours,

The Concerned Consumer

⁶⁷ This letter was drafted with the help of James Fishman, an attorney and FCRA specialist in New York with Fishman and Neil, and by attorney Joanne Faulkner of New Haven, Connecticut.

Send To Both Credit Bureau & Credit Grantor

Even if you think your creditor is the main cause of the problem, you need to send the dispute to the credit bureau that is including the errors in your credit report. This is because the FCRA directs consumers to route their disputes through the credit bureaus. The credit bureau in turn is responsible for notifying the credit grantor of the dispute and for forwarding to the creditor all other relevant information. By sending the dispute to the credit bureau, the consumer increases the duty on the credit grantor to reinvestigate and increases its liability if it fails to do so.

In most cases, it's also a good idea to send the dispute data directly to the credit grantor. There have been cases in which the credit grantors have claimed they never received the credit bureau's notice of the consumer's dispute. Sending it directly to the credit grantor also puts it on notice that you are serious about getting the error corrected.

And don't forget the "shortcut" mentioned before. If you think your creditor will believe you and promptly instruct the credit bureau that the disputed data should be deleted or corrected, that could be the most efficient way to accomplish this goal. After all, you are the creditor's customer. Sometimes, that gives you leverage.

Send all letters Certified First Class Mail. In a few days, go to the U.S. Postal Service's Web site (www.usps.com) and using the number on your Certified Mail receipt, confirm receipt of your dispute. Note all the activity in your "Activity Log."

The FCRA requires the credit bureaus to complete their investigation in 30 days and send you the results of their investigation. Mark your calendar so you will know to send a follow up letter if they fail to meet that requirement. Generally, you want to avoid sending additional dispute letters within the 30-day period, as that grants the credit bureaus an extension. The credit bureaus must forward your dispute to the credit grantors within five business days.

Following Up

Within 30 days or so, you are supposed to receive at least a letter from each credit bureau advising you the results of the investigation. If your dispute is successful, the bureaus will respond by informing you that trade lines (information about an account) will be deleted or otherwise corrected. If you don't receive a response by day 40 or so, then write a follow-up letter basically stating:

Dear Credit Bureau:

Since you did not advise me within 30 days about your investigation of my dispute, please confirm that you have deleted the disputed account (insert creditor name and account number). Please do this promptly and send me a corrected copy of my credit report. Also please ensure that this deleted trade line is not reinserted into my credit report at some future date. Thank you very much for your prompt assistance in this matter. I hope you have a great day.

Sincerely Yours,
Happy Consumer

If the credit grantor insisted that its original report about you was correct, the credit bureau will advise you that the disputed trade line was "verified as reported." If this is the case, and you are not willing to give up, it's time to escalate. Before we discuss the escalation process, let's say a few words about disputing by telephone and via the Internet.

Telephone

You can dispute errors over the phone by calling the toll-free numbers listed in this chapter. There might be certain errors that lend themselves to resolution by telephone. For example, if you are 22 years old and your credit report shows you owe an unpaid, 7-year-old auto loan, you could probably convince a credit bureau operator that you are not responsible and that this is a mistake.

But if you are trying to resolve the kinds of disputes where your "word" is not sufficient then you need to prepare before you make the phone call.

First, you want to gather and have ready all documentation supporting your dispute. Second, you want to be ready to keep detailed notes of your conversation. Some state laws permit you to record phone conversations without first getting the other person's consent, but overall, it's usually better to obtain someone's consent before recording a phone conversation.

Finally, you should ask the credit bureau employee for a fax number so you can fax any supporting documentation. Keep a copy of the fax machine's "activity record" showing the time and date that you faxed the information to the bureau's fax number.

Place all records related to this communication in your dedicated folder.

Internet

After obtaining your credit report online at the credit bureau's Web site, you can click on specific derogatory trade lines, find the "dispute" button, and click on that to dispute it. When you do this, the credit bureau says it instantly forwards your dispute to the furnisher. This should speed the dispute resolution process, but there are no guarantees of that as of this writing. Print all relevant computer screens and save them in a dedicated folder.

Escalating After A Refusal To Correct

If, like many other consumers, you found that the system did not work the way it was supposed to, and that inaccurate information remains on your credit report, your situation is considerably more serious, and it's time to take it to the next level. If possible, it's best to get expert legal advice from an attorney who specializes in the FCRA. Again, the best places to find FCRA attorneys are at two groups: the National Association of Consumer Advocates (NACA) www.naca.net and the National Consumer Law Center (NCLC) www.nclc.org.

