Money Monday: Your Credit Report Dispute Strategy

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Checking your credit annually or even every six months has been the standard advice given to consumers over the years. But based upon the latest trends and data information from the credit reporting agencies, there may be good reasons to be more vigilant in monitoring your credit report.

Credit Reporting Problem

According to the Federal Trade Commission (FTC) credit report complaints have increased more than four times from the years 2019 through 2023. The data indicates that complaints went from 165,000 to 711,802. In February, Consumer Reports cited the fact that credit report disputes have increased at least 2.5 times in the past two years.

Credit Reports Freely Available

One could easily point to the fact that prior to Covid-19, credit reporting agencies were mandated to provide only one free annual credit report. However, during Covid -19 and the succeeding years, credit reporting agencies made credit reports available weekly and therefore more consumers got engaged in checking their own credit report. Plausible, but it is a secondary reason for increased credit report complaints. The primary reason for increased credit report complaints is the significant increase in identity theft from 2020 through 2023. In a world that has become more financially digital since the arrival of Covid-19, more of our financial information and transactions are exposed, at risk and less secure.

Another reason for increased credit report disputes is that attempts to get the credit reporting companies to correct disputes many times results in the companies suggesting that you address your concerns to the source which could be the credit card companies, mortgage companies or debt collection companies. The response would make sense because the origination of the credit issue is the credit card company or some other financial company. However, the credit reporting agencies changed their policies and made it easier to dismiss your complaints and disputes. In other words, while they increased the number of free annual credit reports you could receive during and post Covid-19, they also changed the rules of the game to make it easier to dismiss your complaints and disputes. Consequently, credit report errors, disputes and complaints have increased and remain on your report.

Lastly, credit repair companies, many of whom advertise via social media, now claim to be able to solve credit report disputes and clean up errors. But they don’t really do so! The credit reporting agencies are not required to investigate irrelevant or frivolous disputes. More importantly, they generally ignore third party disputes. In fact, if you use some generic letter to dispute a matter, or your disputed letter resembles that of a third party submission, your letter can be easily ignored. For example in 2020, the Consumer Financial Protection Bureau (CFPB) found that in just one month, almost half of the complaints or disputes filed were dismissed because letters were generic from some template, or they resembled that of a third party submission. I would venture to speculate that dismissals could increase with the introduction of Artificial Intelligence.

How Best to Wage Your Dispute

1. Get a copy of your credit report from Annual Credit Report.Com. That’s the only website guaranteed by law, to provide copies of your credit report from all three agencies. Know that the dispute process is only intended to rectify only inaccurate, or incomplete information.

2. Determine the source of your credit report error. Is it the credit card company or is it the reporting agency? If the source is the credit card company, reach out to them directly first. Maybe that problem can be solved with them. If that fails, go to the credit reporting agency. Now, if the problem is that of identity theft, start with the credit reporting agency.

3. Submit your dispute by citing the exact language on your credit report, at the disclaimer dispute near the end of your credit report. While sending an email is faster, it may not allow you the space and opportunity to give the agency all the necessary details you may have to prove your matter. Therefore it is best to mail it certified mail, through FedEx, or UPS.

4. Present your dispute in your own words and not some template or boilerplate language to increase your chances of success.

5. Provide a copy of this letter to both your source (the credit card company, or bank, or mortgage company), and the credit reporting agencies.

WHAT’S UP!

Today’s What’s Up is about saving for your holiday shopping. It’s never too early to begin your holiday shopping plans since we are almost at the halfway point of the year. You can operate a separate account, and have a small portion of your salary directed there for holiday savings. Start a holiday saving club with some of your friends or family members. Finally, join or start a sou-sou/ Su-Su with trusted individuals. Ideally, the smaller the amount of weekly or monthly contributions, the longer time period for a substantial saving. And that’s what’s up!

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