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The In-effective Credit Dispute Method

By: Matt Douglas

Disputing negative credit items with the credit bureaus Equifax, Experian, and Transunion can often be a challenge. Many times the bureaus respond to a dispute with a letter indicating they verified the disputed item. Accordingly, you are stuck with the information being reported about you.

Credit bureaus always respond to disputes with a letter where they inform you that you have the right to attach a 100-word statement to your report. Often, people believe this is a good opportunity to explain away their negative information or argue their case.

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.

Be cautious about adding a consumer statement to your credit file.

Do not mistake the 100-word statement for good faith on the part of the credit bureaus. As you will see, such a statement is usually used against your best interests.

People often send in statements like this: "I fell behind on my credit card bills, but I have since caught up. My boss laid me off from my job of 20 years. Even though I could not pay my bills, it was only a temporary situation and now I am current."

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.

Instead, the credit bureaus see somebody who isn't smart enough to have an emergency fund to cover basic minimum payments should something go wrong financially.

Attaching a 100-word statement is really bad for three additional reasons: (1) Such a statement confirms that Yes - you really were late on those payments. (2) The credit bureaus will ignore any future disputes you mail because you already admitted fault. (3) Should you apply for new credit in the future; every creditor will see your candid admission that you are not able to pay your bills during times of emergency - and therefore a bad credit risk. 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.

If a creditor does not read your statement, then nobody will. Most applications are reviewed digitally and so the 100-word statement serves no purpose other than a weapon credit bureaus use against you.

To summarize, the 100-word statement is out dated and dangerous. Avoid the temptation to explain bad credit. Instead, use the formal channels to challenge misleading credit information such as dispute letters and creditor interventions.

Article Source: Main Articles

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