Disputing Credit

HOW TO DISPUTE NEGATIVE ITEMS ON YOUR CREDIT REPORTS

Strategies For Small Business is not authorized or licensed to be your credit report consultant, but we are happy to give you some brief information on how to attempt correction of some of the negative items on your credit report. Be prepared to spend some time on this, especially since the credit reporting bureaus are not the easiest companies to deal with. But you’ll thank yourself for doing so—it is extremely beneficial for your credit standing and ability to receive credit/loans with lower interest rates. We find that the people that are willing to spend the time in this process, can substantially help their credit standing.

In the credit world, there are three major credit reporting services you will be dealing with: Experian, Equifax, and TransUnion. A word of warning from the beginning: Experian is by far the worst, and has devised their system to make it difficult to talk to a real live person or get a credible response by mail/e-mail. Their goal is to get you to dispute matters online, but there is a catch: what they really want you to do is pay money to get periodic reports, updates, or sign up for their monthly monitoring program. Unless you are prepared to spend literally days of unsuccessful time, the phone numbers provided will send you repeatedly into an automated system. Even the mailing address they have on their reports is erroneous and the mail will come back. If you do get a semi-conscious, English-speaking humanoid, it is probably someone who has been programmed to be a robot and either a) hangs up, b) puts you on terminal hold, c) sends you to an automated system, d) or gets you off the phone with little or no answers to your questions. The other two reporting services are actually very professional and easy to deal with.

So what is the point to all of this? While it is theoretically possible to dispute items by phone or mail, this is simply not going to happen with Experian within the next century. Since it will not do any good unless you make changes to all free credit reporting services, our experience indicates the best way to register your dispute is online.

According to law, after you make your dispute to the reporting service, they will notify the creditor and give them approximately 30 days to respond. They can either state the information is correct or is erroneous. If the creditor does not respond or admits it is erroneous, the good news is the information will have to be deleted.

Disputes Online:

Step 1: Get a current copy of your credit report.

To get a free credit report (free once a year) that covers all three reporting services, go to “www.annualcreditreport.com”. You’ll need to do this even though you have a recent copy in your file, because this has the required report numbers that the credit reporting services needed. Follow the online instructions to receive your report.

Step 2: Dispute online.

Experian: Go to “www.experian.com/disputes/ index.html” and click onto “Click here to request a dispute online”. You will need an Experian report number that should be on the free credit report that you received from the “annualcreditreport.com”. If not, click onto—

Page 1

“Order a current copy of your personal credit report”. When you get that report with the report number, go back into the system and go through the process online.

TransUnion: Go to “www.transunion.com” and click onto: “First Time? Click Here”. Fill out the personal information and create an account. Proceed through the system.

Equifax: Go to www.equifax.com/online-credit-dispute/. Enter your zip code and follow the instructions.

Disputes by Phone

As mentioned above, you can forget about doing this through Experian. Believe it or not, Equifax and TransUnion are pretty easy to deal with and it can be done by phone, although you do have to have some patience.

Step 1: Get a current copy of your credit report.

Just like above, to get a free credit report (free once a year) that covers all three reporting services, go to “www.annualcreditreport.com”. You’ll need to do this even though you have a recent copy in your file, because this has the required report numbers that the credit reporting services needed. Follow the online instructions to receive your report.

Step 2: Dispute by Phone.

Experian: Unless you are a certified masochist, don’t bother. It will do absolutely no good unless you have an Experian report number (see above). But if you feel lucky, get a good book to read and try these numbers: 1-714-830-7000 (best number to use).1-800-493-1058 (press 0, or say “speak to an agent” or “I want to speak to a live person”); 1-800-854-7201 (ask for switchboard).

TransUnion: Go to www.transunion.com. Click “Phone”. You will be able to speak with someone, but you will need: a) your TransUnion acct. number (off your free credit report), although this is optional, b) the company name of the disputed item (as listed on the credit report), c) the account # of the disputed item (as listed on the credit report), and d) the reason for the dispute, such as it is not my account, I have never been late, the account is closed, the account is paid, etc.

Equifax: See the toll free number on your free credit report.

Disputes by Letter

As mentioned above, you can forget about doing this through Experian. Believe it or not, Equifax and TransUnion are pretty easy to deal with and it can be done by mail.

Step 1: Get a current copy of your credit report.

Just like above, to get a free credit report (free once a year) that covers all three reporting services, go to “www.annualcreditreport.com”. You’ll need to do this even though you have a recent copy in your file, because this has the required report numbers that the credit reporting services needed. Follow the online instructions to receive your report.

