How Do Credit Report Disputes Affect Your Credit Score?

Did you know that more than a third of Americans have discovered at least one inaccuracy on their credit reports? These inaccuracies can have consequences, especially when applying for a mortgage, car loan, or even insurance. The good news is that you have the power to fight back and dispute inaccuracies on your credit report. Read on to learn how disputes work and whether they affect your credit score.

What Is a Credit Report Dispute?

A credit report dispute arises when you identify information on your report that you believe is inaccurate. These inaccuracies can take various forms, including:

  • Inaccurate Personal Information: This could involve a misspelling of your name, an outdated address, or an inaccurate Social Security number.
  • Inaccurate Account Information: This might include accounts you don’t recognize, late payments you never made, or credit limits that differ from reality.
  • Fraudulent Activity: Identity theft can lead to unauthorized accounts appearing on your report.

How Do Credit Report Disputes Work?

If you discover an inaccuracy in your credit report, here’s what you should do:

1. Gather Evidence

Collect documents that support your claim. This might include receipts or correspondence with creditors.

2. Craft a Compelling Dispute Letter

When creating your dispute letter, you should clearly explain the inaccuracy, provide evidence to back up your claim, and request the information be corrected or removed.  However, this process can be tedious – that’s where CreditBuilderIQ comes in. We give you the tools to easily craft well-written dispute letters to send to the credit bureaus. All it takes is a few clicks to generate a detailed dispute letter.

3. Mail Your Dispute Letter

Once your dispute letter is generated, it’s time to mail it in!

4. Wait For a Response

The investigation process can take 30-45 days, sometimes longer for complex cases. The credit bureaus will keep you updated on the progress.

How Do Credit Report Disputes Affect Your Credit Scores?

Disputing inaccuracies on your credit report generally won’t directly lower your score. In fact, successfully removing inaccuracies can actually help you reach your credit goals. This is because your credit score is calculated based on factors such as your payment history, credit utilization ratio, and credit history length. Removing negative inaccuracies can help improve these factors, often leading to a potential score increase.

However, there’s a temporary catch-22 during the dispute process. While disputing an inaccuracy doesn’t directly impact your score, disputed items themselves might be flagged on your report. This flag indicates that the information is being investigated. Some lenders might view disputed items less favorably, potentially lowering your chances of credit approval during the investigation period, especially if you’re applying for new lines of credit.

Bottom Line

A third of Americans have inaccuracies on their credit reports. Fortunately, you can dispute these inaccuracies. While disputing generally won’t negatively impact your score, disputed items may be temporarily flagged, potentially affecting credit approval in the short term. Learning the dispute process and its impact can help empower you to take control of your credit report and reach your financial goals.

If you are still questioning, feel overwhelmed, or still do not know where to start, CreditBuilderIQ is here to help. CreditBuilderIQ has the tools to help you dispute as well as educate you step by step on the process of disputing.