After disputing a charge on your credit, you may still be trapped facing a consumer dispute after the resolution process. This means that even though you have successfully disputed a charge on your credit, there may be an issue with the way it is reported on a credit report. This type of reporting can affect the way that companies look at a credit score and can end up disqualifying you for purchases later on. Understanding how and why to remove dispute comments from your credit report and the effect that they could have on your score is an important part of creating and gaining your credit. This article will explore how disputes affect a credit score, how to dispute them, how long that process takes, and how removing disputes may affect a credit score.
Credit Score Basics:
Credit scores are based on a variety of factors that have to do with a consumer’s history within the credit world. Difference aspects of a person’s history will have a greater impact on the score. Some of the aspects of a person’s credit history that are considered in a score are:
- Payment History: This is the most important factor that will affect your credit. People who make payments on time on their credit cards and other debts will have a positive impact on their score. However, any missed payments will have a dramatic impact on a person’s credit score. This is why it is important to keep track of payments and make all payments on time.
- History Length: Creditors are less likely to give large amounts of money to people who have shorter credit histories because they will not have the same tested and demonstrated experience with credit. Beginning to earn credit can be difficult, but once you have started, it is easier to increase your credit score with a good history.
- Credit Mix: The variety of credit accounts that a person has will also affect their credit score. Credit companies like to see a variety of accounts because it helps them access the ability of the user to manage their finances and add variety to their investments. Certain types of credit hold more value to creditors, so having a mix of credits on an account can ensure that a credit score holds as much power as possible.
- Credit Usage: Credit usage is another factor that can affect a person’s credit score. This is the ratio of credit used to available credit. Credit companies tend to prefer that users only use 30% of their credit while using under 10% is the best option. Using too much credit can signal that a user has less financial stability than other users.
- New Credit: The number of new account inquiries that are on a credit report is important. Creditors view too many new accounts or inquiries as a financial risker situation. Limiting the number of new accounts opened at one time can aid in increasing a credit score.
- Derogatory Marks: Certain actions on a credit report may harm a score. This can include missed or late payments, judgments from courts that impact your credit history, or certain credit disputes. Understanding how and why to dispute these marks is important.
Credit scores are a difficult thing to understand, even if one has a long history of good credit, especially when things that may seem like they should help a score negatively impact it. Sometimes, a person can believe they have done everything right, but then they are stuck in a situation where their credit is not as good as they believed. Knowing how to prepare for big purchases where a healthy credit score is necessary will affect the outcome of any major purchases and credit further on.
Understanding Credit Disputes:
Credit disputes are instances where consumers dispute an account on their credit report. This may be because they noticed a charge that was not theirs or found an account that was credited to their name but they do not recognize it. The dispute process allows the credit holder to provide evidence detailing the issue and ask the credit bureau to take it off the report. This causes both the credit bureau and the creditor to investigate the dispute and draw a conclusion on the true owner of the account and how it should be reported. During the investigation, the account will not factor into a credit report. Once this investigation happens, there will be two options for the resolution:
- Deletion: This result means that the disputed account will be deleted because the account was not found to be reported correctly. This account will not be factored into a credit score and will be deleted from the account.
- Consumer Disputes: This is the type of dispute comment on a credit report that can hurt a credit score and cause the credit holder to lose out on opportunities to borrow. This means that the account will be reported in credit reports with a designation that the consumer disputes the account, but it will not be deleted from the credit report. This is the type of dispute comment that most prospective creditors may want to be removed to provide credit, especially if it is on a negative account.
To summarize the dispute process, the dispute will typically follow a standard procedure. The consumer will notice an account that is not theirs or an account that has a mistake. The consumer will report this to the credit bureau and this will start the investigation, which usually means that the credit bureau will give the account holder 30 days to respond to the dispute about whey they believe it is a correct account. Once that happens, the credit bureau will make a decision based on that. This decision will be either to leave the disputed account on the report with a note or to delete it.