Step 2: Dispute by Mail (see attached sample letter)

Experian: For the especially hardy amongst us, try this address: Experian, Disputes, P.O. Box 9701 Allen, TX 75013 or Experian, 701 Experian Parkway, Allen, Texas 75013. Good luck.

TransUnion: Go to www.transunion.com and click onto “Dispute”, “Mail”, “United States”, and then print out the request for investigation form and mail it to the address on the form. There is no need to prepare a formal letter. Just use of their form.

Equifax: You do not need a confirmation number and can simply mail a detailed letter regarding the dispute, the full company name of the creditor(s), and mail it to: Equifax Information Services, P.O. Box 740256, Atlanta, GA 30374.

Follow-up Letters and procedures

The traditional method of simply emailing or writing mass letters disputing credit and then waiting for them to do their 30 day investigation with fifteen days to report back to you, may not provide the relief you desire. The reporting services can be wise to this and usually are able to receive information that it is still a viable debt from the creditor.

Current credit repair companies usually do in a bit differently. The Fair Credit Reporting Act has a provision that there cannot be any reporting of derogatory credit if the information is misleading, outdated, or unverifiable. They use that loophole by demanding the credit reporting services verify the debt by receiving a copy of the contract that constituted the obligation and a copy of the debtor’s signature. In most cases they cannot do so, especially from a collection agency because they don’t receive those types of files for from the creditor.

But beware that the response from the credit reporting agency is usually they cannot verify the debtor and they write a letter saying “insufficient identification”. For this reason, along with the letter, send a copy of your driver’s license, state your social security number, and send a copy of a utility bill. If they still don’t remove it, make a complaint to the various government agencies.

Pointer: The various government agencies below have their own complaint forms and they sometimes take awhile to fill-out. But you are sending them the same information. So the trick is to prepare a detailed letter and then just insert “see attached letter” in the relevant boxes that ask you to describe the dispute. Of course, this means that you will be physically mailing the complaint form.

Complaints to government and nonprofit organization. Reporting agencies absolutely hate to receive complaints from consumer affairs–government organizations and nonprofit organizations helping people with that issue. So, for example, if you have sent out multiple letters requesting verification of the account and disputing various items, but haven’t received a response, the credit reporting agency can be in trouble and they usually respond quickly. In fact, some experts recommend that if you do not get a response to your first certified letter, don’t waste your time sending in multiple letters and go directly to the complaint process described below

Make your complaint to the following agencies:

• Federal Trade Commission: www.ftccomplaintassistant.gov. Or call 1-877-FTC-HELP.
• State Attorney General Offices. Do a Google search such as “Oregon attorney general” and you will see consumer affairs complaint forms.
• Better Business Bureau. Make the complaint with the local bureau nearest your home or office: http://welcome.bbb.org> zip code>File a Complaint.
• State Consumer Affairs Agency. Every state has a consumer affairs agency which investigates complaints by consumers. To find your local state agency, go to: www.consumeraction.gov/caw_state_resources.shtml.

Disputes by Small Claims

Introduction: As mentioned above, one way to dispute items is to write a protest letter to the reporting services and see if the creditor responds within 30 to 45 days. If the creditor does not notify the reporting service that the charge is a valid, or ignores the request, the negative information must be taken off. As you might imagine, this is somewhat of a problematical method because you’re never certain what the response will be.

The only thing that is certain is if you have a judgment in your favor stating that you do not owe the bill or that it should be taken off your credit report, the agencies must immediately take it off. It is clearly the most powerful and cogent redress you can have under the circumstances. You don’t have to worry about arguing with them, giving further explanation, or offering additional evidence. As soon as they receive a copy of the judgment they must act immediately with no questions asked.

For some reason, most people do not want to go to the time and effort of bringing a small claims action even though it is clearly the best way to precede. You do not have to have a lawyer, the fees are very small, and you can usually get into court within four to six weeks.

The only problem is you can use this avenue only if you have a good chance of showing the court that the negative item is their fault. So, here are examples (there are many

such instances and these are illustrative only) of situations in which it would be beneficial to go to small claims court:

