How to Dispute Bad Credit

In the United States, there are three main credit reporting agencies—Experian, Equifax, and TransUnion. Whenever you go to a bank to borrow money, the lender will pull a credit report to find out your creditworthiness. If you have a bad credit score, then you will want to repair it. One way to improve your score is to look over your credit reports and make sure that no negative information appears on the report in error. If it does, then you should dispute those items.

Part 1

Part 1 of 5:

Understanding Your Credit Score

1
Learn how your score is calculated. Your credit reports contain your history of payment (or non-payment). With this information, a company called FICO calculates a score, which ranges from 300 to 850 (with a higher score being best). The factors FICO uses to calculate the score include:^{[1]XResearch source}
- payment history (about 35% of your score)
- how much of your available credit you have used (about 30%)
- length of credit history (15%)
- any new credit opened (10%)
- types of credit used (10%)
2
Understand common reporting errors. If you fail to make a payment, open several new credit accounts at once, or are denied new credit, then your FICO score can fall. However, sometimes creditors report inaccurate information. You can dispute these inaccurate items and try to get them removed in the hopes of boosting your credit score. These are common inaccuracies reported to credit reporting agencies:^{[2]XResearch source}
- reporting incorrect payment status (such as “past due”)
- reporting a loan modification as a “foreclosure”
- stating that an account you closed was instead closed by a creditor
- refusing to remove negative information after seven years
3
Know your rights. The federal Fair Credit Reporting Act gives consumers the right to challenge inaccurate or incomplete information. If the credit reporting agency cannot verify the disputed information, then it must delete or correct it within 30 days.^{[3]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
- Credit reporting agencies (CRAs) also cannot report negative information that is too old. For example, negative information more than seven years old should not appear on your report. Bankruptcies more than 10 years old cannot be reported, either.^{[4]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
- The law also allows you to seek damages from any violator. If the CRA does not timely remove unverified information or does not perform a proper investigation, then you might be able to sue in court.
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Part 2

Part 2 of 5:

Preparing to Dispute Errors

1
Request a free credit report. You are entitled to one free credit report every year. You may request it over the phone, online, or through the mail.^{[5]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
- To request by phone, call 1-877-322-8228.
- To order online, visit annualcreditreport.com and request a report.
- To request a copy of your report by mail, send a written request to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can use the Federal Trade Commission’s form available at http://www.consumer.ftc.gov/articles/pdf-0093-annual-report-request-form.pdf.
Once you receive your report, you should study it closely to find any negative information that is erroneous. You cannot get negative information removed if it is accurate. However, you should challenge any negative information you believe has been reported mistakenly.
3
Gather supporting documents. To strengthen your position, you should try to gather evidentiary support that an error was made. For example, if you see that a credit card payment is listed as more than 60 days past due, then you should try to find cancelled checks that show payment had been made and accepted before that date.
- If a creditor erroneously reported a loan modification as a “foreclosure,” then get copies of the modification agreement.
4
Get the creditor’s address. You should always send a letter to both the credit reporting agencies as well as any creditor who forwarded negative information in error. Generally, the creditor’s address should appear on the credit report.
- If not, then contact the CRA on which the negative information appears and ask for a phone number or mailing address.
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Part 3

Part 3 of 5:

Writing a Dispute Letter

1
Insert your address and the date. Begin your letter by opening a blank word processing document. You should insert your address first, aligning it with the left-hand margin. After typing the address, move down two lines and enter the date.^{[6]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
- Two lines beneath the date, you should enter the credit reporting agency’s address.
You can use a contact person’s name if you have one. Otherwise, you can open the letter with “Dear Sir or Madam:”.^{[7]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
You should use the first paragraph to explain why you are writing. For example, you can type, “I am writing to dispute the following information in my file. I have highlighted the items I wish to dispute on the attached copy of my credit report.”^{[8]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
4
Identify which items you dispute. You should use the second paragraph to identify the items you want investigated. Also request that the item be removed from your report.
- You can write, “The item listing a foreclosure is inaccurate, as I received a loan modification instead. I am requesting that you remove the item from my report.”^{[9]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
5
Identify the supporting documentation included. In the third paragraph, tell the CRA what documents you have enclosed that support your position. Be sure to send photocopies because the CRA probably won’t return them.
- Here is some sample language: “Enclosed are the loan modification documents. Please reinvestigate this matter and delete the disputed item as soon as possible.”^{[10]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
6
Conclude the letter. Type “Sincerely,” and then leave enough space for your signature. Below this space type your name.^{[11]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source} You should sign the letter in black or blue ink.
- Remember to type “Enclosure:” at the very bottom of the letter. Then list any enclosures, such as a copy of your credit report.^{[12]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
7
Mail the letter. You should mail the letter first class, return receipt requested to each of the three CRAs.^{[13]XResearch source} Hold onto your receipts. They will serve as proof that the credit reporting agency received the letter.
- Be sure to keep copies of all of the letters that you send. Maintaining proper documentation of your communications is critical.
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Part 4

