Knowing when and how to dispute accounts on your credit report can make a huge difference in getting inaccurate information removed from your credit profile. Despite some promises to the contrary that you might come across, dispute letters are not the be-all-end-all of the credit repair process. There is no special formula to writing a carefully-worded argument that will convince the credit bureaus to drop your bad credit history as soon as they receive it.
Yet this myth continues to persist, so I thought I’d take the time to set the record straight on disputing your bad credit history. The trick to writing dispute letters that work is that there is no trick; it’s about knowing how and when to use them.
The first thing to know is that there are actually three different kinds of dispute letters for different scenarios and account types on your credit report. They are the regular dispute letters, pay for delete letters, and debt validation letters. Knowing which letter to use for which account is the key to cleaning up your profile and improving your credit score.
When you find an account on your credit report that you believe to be reporting inaccurately, you’ll want to draft up a dispute letter to the credit bureaus. Instead of worrying about how best to word your argument, focus on detailing exactly what is inaccurate about the account (a balance that’s off, incorrect account dates, etc.).
Be sure to include documents that will back up your claims when you send your disputes off, and to send all correspondence through certified mail. This way, you’ll always have confirmation that the credit bureaus actually receive your disputes.
The bureaus now have up to 30 days (plus mail time) to investigate your dispute claims and report their findings, as well as forward you an updated credit report if your dispute results in any changes. If your disputes are unsuccessful, and you still believe the account is reporting inaccurate information, you can ask that a record of the dispute is put into your file.
We also recommend you stick to regular mail for your disputes over sending them online. Using the credit bureaus’ online dispute process doesn’t afford you any records of the dispute and doesn’t allow you to send documents to back up your claims. You also give up your right to take the credit bureau to court over the account by going online-only.
Debt validation letters
If you have a collection account on your credit report that you don’t even recognize, you’ll want to take care of it as soon as possible. Having accounts in collection on your credit report is a recipe for disaster if you’re planning on applying for a loan or new credit line.
Send a debt validation letter to the collection agency. The purpose of these letters is to call into question not only the validity of the collection on your report, but also the collection agency’s right to collect it from you. You’ll want to ask them to provide written proof that you owe them the debt, as well as account statements from the original creditor. Send these as soon as you notice the account or receive their written notice.
Again, the collection agency has 30 days to investigate and respond. If they can’t provide proof, tell them you want the account wiped from your report entirely. If they fail to respond at all, notify them that they’re in violation of your rights under the Fair Debt Collection Practices Act, and that if they do not respond to your requests for proof, you’ll file suit in small claims court.
Pay for delete letters
And what about the accurate accounts and collections? You’re going to have to pay those off if you want your credit score to improve. If you’d rather have it done sooner than later, you can try to negotiate a pay for deletion agreement with the collector(s).
Pay for deletion works exactly like it sounds – you agree to pay the collection account on the condition that it’s removed from your report once it’s paid. Not every collection agency will agree to this, but most are more receptive to the idea if it means getting some type of settlement out of you. Make sure you get everything in writing, especially if you do get them to agree to a PFD.
The downside might be that they won’t let you settle the account for less which, depending on how old the account is, could be a good or bad thing. Either pay it in full and have it deleted, or settle for less and have it remain on your report until the statute of limitations is up.
This is a guest post from John LeBlanc, a writer for My Credit Group, a website dedicated to helping consumers repair their credit.