Examples–Decent Chance to Win in Court

• “It is not my bill”. This is used in cases of identity theft, fraud, mistaken identity (especially if you have a common name such as “Smith”), or if someone orders products or services without your knowledge. But you cannot use this defense if you are jointly liable and signed the original credit application. So, if A and B both signed the credit application, but B alone incurred the bill and never pays it back, A is also liable (even though that person never made any charges).
• “I never ordered it”. If you showed an initial interest in a product or service, such as a promotion, trial basis, direct mail offer, or solicitation, but did not actually sign a contract. Billing you for it would be improper.
• “I was charged an improper cancellation fee”. An example would be canceling a cell phone service, paying everything that you were owed, but then being assessed a cancellation fee that was never disclosed.
• “I don’t even know who this company is”. There are rare cases in which the credit reporting service has flatly made a mistake and has you down for a delinquency from a company that you have never dealt with. In most cases, however, the name that appears on the credit report is a collection agency you may not recognize, although you did in fact incur the bill. You need to call that company, tell them your name, and find out who the original creditor was.
• “I was double billed”. These are cases in which you ordered the product or service, but got charged more than you had originally requested. An example would be ordering two bottles of vitamins for $50.00 but getting shipped four bottles and charged $100.00.
• “I never got the discount I was promised”. This is a case in which you order the product but they told you it came with a discount or additional free material which never came. As a result you have refused to pay for it and it is now showing as delinquent on your report. Using the vitamin example above, this would apply if you were told that the purchase of $50.00 worth of vitamins would also come with free skin care products, you never received them, and so refused to pay for any of the product. This usually involves a long standing dispute, with letters and phone calls back and forth, but never having been resolved.
• “I have an improper finance charge or interest assessment”. You have been religiously sending in your payments and have verification either by certified mail or a FedEx receipt, but the creditor always claims it comes in late.

  Page 5

  Because of that creditor’s disorganization, selling to another company, or other

  causes, it always seems you are hit with a late charge. Bear in mind that

  many companies make a lot of their money by assessing late charges and so

  they’re rather zealous in claiming them.

• “I was the victim of misrepresentation”. An example would be agreeing to sign-up for a credit card under an introductory offer that said the interest rate would never exceed 12%. When you receive the card and read the fine print, it turned out it was 18%. You tried to cancel but were assessed a fee.
• “I paid it, but it’s not showing up”. There is nothing more disconcerting than paying off a creditor and then finding out that they in turn did not report this to the credit reporting service. The best approach is to issue a strong demand letter to immediately report the payment and if this is not forthcoming, bring the small claims action.
• “This was included in my bankruptcy”. All delinquencies included in a bankruptcy that has been finalized and discharged can be deleted from your credit report. Such creditors are usually listed in a schedule F (if you filed a Chapter 7). You will know you have been discharged because the last paper you receive from the bankruptcy court is called the Order of Discharge. If you used a lawyer, many times they have a standard letter sent to the credit reporting services demanding all such items be deleted. If this hasn’t been done, you can write your own letter followed up by the small claims action if nothing is done.

  Sometimes a credit reporting service keeps the delinquency on the report with a statement it has been discharged or in another section of the report simply list bankruptcy as a matter of public record. You should demand that it be taken out of the report completely.

• “I paid this before it went into collection”. This is in cases in which you paid the original creditor everything they wanted and later it went into collection anyway. You shouldn’t have to deal with a collection agency when the obligation has already been paid.
• “This is an old account that should be taken off the report”. By law, derogatory credit can stay on your report only for certain periods of time: bankruptcy, ten years after the discharge date (Fair Credit Reporting Act Section 605(a)(1)), civil judgments, seven years after entry of judgment (605(a)(2)), paid tax liens, seven years from payment (605(a)(3)), charge-offs or collection agencies, seven years (605(a)(4)), other delinquent accounts, seven years (605(a)(5)).
• “A second collection agency has reported a delinquency after the expiration date”. Assume you have an account that went to collection in 1997. Seven years later in 2004, it was taken off your report. Suddenly in 2005, it was assigned to a second collection agency which re-entered it and put it down as

  Page 6

  an obligation that became due in 2005. This is illegal “re-aging” and you should have it immediately removed.
  

  Examples–Little Chance to Win in Court

  You can’t expect to be successful in court by simply disputing everything that you would like to have off your report. There are simply instances in which nothing can be done. On the other hand, some people take the position of “why not give it a chance?“, especially since large corporations don’t like to appear in court and you may be successful in getting a default judgment. This means winning by default because the other side does not show up. But there is a catch: if you have an exceptionally weak case, the judge will probably insist you give evidence and prove at least a prima facie case before he/she makes an award. If the

  judge finds the case unmeritorious, he/she may rule against you anyway. Even worse, a

  judgment against you, under the principles of res judicata will prevent you from ever disputing the case in court again. So, here are some common examples of when not to go to court:

• Slow pay.
• High credit card balances. ü Good moral excuse but bad legal excuse. You may have the best reasons in the world for being behind on your bills but it won’t help you legally in court. Common examples are injuries, health problems, casualty losses, divorce, loss of employment, caring for parents, and death and the family.
• Co-signing. As long as you have agreed to be liable, there is no defense even though someone else is running up the bill. For example, you could co-sign on a car purchase with your adult child and that person may fall behind or even have the car repossessed. Even though you were not personally involved in the bill paying, you’re still liable.
• Voluntary repossessions.

