Finding a mistake on your credit report can be frustrating. Unfortunately, according to a Credit.com survey of credit report awareness, one in five consumers (21%) who have seen their credit reports say they found inaccurate information on their reports.
Not only is that a lot of frustration, but the error may also have a negative impact on your credit score. Submitting a credit dispute is the first step in the process of correcting inaccurate information and improving your score.
But what comes next? How do credit bureaus fix the error? What effect does a dispute have on your credit score? Here’s the whole story on what happens when you submit a credit report dispute.
How to Dispute an Error on Your Credit Report
There are two ways to dispute an inaccuracy on your credit report.
- Go directly to the furnisher to dispute the error: You can contact the furnisher (the creditor furnishing the data to the credit bureau) directly to dispute the incorrect data on your credit report. If the furnisher finds the information to be inaccurate, it will correct the error and notify all three Credit Reporting Agencies (CRAs) of the discrepancy. If there is no resolution and you still feel there is a mistake on your report, the furnisher will inform the CRAs that the account is in dispute.
- Dispute the error with the credit reporting agency: You can also file a dispute through the CRA that has the inaccuracy on its report. Each one—Experian, Equifax, and TransUnion—has its own submission process for disputes. Once a dispute is submitted to a CRA, an investigation process starts.
Filing Disputes with the Credit Bureaus
If you include enough documentation when you submit a dispute through a CRA, the agency will resolve the error on your report. If additional information is needed, the agency you submitted the dispute to is required to initiate an investigation (unless your dispute is considered “frivolous”).
When the CRA investigates, the agency forwards relevant information about your dispute to the creditor. Under the Fair Credit Reporting Act (FCRA), the creditor must then investigate the claim and report its results back to the credit reporting agency. If the information is found to be inaccurate, the furnisher must submit corrections to all three credit reporting agencies.
Confirm with the CRA to find out if you need to continue making payments while in the dispute process. Each CRA has its own policies and procedures for investigations.
While disputed information is being reviewed by a credit bureau, it is not typically labeled as “disputed” on your credit report.
- Experian Disputes
When you file a credit dispute with Experian, the agency reaches out to the furnisher and gives it 30 days from the date you submitted your request to respond back. For Maine residents, the time frame is 21 days. When the agency receives a response, Experian will notify you of the results of the investigation. If it does not get a response in the allotted time, Experian will correct the disputed information as you requested or delete the disputed information. During the investigation process, Experian does not add a comment, note, or any other indication of a dispute on your credit report.
- TransUnion Disputes
TransUnion usually finishes an investigation and provides you the results about 30 days from the receipt of your dispute—but the company recommends preparing for up to 45 days. When a customer contacts the agency directly, it does not add an “in dispute” comment to their credit report.
- Equifax Disputes
Once your dispute request is submitted, Equifax notifies you of the results within 30 days. On average, disputes are resolved within 10 days. Unlike the other two CRAs, Equifax makes an indication of a consumer dispute on your credit report during the investigation. On Equifax reports, the item will be “noted as ‘Consumer Disputes—Reinvestigation in Process” says Meredith Griffanti, senior director of public relations for Equifax, noting in her email, “If the consumer applies for credit during this time, the potential creditor will see this comment.”
Credit Disputes with Creditors
It is your right to dispute information that you believe to be inaccurate on your credit report. The overall process for disputing inaccurate information with creditors is similar to that of disputing information with the CRAs, but with one important difference: if you dispute an item directly with the furnisher, it will very likely be noted as “disputed” on your credit report for potential lenders to see.
Once you submit a dispute, the creditor has a duty to investigate your claim, according to the FCRA. In most cases, the creditor is expected to respond to your claim within 30 to 45 days and to inform you of the results of its investigation within five business days.
The creditor must notify the credit reporting agencies that you have disputed information, and, if it finds that the information is indeed incorrect, it must promptly provide accurate information to the reporting agencies. If you have received notice that the creditor agrees with your dispute, send a copy of that documentation to the CRAs that reported the information to ensure it gets updated.
Why Credit Disputes Matter
Negative information on your credit report brings down your credit score. But whether an account is listed as “disputed” or not could also have an effect on your credit score.
When an account is documented as disputed, “it is temporarily excluded from consideration by the VantageScore model,” explains Jeff Richardson, spokesperson with VantageScore. Similarly, “the FICO Score algorithm excludes account activity that is in dispute,” says FICO spokesperson Jeffrey Scott.
VantageScore excludes entire accounts in dispute from the model that calculates your score. FICO, on the other hand, excludes only the disputed information such as an account balance and late payments—not the entire account—from its calculations of your score. “The dispute doesn’t include the age, type, or other non-controversial aspects,” Scott says. “It includes things directly impacted by the dispute—e.g., account balance or late payment.”
There are times when the VantageScore model could be a plus. For example, Richardson says, “If there was a missed payment on the disputed account, the consumer’s credit score can increase because the missed payment will be ignored.”
Unfortunately, the dispute process has been abused. Consumers will sometimes dispute an item that is negative but accurate, then quickly apply for credit, hoping the application will be approved while that information is under dispute and not recognized by the credit scoring model. If you’re thinking of trying that approach, be careful: It could backfire.
The Downsides of Disputing an Error on Your Report
Disputing inaccurate credit report items sounds like it would always be a positive thing, but it is important to recognize that there can be downsides to disputing an item—especially while you are trying to get a loan.
- Positive information can also be affected: “A consumer could possibly see a decline in his or her score because they would also not receive the positive impact of the account’s age, history, credit availability, or on-time payments,” Richardson points out.
- You may not be able to get a mortgage: Challenging a mistake while you are trying to get a home loan can hold up your loan. Lenders often will not close a mortgage until the dispute notation is removed. It may be best to wait to dispute incorrect data until after you close a mortgage.
The good news is that most disputes are processed quickly—in less than two weeks, says Griffin—and once the investigation is complete, the item should no longer be listed as disputed. If it’s not, the consumer can request the “under dispute” notation be removed. “If the credit report indicates the dispute has been resolved and/or closed, the account activity will be treated just like all other account activity,” Scott says.
If you have disputed information that is found to be accurate, time is the only thing that can remove that negative information from your credit report. In most cases, negative information stays on your report for 7 to 10 years.
Review Your Credit Report for Inaccuracies
Either way, to dispute a mistake on your credit report, you have to know there is one. You can get your credit reports for free at Credit.com and find out how the information they contain affects your credit by checking your credit scores. You can get your credit scores, which are updated monthly, for free on Credit.com.
If you discover your credit report contains erroneous information, dispute it—but give yourself plenty of time to get the item(s) corrected and the dispute resolved before you apply for a mortgage, car loan, or credit card.