You’ve ordered and received your credit report, verified the information on it and identified items to be disputed…

I suggest that you dispute all NEGATIVE items.  (Don’t dispute an outdated POSITIVE item. I did that once. It was removed and I felt like an idiot later.)

There are several methods you can use: (1) dispute items with the Credit Reporting Agencies, (2) dispute items with the Creditors, (3) negotiate with your Creditors, (4) file segregation (do NOT use.  illegal.), and (5) a statement to be included with your credit report. 

Choose the method that best fits your situation.

1: Disputing Items With the Credit Bureaus

When you write to the Credit Reporting Agencies, include the following information: your credit report file number, social security number, date of birth, current address, company name of the disputed item, account number of the disputed item, reason for your dispute and any corrections to your personal information.  In most cases, you can dispute your credit report online, by mail, or by phone (not suggested).  I have included sample letters to be used when disputing credit report entries; however some Credit Reporting Agencies may also include a form with your credit report.  You can use either method.  I found that using my own letters was easiest, so that I didn’t have to write everything out more than once.

Keep a file for each Credit Reporting Agency and an accurate record of all correspondence with them.  Track the dates you send letters and the dates you receive responses.  If you speak to someone over the phone, record the time and date and the person’s name, along with any information covered during the phone call.

Once the Credit Reporting Agencies have received your dispute, they will flag the disputed items. The flag will usually stay on your file for 60 days after the investigation is completed. You will be notified of the results of the investigation and be sent a copy of your updated credit report. If you again dispute the item without waiting the 60 days for the flag to be removed, the Credit Reporting Agency MAY reject your dispute and mark it as frivolous.

If you do not agree with the results of the Credit Reporting Agency’s initial investigation, wait 60 days and send a follow up letter. You’ll also want to send a follow-up letter if you have not received a response from the Credit Reporting Agency.

When dealing with the Credit Reporting Agencies, do not allow a refusal to remove or correct an item that you know is inaccurate to intimidate you. As a consumer, you have rights under the Fair Credit Reporting Act (FCRA) and the Personal Information Protection and Electronic Documents Act (PIPEDA) in Canada.

Be persistent. Note, however, the Credit Reporting Agencies will NOT investigate items that they feel are frivolous, so don’t overburden them with disputes.  (Meaning: Don’t send 20 copies of the same disputes to the same Credit Reporting Agencies. It won’t do any good and it may make them angry.)

2: Disputing Items With Creditors

In some cases, your best bet may not be to contact the Credit Bureau first:

Late payments: If you can prove, with canceled checks or payment receipts, that you were never late on the account, send the Creditor a certified letter with copies (NOT originals) of your proof and ask that they review your payment history and send you a copy. Hopefully, this will suffice and they’ll correct your credit report. If they don’t, send a letter to the Credit Reporting Agency disputing the late payment and provide copies of the letter you sent to the Creditor, the payment history (if they sent it to you) and the proof of your payments. If the Credit Reporting Agency can verify that you weren’t late, they’ll remove the negative item from your report.

Bankruptcies: If your bankruptcy information is inaccurate, mail a certified letter to your Bankruptcy Trustee requesting that the information be corrected on your credit report.

Collection accounts: If you have multiple items on your report for an account in collections (for example, both the original Creditor and the collection agency), mail a certified letter to the original Creditor and ask that their item be removed since the account was placed with a collection agency. If they don’t respond, send a letter to the Credit Reporting Agency.

If you’ve disputed a negative item with the Credit Reporting Agencies which was NOT accurate, but they’ve not changed or removed it (similar to the “Late Payments” section above), go directly to the Creditor and ask for the information being used to support the negative item on your credit report. If they don’t respond within a reasonable amount of time, send a letter demanding that the negative rating be removed.

When you contact the Creditor, identify yourself and the account in question. Hold them responsible for the incorrect rating. Inform them that you will contact an attorney if the matter is not resolved. Send the letter to either the Credit Manager, the President of the Company, or both, or anyone you feel would be able to correct the item.

See the Sample Letter Index!

3. Negotiating with your Creditors

What if negative items on your credit report ARE accurate? Sometimes you can negotiate with your Creditor to get the negative rating removed.

There are two methods you can use: consulting with a professional such as Consumer Credit Counseling Services, or negotiating on your own. (Consumer Credit Counseling Services is free. You can visit them at www.cccsintl.org, or call 1-800-873-2227.) There is some debate over which method is the best way to negotiate accurate negative items appearing on your credit report. When using Consumer Credit Counseling Services, your accounts may be listed with a rating of “in consumer credit counseling”. Since your goal is to improve your credit, this may not be the best route to take, since Creditors may consider this a negative rating. HOWEVER, some people need the structure that CCCS can give, so decide which is best for you.

