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If You Lose a Credit Bureau Dispute, Get Set for Round 2

Credit Score, Personal Finance
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If You Lose a Credit Bureau Dispute, Get Set for Round 2

When there’s an error on your credit report, you may file a dispute with the credit bureaus, but there’s no guarantee you’ll be able to set the record straight. Even with more thorough investigations, some requests still fall through the cracks. The good news is that filing a dispute doesn’t have to be your last shot at fixing your credit.

If the bureaus reject your disputes, consider these next steps:

Remain silent

If your credit report dispute is rejected, the Fair Credit Reporting Act gives you the right to add a 100-word consumer statement to your report explaining your position. This may not be as helpful as you think, though.

“It’s like putting a Band-Aid on a heart attack. It’s not going to do anything,” says Tracy Becker, a credit expert and president of North Shore Advisory Inc., a credit restoration company. Your chances of getting new credit probably won’t improve, she notes, since most lenders use automated underwriting systems to determine a borrower’s creditworthiness. These systems, which sometimes approve or reject potential borrowers in seconds, don’t look past the numbers.

If you add a consumer statement that acknowledges the negative information on your reports is correct, credit bureaus then have proof of your guilt. And if the information wasn’t completely correct, it makes it difficult to repair credit reports in the future, she adds. You may be better off saying nothing on your reports and answering lenders’ questions individually.

Troubleshoot

Don’t assume that the error on your report is the mistake of the credit bureau or even the lender. If you didn’t get your mail, it may be the post office, or if your spouse forgot to pay a bill, it may be an oversight.

And there’s a chance you could be at fault without realizing it. Maybe you co-signed for a loan, the borrower fell behind on payments and you didn’t step in and cover them. Perhaps you gave the wrong address to your creditors. Sometimes, fixing the problem has nothing to do with contacting the bureaus. Start at the beginning and figure out where things went awry, then work on making things right.

“You have to uncover the facts,” Becker says. “Then find the resolution.”

Set up a fraud alert

If you’ve been a victim of fraud in the past, noting that fact on your credit reports won’t improve anything. Instead, find ways to prevent it from happening again. Becker recommends adding fraud alerts to your credit reports, which require creditors to verify your identity before extending credit to you. If someone applies for a credit card using your Social Security number and there’s a fraud alert on your report, the creditors will call you to verify the transaction. You can set up this service for free by following this guide from the Federal Trade Commission and renewing your request every 90 days.

Remember that you can also get copies of your credit reports from TransUnion, Experian and Equifax for free every 12 months through AnnualCreditReport.com. Reviewing your credit regularly and keeping careful records of your credit statements can make it easier to resolve future issues.

Call in a pro

If you think your credit report is inaccurate, but the credit bureau says it’s correct, consider enlisting the help of a reputable credit counselor. These experts, who specialize in resolving credit issues, can help you address problems you may have overlooked on your own.

Remember, there’s a difference between getting the advice of a certified professional and getting caught up in a credit-repair scam, where a fraudster uses illegal methods to change credit reports. A good credit counselor can help you improve your credit legally.

Don’t avoid seeking expert help just because you think you can’t afford it. The National Foundation for Credit Counseling website lists several member agencies that offer free credit counseling and low-cost plans. On NerdWallet’s Ask An Advisor platform, you can also pose your questions to credit experts, such as Becker, and get personalized help for free.

Once you have a professional on your side, it may be easier to deal with your credit issues and boost your score. That could make it easier to qualify for new credit, get approved for an apartment and even secure a new job.

“You need to be more aggressive about improving your credit,” says Becker. “It can save you a fortune.”

Claire Tsosie is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @ideclaire7 and on Google+.

This article was updated July 1, 2016. It was originally published March 13, 2015.