Disputing Credit Issues Yourself

You can dispute credit issues yourself. There are several websites that give example of letters you can use for any given situation. However, let’s put things into perspective.

You can spend hours looking at 100’s of websites with similar stock letters. You can review the comments of other people and follow their lead. But, ultimately you have no guarantee that whatever strategy worked for them will work for you.

If you decide to try and take on the credit repair challenge yourself, here are some important tips to guide you through the process.

Statute of Limitations versus Fair Credit Reporting Act (FRCA)

Statute of Limitations

Be familiar with the statue of limitations of debt. This tells you how long a creditor can legally pursue you for a debt. When you pull your credit report, you want to look out for derogatory marks that can cause issues later down the line. Don’t confuse the statute of limitations with the Fair Credit Reporting Act.

Fair Credit Reporting Act

The Fair Credit Reporting Act is the U.S Government legislation promotes the accuracy, fairness, and privacy of consumer information. This legislation applies to the files of the consumer reporting agencies (CRA’s). Some of the more popular CRA’s are TransUnion, Equifax, Experian, Telecheck, and ChexSystems.

The original date the act passed is October 26, 1970. Since then there have been several amendments to the act to update different aspects. One of the important dates is 1997 which affects the running of the reporting period. This is explained more below. A second date, in 2003, when the act provides the provision that everyone is entitled to a free credit report at least once per year.

  • Chapter 7 bankruptcy: 10 years from the date of filing
  • Chapter 13 bankruptcy: 7 years from the date of discharge
    • If the case is dismissed for non-payment the Chapter 13 payment plan is not complete. The derogatory trade line item(s) can appear for another 7 ½ years from the new date of delinquency
  • Unpaid tax liens: report indefinitely if no payment
  • Paid tax liens: report for 7 years from the date of payment
  • Civil suits and judgments: 7 years from the date of entry, judgment rules from above apply
    • If the creditor renews the judgment with a new case number it will show up with a new reporting date for another 7 years
  • Unpaid child support: varies by state and does not always report, but in general will show as a judgment while unpaid
  • Late payments: 30, 60, 90 or 120 days late report up to 7 years from the date of delinquency

The Running of the Reporting Period Extending

Contrary to popular opinion you cannot reset the clock on old debt. Prior to 1996, any account activity had the possibility of extending the reporting period. Creditors and collection agencies took advantage of this loophole to keep negative items on a debtors report for many years.

In 1996 Congress amended the FCRA to firmly establish a date when the 7 ½ year period begins. The standard date is now the month and year of the last delinquency (last missed payment). Therefore, regardless of if 7 ½ year period expires or not, the “running of the reporting period” does not update.

How the Running of the Reporting Period Affects Credit

On December 29th, 1997 the amendment of the Running of Reporting Period became effective. The act states, the reporting period runs 7 ½ years (or 7 years and 180 days) from the date of the last delinquency (the last missed payment).

This means that even if the creditor doesn’t charge off the debt for a long period of time, the debt only shows on your credit report for 7 ½ years from your last missed payment.

The 7 ½ period does not update even with the following actions:

  • The creditor sells or transfers the debt
  • You respond to a post-charge off collection effort by making a payment or signing a payment agreement
  • You dispute the account or item with a credit reporting agency

Do not confuse this with making a payment arrangement, making several on-time payments then falling behind again. This action does adjust the running of reporting period because your last delinquency date has now changed.

Disputing Items Correctly

NEVER DISPUTE ITEMS ONLINE! Many sites offer online disputes through e-Oscar (electronic online system for complete and accurate reporting). While convenient, this system limits your ability to properly dispute derogatory marks.

  • First, you can only select from the credit reporting agency’s (CRA’s) predetermined list of items to dispute. This reduces the chance you can properly dispute the item because it reduces the nature of the dispute to a 3 digit code
    • Some items will require three (3) to four (4) paragraphs to properly dispute. When you write a claim online you are generally limited to approximately 250 characters or less.
  • The CRA’s have to consider and transmit to the furnisher all relevant evidence submitted by the consumer the first time
    • There are instances when this does not occur especially when e-Oscars is the verification method. If you write, you can request for the CRA to disclose the verification method
  • Finally, if you dispute online you cannot dispute the item online again

Creating the Letters and Who to Contact

To ensure your credit inaccuracies are corrected as quickly as possible, contact both the CRA and the creditor. Remember, contacting the creditor for a dispute does not reset the running of the reporting period. Both the creditor and the CRA are responsible for correcting mistakes on your report. The CRA must investigate your claim within 30 days.

**special note: If you file the dispute online through annualcreditreport.com the CRA’s have 45 days to investigate, not 30.

The letter should include the information the CRA requests. Find the information from each CRA here:

At a minimum make sure you include the following:

  • Your name
  • Address
  • A copy of the report and clearly identify each item your are contesting (circle or highlight)
  • State the facts and explain your dispute
  • Include any supporting documentation
  • Request a deletion or correction

Click here to view a sample letter for format and information requirements.

Just because you dispute something does not mean an automatic removal from your credit report. Valid items will not come off your credit report. Therefore, trying to dispute these items is likely a waste of time and energy. However, duplicate accounts or incorrect information are definite causes for a dispute and you can do your best to try to correct these issues. If you do dispute an item and it is valid this will not lower your score.

When you send the letter, send it via registered mail for extra assurance. Although this is not vital it does provide peace of mind.

Receiving the Results

When you receive your results, you can begin to diagnose what occurred. All items you identify will have an answer. If there is no answer, there is a chance the item and supporting documentation is unclear. You will want to dispute this item again. By law the CRA must respond to your inquiry.

If you receive a vague response such as “verified” you can assume the CRA used e-Oscar to verify the debt. This verification method is not as reliable as going to the creditor and sending supporting documentation. For more information on how to handle receiving less than helpful results click here.

Credit Repair Agencies

Credit Repair Company Scams

You cannot delete valid information off your credit report. And, you should not believe the people or companies that say they can. Illegitimate companies attempt to remove items off your report by sending a flood of requests to CRA’s. The CRA’s call this tactic jamming, and it accounts for nearly 1/3 of the disputes CRA’s receive.

When a dispute is sent, the CRA must verify the information with the data furnisher (the organization reporting the data) within 30 days. If the furnisher does not validate the data as correct within 30 days, on day 31 the CRA must remove the data from your report. The scammers will continue to send disputes on your behalf hoping that the 31st day comes and the information gets removed from your report. However, the creditor normally reports information every 30 days. This means the derogatory information ultimately ends up showing up on your credit report again.

Using a Credit Repair Company

Do it yourself projects are great. But, sometimes you might have to take a step back and let the people that handle credit repair day-in and day-out manage the situation for you. You wouldn’t expect someone to do your job with no experience, would you? Well, it’s also hard to come in and do something as complex as credit repair with no experience because there is no straight path.

As a general rule of thumb, you will want to wait 60 days between disputes. Try to have a different reason or more/better evidence if you bring up the same issue again. You can be assertive when speaking with the bureaus. Advise them you are going to hire an attorney if you feel the investigation is not handled correctly.

If you still get no traction, you may consider speaking to a profession about your dispute. You do not have to go straight to an attorney for assistance. There are other organizations that help consumers with all matters of disputes. One such company is Debt.com, they have a large list of services they provide. Check their site to see if they can help because they can do much more than just credit repair.