Can Disputing Hurt Your Credit? Here’s What You Need to Know
It’s common knowledge that it’s a good idea to occasionally check your credit report – but what do you do if you find something that doesn’t look right?
The first thing you’ll want to do is file a dispute with the credit bureau. But, can disputing hurt your credit score? And what happens when you file credit disputes?
Here’s everything you need to know.
Types of Credit Report Disputes
There are many different issues you might come across that would warrant a dispute. For example, there could be an error in the spelling of your name, your phone number, or your address. This type of clerical error won’t have any effect on your credit score even after it’s fixed.
The next type of error occurs when your report contains accounts that aren’t yours. This could occur when someone’s account ends up on your report erroneously due to them having the same or a very similar name. Accounts could also have been attributed to your credit report due to identity theft.
You may also find that an account you’ve closed still shows as being open. An account that went to collections and was resolved may still show as being unpaid or the same account could be incorrectly listed more than once.
Other issues include incorrect account balances, inaccurate credit limits, and more. Thanks to the Fair Credit Reporting Act, credit bureaus must investigate any disputes that customers make about the validity of their credit reports.
It’s also required under law that the bureaus investigate complaints within a “reasonable time frame,” generally within 30 days. At the end of the investigation, you’ll receive one of four outcomes.
They may declare the item found on your report “verified,” which means that it’s valid and will remain on your report. Generally, this will leave your report unchanged.
The item in question may also be “modified,” meaning that the bureau has revised certain aspects or your report. A third option is that the credit agency will delete the item, removing it completely from your file.
Lastly, the bureau may decide that your complaint has been “deemed frivolous,” and they will refuse to investigate the situation any further.
No matter what, you cannot be penalized for disputing any item on your credit report. Not only is it perfectly acceptable to review your report regularly and fix any mistakes, but it’s also highly recommended that you do it at least once a year.
So… Can Disputing Hurt Your Credit Score?
Now that we’ve reviewed types of credit report errors and possible outcomes, it’s time to look at the real question – will disputing something on your credit report hurt your score? The answer is no – filing the dispute itself will not have any impact on your credit score.
However, the results of the investigation could cause your score to go up or down. The actual impact will depend on what you disputed and the bureau’s findings. For example, if you found a late payment on your report that never happened and it is eventually removed, then your score will likely go up.
If you find an open account that was actually closed and it’s fixed, this could decrease your score if it results in a higher debt utilization. Regardless, however, it’s best that you dispute any inaccuracies to avoid them becoming a problem in the future.
It’s also important to note that since the bureau does have about 30 days to complete their investigation, these changes rarely happen overnight. If you’re planning something big – like buying a home, then you’ll want to check your report well in advance so you can get a jump on any inaccuracies you might discover.
Disputing a Charge from Your Creditor
Another, possibly more common, issue arises when you notice an incorrect charge from a creditor. You can dispute these in the same way, but the difference is that you’ll file the dispute directly with the credit provider, rather than with the reporting agency.
For example, if you notice a $200 charge on your credit card statement and you didn’t make the purchase, you’ll reach out to directly your credit card company to dispute the charge. The company will then reach out to the business that submitted the charge for verification.
While most credit bureaus don’t make any notes on your report while they’re investigating a dispute your credit card agency will typically note on our account that the charge has been disputed and is under investigation.
The credit card company is also required to let the credit reporting agencies know that a charge that’s been reported has been disputed. The creditor will usually complete the investigation within 30 to 45 days and inform you of their decision about 5 days after that. If they don’t hear back from the company that submitted the charge within that time period, they’ll usually take your word for it and remove the charge.
If the creditor finds that your dispute is valid, they’re required to provide updated information to the credit bureau right away, which will fix your credit report.
Get Help with Your Credit Report Today
Now that you know the answer to the question, “Can disputing hurt your credit score?” you understand just how important it is to review your credit report thoroughly and ensure it’s accurate.
Need some help getting your credit back under control? Contact us today to claim your free credit report consultation.