The Wrong Way to Dispute Your Credit Report

Credit bureaus respond to consumer credit disputes via mail. They will either delete or verify the information. If the item is verified, it means the bureau is keeping that information on your credit file.

Credit bureaus always respond to disputes with a letter where they inform you that you have the right to attach a 100-word statement to your report. Often, people believe this is a good opportunity to explain away their negative information or argue their case.

It may be difficult to resist the urge to proclaim your innocence by way of a consumer statement. You may feel the need to explain that the bad credit simply was not your fault or beyond your control.

Do not fall into the trap of adding a consumer statement to your credit. It is almost never a good thing.

Do not mistake the 100-word statement for good faith on the part of the credit bureaus. As you will see, such a statement is usually used against your best interests.

Let’s assume that you were to attach a statement like this: “I was only late on my credit cards because I was laid off from work. Once I found another job I caught up on all my bills and have never been late since.”

It may seem unreasonable to punish somebody for losing her job. Especially if she caught up on all her bills.

Credit bureaus interpret a late payment one way. They interpret it as an indication of a bad credit risk.

Instead, the credit bureaus see somebody who isn’t smart enough to have an emergency fund to cover basic minimum payments should something go wrong financially.

Writing a 100-word statement can damage your credit for three more reasons. First, such a statement only cements the fact that you paid your bill late. Second, the credit bureaus already have confirmation that the late payments are accurate. Thus, should you dispute the items in the future, the credit bureaus will ignore that dispute or deem it “frivolous.” Third, any future creditor will expect you not to pay them should you run into another financial emergency. As you can see, there is no benefit to the consumer when they attach the consumer statement. In fact, the purpose of the statement is so old and out-dated that it probably should be simply abolished. It was part of the original Fair Credit Reporting Act enacted by Congress in the 1970’s. The statement has no purpose nowadays since most credit applications are reviewed electronically.

Nowadays applications for new credit such as a credit card or car loan are based upon your score - not your statement. Therefore, the statement is only a weapon that the bureaus can use to ignore your credit report disputes.

In sum, ignore the temptation to tell your side of the story. Resist the urge to “justify” your being late on that credit card bill or car payment. Steer clear of adding the deadly 100-word consumer statement.