Filing a dispute to your credit reporting companies should correct any errors on your reports, right? Well, not if you do it online.
Your credit report could decide whether you get that job you’ve always wanted, the loan you need or the insurance you deserve. This is why you should never take it for granted and always make sure it’s clean and accurate.
The Federal Trade Commission (FTC) issued a report stating that 25 percent of Americans’ credit reports are inaccurate in some way, and 5 percent have errors big enough to result in “less favourable terms of loans”.
Many people will not realize that there’s an issue with their credit report until their credit, job, or loan application is rejected. To avoid this, you must first know where to look for errors in your report.
What to do in order to dispute your credit report? You should never dispute your credit report online, always use the hard copy format and MAIL your dispute to the credit bureau.
While you’re here, check these other useful guides on car insurance disputes, and Don’t Say These 9 Things to Your Insurer after an Accident: The Guide to Successful Car Insurance Settlement.
Credit Report Common Errors
Some errors are more critical than others, and some, as stated in the FTC report, can affect your credit score and your financial status greatly.
When reviewing your credit report, make sure you scan it for these common mistakes listed by the Consumer Financial Protection Bureau (CFPB):
As the name suggests, these errors involve inaccurate current balance or inaccurate credit limits. These errors can affect your credit score exceptionally.
Data Management Errors
These errors arise when data is poorly managed such as reinserting inaccurate data after it was corrected or removed.
Account Status Reporting Errors
The furnisher, the company that provides credit information, can inaccurately report your data. This includes:
Incorrect open/close account status, incorrect ownership status, delinquent account false reports, incorrect payment dates or account opening/closing dates, and more.
Identity and personal information errors
These could range from simply misspelled names and wrong phone numbers or address to more complicated ones such as mixed files and identity theft.
A mixed file error is adding accounts that belong to other people who hold the same name as yours.
More details on these errors can be found on the CFPB’s website.
Major Downsides of Disputing Credit Reports Online
As a consumer, there’s a law that protects you and your credit reports against all the errors listed above, and it’s known as the Fair Credit Reporting Act (FCPA). This law is effective after you file a dispute with one or many credit bureaus.
Credit bureaus now allow consumers to file their disputes by different media: mail, phone or online.
However, the medium with which you dispute these errors will crucially determine whether your dispute succeeds. More significantly, the medium you choose will also determine how much the FCPA can help you.
The internet brought a strong alternative to doing basically anything including filing disputes.
Traditionally credit report disputes are filed by mail to the concerned bureau. Nowadays, phone and online disputes are taking over allegedly because they save time and effort.
Many consumer law firms such as Lyngklip & Associates and Joseph P. McClelland advise against online credit report disputes, and it’s not hard to see why. When you dispute online, you will lose/forfeit:
Hard evidence on your dispute
When you file a dispute through the bureau’s website, you are forfeiting the advantage of solid, in-paper, proof of dispute. You should always keep in mind that your dispute might fail and that a lawsuit is your next step.
When this happens, you should be able to prove that you filed a dispute and they refused to settle it.
Access to dispute documents and responses
Most credit reporting bureaus will not give you permanent access to your dispute process, documents, and responses.
Depending on its terms of service (ToS), the bureau can limit your access to the documents while maintaining its access to it. When you need an attorney to look at your dispute, you wouldn’t find anything to show.
Since everything is conducted through the bureau’s website, you might not be able to retain any copies of the dispute, the supporting documents, or the bureau’s response to them.
Dispute Initiation date
The law requires each bureau to complete its investigation in a certain amount of time. With no initiation date available, you will not be able to start counting down that duration.
Before you can access your credit file, some bureaus display waivers of rights as pop-ups without actually acknowledging what they are.
If you agree to any right waiver without properly reading it, you will never know the rights you just gave up. Such rights could be your right to a jury trial.
Your law protection
The Fair Credit Protection Act included a section (611a (8)) for online disputes which absolved bureaus of requirements they had to meet in traditional dispute filing.
Confirmation of receipt
No bureau guarantees that you will receive a confirmation email or notification when you file the dispute on their website. As such, you won’t know if your dispute is received or ignored.
Precisely, it absolved them of forwarding the dispute to the creditor, sending you the written results of the dispute investigation, and showing you their method of verification if they resolve your dispute within three days.
Because the creditor will not receive your dispute, they will not correct the error they reported to the bureau. Therefore, you will only see the update on the report which the bureau will give you after the dispute. That error will reappear in any future reports from that bureau and others.
Your Best Credit Report Dispute Option
So, if online and phone disputes are frowned upon, what is the best way to dispute your credit report?
The answer is mailing the bureau.
Why? Because mailing the dispute in paper allows you to keep a copy of the content dispute.
Moreover, you can send the dispute by certified mail and request a return receipt to prove that your dispute was actually received. Mailing your dispute will exempt you from any right waivers and protect your rights.
Your dispute must include the dispute form, if any, from the concerned bureau’s website, your letter in which you explain your situation, and any supporting documents.
While online disputes hold an inherent premise of time and effort saving, they might actually be doubling your trouble.
To recap, disputing your credit report online can cost you your proof of dispute, access to dispute documents, your consumer right, and more.
For all these reasons, you should always dispute your credit reports by mail.
On another note, you may need to learn more about BNPL and how it affects your credit scope in Buy Now, Pay Later: Definition, Dispute Resolution, and More.