How to Initiate the Credit Dispute Procedure

The Role of Credit Reporting Agencies When Disputing Credit Reports

Jun 13, 2009

Credit reporting agencies have played a key role in the expansion of consumer credit in the US but when credit disputes arise, what are the correct procedures to follow?

There are three credit reporting agencies in the US: TransUnion, Experian and Equifax and while they do not make the decision as to whether people are given credit or not they have an important role within the credit industry. All three gather and store information that relates to a person’s credit history.

An individual credit report might include, for example, information about the conduct of loan accounts held, whether payments have been made on time or missed. It is also likely to include details of bankruptcies, civil judgments and tax liens.

It is essential therefore that credit reports are accurate and if not people understand how to start the credit dispute procedure.

Credit Disputes

Many credit disputes are triggered by the refusal of credit for no apparent reason. For those people who recognize this scenario the first step should be an application to see their credit report to ensure that all the information on it is accurate.

Under the Free File Disclosure Rule of the Fair and Accurate Credit Transactions Act (FACT Act), US consumers have a legal right to see what’s in their credit report.

Free Credit Report

Each of the credit reporting agencies in the US is required to provide a free copy of a person’s credit report once every year, if asked for it. The three credit reporting agencies sponsor a central site annualcreditreport.com, the only authorized online source for free annual credit reports. It says: “Reports requested online are viewable immediately upon authentication of Identity.” If a person believes, after viewing their report, that there are inaccuracies they can initiate the credit dispute procedure.

Although the dispute procedure is broadly the same for all of the credit reporting agencies, the following information is sourced from TransUnion.

TransUnion Credit Dispute Procedure

Once TransUnion has received a dispute request they will contact the data provider, which has up to 45 days to confirm (or not) the information. If they cannot verify the information it will be removed from the credit report, otherwise the report will be updated and a copy made available to the appropriate person. If the data provider does not respond within the required time, TransUnion will: “prevent the information” from appearing on the report.

If the data provider verifies the information it will remain on the credit report. However, if there is still disagreement over its accuracy, the consumer can add a 100-word statement giving their side of the situation. This statement will be visible to lending organizations that may access the report.

Further advice about how to initiate a credit report dispute is available from the Federal Trade Commission and the credit reporting agencies: TransUnion, Equifax and Experian.

The copyright of the article How to Initiate the Credit Dispute Procedure in Consumer Education is owned by Neil Gunn. Permission to republish How to Initiate the Credit Dispute Procedure in print or online must be granted by the author in writing.