If you decide to negotiate on your own, the best time to do so is when your account is in the last stages of collection. By this time, the Creditor has generally given up any hopes of ever collecting the full amount and may be more willing to negotiate.

When you call the Creditor to begin negotiating, remember that you got yourself into this predicament (for whatever reasons). Be honest and polite with the Creditors. Let them know you are trying to re-establish your credit and return to the “good credit” path. Offer some type of repayment plan to the Creditor, preferably a lump sum, not a monthly installment, as a complete settlement of your debt. Realistically, you should expect to pay anywhere from 60% or more in order to clear the debt and its negative rating. The smaller your balance is, the more you can expect to pay.

As with any negotiation, start with a lower amount than what you want to repay (unless your balance was small to begin with); however, don’t start too low or the Creditor won’t take you seriously. Also, make sure you are negotiating with someone who has the power to agree to a settlement. Ask them. They need to understand up front that your only motivation in working out an agreement is to re-establish your credit. Settle for nothing less than a neutral rating or non-rated account.

Once you have reached a verbal agreement, send a written copy of the settlement agreement to the Creditor. Request that they sign it and return a copy to you. Upon your receipt of the signed agreement, send your check to the Creditor. Write “Paid in Full” on your check. After 30 days, order your credit report. If the item has not been changed or removed per the agreement, send a follow-up letter to remind the Creditor of the agreement. The Creditor can be sued for breach of contract if they do not abide by the agreement.

See the Sample Letter Index for a sample ”Settlement Agreement”!

4. File Segregation

File Segregation is a method touted by some “Credit Counselors” as a way to improve your credit. Do NOT attempt this method. It IS illegal. Be wary of anyone who attempts to sell you this type of information. You want to improve your credit rating, not go to jail.

Typically, these “Credit Counselors” will tell you to apply for an EIN - Employer Identification Number - and to use this in place of your Social Security Number on any credit applications.  It is a crime to misrepresent information on your credit applications and you can face stiff penalties for doing so.

For further information on File Segregation and your rights, if you’ve been approached by one of these “Credit Counselors”, please see the Federal Trade Commission’s publication: ‘File Segregation’: New ID Is a Bad IDea.

5. A Consumer Statement

You may write up to a 100-word statement, explaining the reasons for a negative item. This can be useful when the amount of debt is small or when your credit report has only one negative item and several that are positive. Your statement should be concise and to the point.

A sample ”Consumer Statement” has been provided in the Sample Letter Index!

I was told that my letters to the Credit Bureaus must contain the specific law that required them to remove disputed items that cannot be verified. Your letters do not state the laws in them. Do you know if this is necessary?

My letters refer to the Fair Credit Reporting Act, which is enforced by the Federal Trade Commission. To my knowledge, this would be the only law that would need to be referred to. Laws in other states may be different, but, in Texas, this seems to have been sufficient.

I am trying to buy a house and I have a bankruptcy and an item in collections. Is it possible to clear that up?

Negative items that are outdated (7 years for negative items, 10 years for bankruptcies), inaccurate, unable to be verified, or that don’t belong to you MUST BE REMOVED, according to the Fair Credit Reporting Act. Unless your bankruptcy, or collection item, is outdated, or somehow inaccurate, the items cannot be removed.

Do I need to send a separate letter to each Credit Reporting Agency?

Yes. You should tailor a letter for each Credit Reporting Agency and the items which appear on each report they have provided.

The Credit Bureaus provided a form for disputing entries with my credit report. Should I use it?

You can use their form. I choose not to, because it’s easier for me to type everything in one letter. Plus, by writing your own letter, you’ll have more space to say what you need to say.

Can I dispute everything in one letter or should I put each dispute in a separate letter?

As far as I know, there is no reason you should not dispute all negative entries in one letter. For example, you have 3 outdated entries and 2 incorrect entries. Write one letter disputing all 5 entries. If you’d prefer to write 2 letters, one for the outdated entries and one for the incorrect, you can do that, too.

When corresponding with the Credit Bureaus, how much information should I provide?

The rule of thumb is to make the Credit Bureaus responsible for verifying credit entries; therefore, you don’t want to confirm negative entries for them. If you’ve been the victim of identity theft, though, you’ll want to tell them EVERYTHING. Use common sense.

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