Is it Worth It to Dispute Credit Report Errors?

Filing a dispute with a credit agency has no impact on your credit score. However, if the information in your credit report changes after processing the dispute, your credit rating may be affected. Claiming errors in your credit report is free and you can challenge as many items as you want. Filing a dispute won't hurt your credit rating, but the outcome of the dispute can have an effect on it.

In fact, it may temporarily improve it, since the Fair Credit Reporting Act requires that the items being investigated cannot harm your credit. However, if the disputed item is correct, you'll likely see a drop when the negative element is reflected again. Filing an online dispute with a credit agency may seem like a quick and easy way to get the results you want, but it may not always work in your favor. One of the best ways to improve your credit scores is to review the information in your credit report and challenge any errors you find. Collection accounts, like most negative credit report entries, can remain on your credit reports for up to seven years from the date your account first went into default with the original creditor.

Your credit reports are based on information provided by companies to the three major credit bureaus: Experian, Equifax and Transunion. The Fair Credit Reporting Act was developed to protect consumers from unfair credit reporting practices. If you find an error in your credit report, follow these steps to challenge it directly with the credit agency or creditor that provided the information:

• Gather evidence that proves the information is incorrect.
• Write a letter to the creditor or agency that includes all of your evidence.
• Send copies of all documents and keep copies for yourself.
• Wait for a response from the creditor or agency.

After challenging errors in credit reports with a credit agency, you usually have 30 days to investigate your claim. When filing a dispute with credit reporting agencies, the Fair Credit Reporting Act requires them to prove that the item is “in dispute.”However, there are credit repair companies that take advantage of people by promising to delete derogatory information and charging high fees for doing so. There are two main reasons why you should not file a dispute about errors in online credit reports:

• It can take a long time for disputes to be processed.
• If the disputed item is correct, it will remain on your report and could negatively affect your score.

If you can pay your bills on time, you'll never get a phone call or letter from a collection agency and you won't have to deal with a collection account that appears on your credit reports and, as a result, with the potential damage to your credit rating.

That's why the Consumer Financial Protection Office (CFPB) recommends that you contact credit agencies to challenge inaccurate information in the credit report. You can also contact the account provider, such as the credit card company, lender, or utility company, that entered the negative or incorrect marking on your credit report. Under the Fair Credit Reporting Act, once you file a dispute with a credit reporting agency, that agency must update the account to show that it is in dispute.