Does Disputing Your Credit Report Work?

Responsible borrowers may have bad credit as a result of mistakes by lenders or credit reporting agencies. Consumers sometimes view the credit agencies as all-powerful corporations that control their credit scores, but the agencies are bound by law to investigate your dispute and correct any error. Proving that an error has been made, however, is not always a simple task.

Identification

The federal Fair Credit Reporting Act (FCRA) has provisions giving consumers the right to dispute false information in their credit report. The major credit rating agencies -- Equifax, Experian and TransUnion -- have 30 days to investigate each claim. If they cannot verify the accuracy of the negative item, they must delete it from the report.

How the Dispute Process Works

The majority of the thousands of disputes that pass through the credit rating agencies go through an electronic dispute resolution system called "e-OSCAR," according to Smart Money. This system essentially tells the lender to review the disputed item. The lender then sends in new data, if necessary. Some disputes, such as those requiring considerable documentation, usually require a human to investigate the claim.

Warning

Disputing legitimate negative items on a credit report rarely works and is not an ethical way to fix your credit. Some unscrupulous credit repair companies suggest that their customers dispute all negative items en masse, hoping the credit agency won't be able to verify the items within the 30-day limit. If you dispute several legitimate negative items at once, the credit agency can disregard the action as frivolous and not investigate the claim.

Tip

You can obtain a free credit report from AnnualCreditReport.com once each year and review it for mistakes. You can dispute the error through each agency's online dispute resolution form, but it may be more effective to send a certified letter with copies of evidence supporting your claim, such as canceled checks, according to MSNBC. You should document any interaction with the credit reporting agencies, in case you need to file a lawsuit to clear your name.