Part 4 of 5:

Reporting a Dispute Online

1
Use the online dispute systems. Each CRA has a website on which you can report errors. Before beginning, identify the credit report number on the credit report that you wish to dispute.
- You can reach Equifax’s online dispute system by visiting its website at www.equifax.com and clicking on the “Credit Report Assistance” tab at the top. Then select “Dispute info on credit report.”^{[14]XResearch source}
- To reach Experian’s online dispute system, visit the website at www.experian.com and click “Disputes” under the “Consumer Assistance” heading.^{[15]XResearch source}
- You can reach TransUnion’s online dispute system by visiting its website at www.transunion.com and clicking on the “Credit Reports, Disputes, Alerts & Freezes” tab at the top of the page.^{[16]XResearch source}
CRAs may request additional documentation or information from you in order to facilitate investigation. You should provide this information as soon as possible.
3
Follow up with a letter. Even if you use the online reporting system, you should still send a letter to each CRA. By sending a letter, you maintain a hard copy record of your communication.
- Also save the receipt that shows that the letter was delivered to the CRA.
4
Wait for results. A CRA is required to investigate any dispute typically within 30 days of its filing.^{[17]XResearch source} As part of the investigation, the credit reporting agency forwards the information you provide to the organization that reported the information.^{[18]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
- The contacted creditor will then investigate the disputed information. If the creditor cannot verify the disputed information, then it must notify all three national CRAs.^{[19]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
- Once the CRA completes its investigation, it must send you the results in writing. It must also send you a written notice that contains the name, address, and phone number of the creditor who reported the disputed information.
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Part 5

Part 5 of 5:

Explaining Bad Credit

1
Understand when your credit score might be used. Lenders will look at your credit history (including your score) to determine whether to extend a loan. Other parties also may want to look at your credit history. For example, many landlords now pull credit reports in order to gauge whether they want to rent to an applicant.
- You may also need to give permission to prospective employers to look at your credit history. In 2012, 47% of employers conducted credit checks.^{[20]XResearch source}
2
Submit a statement of dispute. You have the option of submitting a statement of dispute if the CRA does not find that the information was reported erroneously. The statement can be up to 100 words. Both Experian and TransUnion allow you to add multiple statements, but Equifax allows you to add only one.^{[21]XResearch source}
- The purpose of this brief statement is to explain your side of the story. You can explain why you believe the disputed item has been included erroneously on your report.
- You can also use the statement if you have a legitimate reason for having messed up your credit. For example, if medical issues caused you to be late in your payments, then you might want to explain that fact in your statement.^{[22]XResearch source}
- You should also think about not adding a statement. Instead, you could explain the reasons for your poor credit to any lender or employer/landlord you eventually meet with in person.^{[23]XResearch source}
3
Explain how you got bad credit. If you need to explain a poor credit score to a prospective employer or landlord, begin by acknowledging that your credit is poor. You want to convey that you take financial fitness seriously, so don’t minimize it or claim it is no big deal.^{[24]XResearch source}
- Be brief but honest. If you got into financial difficulty because of an illness, say so. Whatever the reason, explain it succinctly. If you delve into too much detail, you threaten to make your credit history a bigger issue than it may be.^{[25]XResearch source}
- You should practice telling your explanation to someone else. Try to simplify your explanation so that it takes only a single sentence.
4
Describe steps you are taking to improve your credit. Instead of trying to minimize bad credit, explain what steps you are taking to improve your score.^{[26]XResearch source} You might offer to show proof that you have been making payments diligently for the past year.
- If you are submitting an application to a housing rental company, then you can submit four months’ worth of bank statements and paystubs along with the application. You could also submit a recent tax return. This information will bolster your argument that you have taken steps to improve your credit.^{[27]XResearch source}
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Warnings

Pay careful attention to bad debts. A bad debt should fall off your credit report after seven years. However, if you talk to a debt collector and agree to partially pay the bad debt, then the debt will be “re-aged” and not fall off the credit report. Accordingly, you should keep close tabs on all of your bad debts and not speak to debt collectors.^{[28]XResearch source}
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