  ü Totaling of your car. In some cases the insurance does not cover the entire value–then you are hit for the excess.

• Insurance disputes. If you have a dispute with your insurance company and the medical bill goes unpaid, you are still liable.
• Uninsured. It is common to have medical collections because you urgently needed the medical care but were uninsured and didn’t have the funds to pay for it. Although our sympathies are with you, the courts are not.
• Business is slow.
• Verbal promises or representations never put in writing. If you’ve ever watched Judge Judy, you will see that most disputes involve “He said–she said “. Nothing was put in writing and it’s a question of who believes who. So, you buy a stereo system and the salesperson has promised you two or three times in the store that your first payment will be July 1^st. But the signed contract clearly states March 1st. Good luck proving that one.
  

  Procedures to take.

Step 1: Write a demand letter to the credit reporting agencies. The first statement out of the mouth of the judge will probably be: “Have you attempted to contact any credit reporting agency or this creditor and asked if they would remove this item before coming to court today?” Judges like to see you exhaust administrative remedies before going into court. It’s possible they may not ask this but if they do, you could be dead before you begin.

As a consequence, it is recommended you first write a demand letter to 1) the disputed creditor and 2) all three credit reporting services. The addresses of those agencies are listed above. You can send these letters simultaneously. For proof of delivery, send them certified. Use the attached sample letter.

I know what you’re thinking: you just told us Experian cannot be counted on to respond to your letters. But that is their problem. By law they are required to do so and most importantly, if they do not respond within 45 days of your letter, as a matter of law, the item must be removed. In a way, you don’t care about a non-response. You have the proof that you sent the letter and that is all that matters.

Step 2: Wait 45 days. The Federal Fair Credit Reporting Act requires the credit agencies to respond to your request within 30 days (to get an answer from the creditor) and an additional five working days thereafter to respond to you. With the time it takes for mail delivery, wait 45 days to be safe.

If they do not respond to you, as are matter of law, the information must be deleted. Then you are ready to go into small claims court to get a judgment forcing them to do this.

If they respond telling you the item has been deleted, you have won the battle and there is no need to go to court.

If they respond stating the item will not be removed, go to court anyway and prove your case. If the judge orders it removed, they must comply with this court order.

Step 3: Go to Small Claims Court.

Assuming you have a decent chance of prevailing, collect all your evidence, especially written documentation, including letters, receipts for payment or delivery, bills, printouts, canceled checks, your demand letters to the creditor and the reporting services (see Step 1 above) and the like. Get the exact legal name of the creditor and the address of their main office. It’s best to use the location of one of their offices which is staffed by real people in your state. Then go to the small claims court in the county in which you reside. Call first to find out exactly what you need and how much it will cost. You can almost always fill out the forms at the counter. They can help you with service of process which in many cases can be done by certified mail. Some clerks will even help you to identify who the agent for service a process is as to large multi-state companies.

You’ll be asked to fill out a brief statement of your case. Make sure you include the phrase “Fair Credit Reporting Act”. An example of such a statement would be: “Dispute with Acme phone service for $232.00 under the Fair Credit Reporting Act “.

You will be happy to hear that in many cases, faced with the prospect of going to court, the creditor and or the agency may not show up. Better yet, they suddenly and miraculously wake form their stupor and give you customer service. They actually call or write you immediately with an apology stating that they have immediately removed the item. If that’s the case, you need not appear in court.

Step 4: If you win, serve a copy of the judgment on the reporting agency and the creditor.

Typically, you will receive your judgment in the mail and if it is in your favor, send a copy to all three agencies by certified mail with the following statement:

“On _________ I wrote this agency demanding that derogatory information be

immediately removed from my credit report. I am enclosing a copy of that letter.

After (choose one) no response / unsatisfactory response, I served you and went to

court.

As you can see from the attached copy of the judgment, the court agreed with me and has ordered that any derogatory information regarding this account be deleted and removed. Demand is hereby made that you immediately take steps to remove this. Within five days of receipt, I will expect to receive a copy of an updated credit report reflecting this deletion. If not, I will bring an appropriate complaint with all appropriate Federal agencies and the Better Business Bureau. This may also involve the assessment of attorney’s fees and costs, as well as civil liability for as much as $1,000.00. “

Good Luck. Sue Malone.

Download Request for Credit Investigation