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Are Credit Report Disputes Pointless?

Posted on May 29, 2011

Credit report disputes are one of the easiest credit repair strategies. By law, you’re entitled to an accurate  report and you have the right to dispute information you believe to be inaccurate, incomplete, or unverifiable. Credit bureaus have to remove this type of information from your credit report after an investigation proves your dispute to be accurate.

Results of Credit Report Study

Are credit report disputes really the best way to spend your credit report efforts? A new report released by the Policy and Economic Research Council (PERC) in May 2011 revealed that less than 1% of credit reports actually have an error that, if corrected, would improve credit scores more than 25 points. The study, called U.S. Consumer Reports: Measuring Accuracy and Dispute Outcomes, also showed that only half a percent of those consumers who disputed report errors saw their scores improve to the next tier. According to this study, it’s very unlikely that a credit report dispute would move your score from Bad to Poor or from Poor to Fair.

Do the Study Results Apply to You?

This information makes it seem that credit report disputes are a waste of time, but they’re still a worthwhile effort, especially if you have significant errors on your report. More than half the people (53%) who participated in the study had VantageScores above 800, that is, scores are in the “A” and “B” categories.  It stands to reason this particular segment of the population wouldn’t have serious errors on their report dragging down their scores. On the other hand, only 29% of participants had credit scores below 699, in the “D” and “F” categories.

How to Get More Successful Disputes

You can help make sure your disputes result in a change by sending proof along with your dispute. Sometimes credit bureaus don’t pass this proof along to the business that reported the error, so it can benefit you to dispute directly with the creditor. Creditors also have a legal obligation to investigate your disputes and update your credit report if necessary.

Remember that credit report disputes not only apply to data that’s inaccurate, but also credit report entries that are incomplete or can’t be verified. For example, if a debt collector takes over your account but doesn’t have the documents to prove you actually owe that debt, they wouldn’t be able to verify the account. By law, the credit bureau is supposed to remove this type of account from your credit report. Having a collection account taken off your credit report could greatly improve your credit score.

The consumers who participated in PERC’s study also disputed their own credit report errors with training from the research company. In reality, consumers with bad credit sometimes use a credit repair company to help with the dispute process because they’re not sure how to best handle disputes. You can dispute your own credit report errors by sending a letter to the credit bureaus, but credit repair companies can save you the stress of keeping with your disputes and appropriate responses.

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