As a practical matter, however, it's not always possible or affordable for many consumers to find an attorney who will represent them at such an early stage in the credit dispute process. If you are determined to clear your credit report, but it's not practical for you to find legal representation, let's look at the next steps you can take on your own.

Escalation Letter — More Demanding

Since the resolution of your dispute now necessitates some escalation, your letter to the credit bureaus and/or credit grantors will require a more stern and demanding tone. Here are some points that might help you communicate your seriousness. Of course, you should only state things that are true.

• Ask the credit bureau to describe the accuracy and completeness of the disputed data, including the business name, address and phone number of any furnisher that was contacted. This is an important right under the FCRA that is often overlooked.⁶⁸


• List all ways that the bureau's failure to honor your dispute has damaged you. Has it caused credit denials or discouraged you from applying for credit? Is it causing you frustration, aggravation or other emotional distress? If so, is the distress interfering with your work performance, relationships, or daily life?


• Write to the FTC⁶⁹, which under the new FACT Act will forward your complaint to the credit bureau; also, write your Member of Congress⁷⁰ and/or the news media.


• Complain to a state authority, like a State Attorney General⁷¹, or banking department or consumer protection department. In some cases, these offices will contact the bureaus about your complaint. Sometimes that suffices to make the bureaus respond. Some county governments have helpful consumer affairs offices.⁷²


• You can also place a 100-word "statement of dispute" on your report, but generally this has not proven to accomplish much.

Taking It To Court

If none of these actions are successful in convincing the CRAs to delete or correct inaccurate information, the FCRA gives you the right to go to court and file suit. The merits of such a suit can only be judged on a case-by-case basis. Like any other area, it is preferable to seek the advice of an attorney who specializes in the FCRA. If you are unable to find a specialist, any attorney can obtain valuable information about the FCRA in a manual published by the National Consumer Law Center (www.nclc.org).

⁶⁸ 15 U.S.C. 1681i(a)(6)(B)(iii)
⁶⁹ www.ftc.gov
⁷⁰ www.house.gov and www.senate.gov
⁷¹ Go to www.naag.org. Web site for the National Association of Attorneys General to obtain an address for your State Attorney General
⁷² See www.nacaanet.org/about/members.ahtml, the National Association of Consumer Agency Administrators

Making Your Dispute A Priority

In deposition testimony, CRA employees have acknowledged that their dispute handling departments treat certain cases as "priorities." They generally have identified the priority categories as:

• A Person or Attorney Threatening To Sue. You actually have to be careful here. Credit bureaus have been known to treat letters from attorneys as credit repair operators. Thus, invoking your right to sue or having an attorney write the letter could backfire in the sense that it would delay correction of errors rather than expedite them. On the other hand, you have every right to an attorney and to pursue your rights under law. The credit bureau has no right to dismiss a legitimate reference to an attorney or to legal rights as a credit repair tactic. The manner and tone in which you dispute errors call for good judgment, based upon the particular circumstances. If the matter is urgent and there is a lot at stake, involvement of an attorney would seem warranted, particularly if the credit bureaus have not satisfactorily responded to your previous requests for correction. When an actual lawsuit is pending over a credit bureau's failure to correct errors, the bureaus have been known to more quickly make long sought after corrections. The National Association of Consumer Advocates (NACA) (www.naca.net) and the National Consumer Law Center (NCLC) (www.nclc.org) both sponsors conferences to educate attorneys about the FCRA.


• Some credit repair organizations may imply that an attorney will handle your case, but from the volume of business that they claim to do, be suspicious. An attorney who will go to bat for you in court cannot effectively do the type of large volume business that some credit repair "law firms" claim they do.


• An Enforcement Official From the FTC or State Attorney General. These officials have the authority to trigger wider investigations of credit bureau practices and have done so over the years. In fact, reference to a particular consumer's case before a Congressional hearing or FTC workshop can expedite resolution of disputes.


• A Celebrity. Movie and television stars, recording artists, and even athletes are capable of doing testimonials as to how wonderfully the credit bureau performed in their case.

Continue to Next Chapter  

© 2005 Evan Hendricks and Privacy Times, Inc. All rights reserved.