When Dispute Comments Harm:
In some instances, it will not harm you to have a dispute comment on your account. It shows the creditor that you disagree with the report of the credit. However, there are certain situations where creditors will want dispute comments removed from the account, especially if the dispute is trapped in an indefinite disputed status and is not affecting your credit score. This happens often when a credit bureau does not hear from the account holder about the account or they cannot decide, and the disputed account remains frozen off the credit report. This can be good for a credit report because it can help a score stay high, but if it is on a negative account, the eventual dispute comment removal can make the score go down dramatically. Some lenders, particularly mortgage lenders, do not want any dispute comments that can prevent consideration of an account on a potential borrower’s report. In these situations, it is smart to be aware of your report and understand what your options and disputes are.
Understanding Disputed Accounts:
When considering how and why to dispute an account, four considerations need to be made to ensure that an account is deleted from all the places that it may be reported. These considerations are (1) where the wording came from, (2) where to find the accounts, (3) understanding when it is not necessary to remove dispute wording, and (4) avoiding harming your score when you remove the dispute. This section will discuss each of these considerations in turn.
Where the Wording Came From:
The wording for disputes can come from either the creditor directly or one of the credit bureaus, or both. Knowing the difference will help ensure that the dispute wording is removed permanently. Creditors may put a dispute on an account when they receive a complaint about the account directly from the consumer. This can happen at any point during communication between a consumer and a creditor where the consumer disputes something about the account. This can lead to many accounts in a consumer’s name being marked as disputes. The other way that an account can be marked as disputed is when the consumer contacts the credit bureau, such as Experian, Equifax, or TransUnion. If a consumer questions any of the information about an account on the report, the bureau may mark the account as disputed. In some cases, the dispute can come from either place. Knowing where a dispute comes from will help determine which of the stops a consumer will need to take to remove the dispute.
How to Find the Disputed Accounts:
In some cases, a consumer may remember that they had disputed accounts, but not remember which ones. Other times, a consumer will need to see if any accounts on their credit report are disputed. To do this, it is important to understand how to locate the dispute wording on the report. There is no common form to mark a disputed account, and each creditor and credit bureau may do something different and it may make it difficult to identify. There are a set of standard phrases that most creditors use, but all of them will have the word dispute in them in some form. This will be found in the account notes on a credit report. There will often be very little if any, information about where the dispute wording comes from and if there is a resolution. Once the accounts have been identified, the next step is to decide whether to remove them or to leave them disputed.
When to Leave a Dispute:
Another important consideration is whether to try and remove the dispute wording or if it will be more beneficial to leave it on. To do this, two aspects should be considered. First, does it need to be removed for consideration for another loan? Second, will removing the dispute hurt or harm your score?
- Required: Certain loans, often mortgages, will require that certain disputes be removed from a consumer’s report. However, while some may ask that all disputes be removed, it is important to understand the distinction between what is required and what is not. Some mortgage lenders will have rules about how large the loan or charge was before a dispute comment needs to be deleted. Other types of lenders may not require that certain types of accounts will not need the dispute language removed. If the dispute language must be removed based on the rules of the lender, then it must be removed. If it is not, then a consumer can move to the next consideration.
- Helpful: In some cases, removing a dispute from an account may be beneficial for a consumer report. This may mean that the account is a positive account, or it may mean that it has since been resolved and the account will be helpful toward the report. Discovering what will happen when the account is counted may be difficult, but many credit apps have simulators that can show how an account may affect the overall score.
Removing a Dispute without Harm:
Once a consumer has decided to remove dispute wording, they may begin the process. Typically, the best process will depend on where the dispute is reported; however, that information is often difficult to determine, so it is usually best to remove it from each place. The best sequence seems to be:
- Call the Creditor: A consumer should first call the creditor listed on the account and inquire about the dispute on the account. They should tell the creditor that they are applying for a loan and would like to stop disputing the account. They will have to agree with the balance and the payment history. After this is decided, they should follow up a few days later to verify.
- Contact the Credit Bureau: Once a consumer has obtained a report from a credit bureau, they should identify any disputed accounts and call the credit bureau to ask them to stop the dispute.
Once both the creditor and the bureau are on notice, the dispute should be removed fairly quickly. Some places may require occasional check-ins until the dispute is removed. However, once the dispute is removed and the credit report s reconfigured, the consumer will be free to borrow for their next large purchase and build credit for years to come.