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When you find a mistake on your credit report, the advice is always the same: dispute it. It is your right under federal law to dispute incorrect or incomplete information with both the credit reporting agency (or agencies) reporting the data, as well as with the furnisher—the issuing credit card company, auto lender or debt collector, for example. Typically, the furnisher must investigate and respond within thirty days.

But just because an item is disputed doesn’t mean it will be fixed. In written testimony submitted to the House Financial Services committee in 2007, Stuart K. Pratt of the industry group the Consumer Data Industry Association (CDIA), said that out of 52 million credit file disclosures reviewed by consumers, only 1.98% resulted in a dispute where data was deleted. Here are five reasons why credit report disputes don’t always get results.

The human touch is missing. At least that’s the take of the National Consumer Law Center. In its 2009 report, Automated Injustice: How A Mechanized Dispute System Frustrates Consumers Seeking To Fix Errors In Their Credit Reports, NCLC explains that the system for handling disputes is highly automated.

Here is how it works: When you dispute an item, it is coded using a two- or three-digit code corresponding to the reason for the dispute (“account not mine,” for example). While this can be done online, if you choose to mail in your dispute, the person processing it will code it. The consumer reporting agencies’ computer then “talks” to the furnisher’s computer. If the item is “confirmed” as correct, you’ll be told that. If the furnisher does not respond, it will be removed. If the furnisher confirms there is an error, it will be corrected.

While this system can be highly efficient, the NCLC believes it also creates problems for consumers trying to get items corrected. They point to a couple of specific problems:

  • Failure (by the CRA) to send supporting documentation to creditors and other information providers (furnishers) as required by the FCRA.
  • Limited role of employees who handle disputes (or of foreign workers employed by their offshore vendors) to little more than selecting these two- or three digit codes. Workers do not examine documents, contact consumers by phone or email, or exercise any form of human discretion in resolving a dispute.

In other words, what consumers normally expect of an investigation—someone thoroughly reviewing documents, making phone calls, asking questions, etc.—is not likely to happen.

It’s the creditor’s word against yours. At least that’s the perception. The reality is that in the highly automated dispute process just described, no one is siding with or against the consumer—computers are simply communicating. Still, unless the furnisher agrees the information is wrong, or the consumer proves it’s inaccurate (and can get someone to pay attention to that proof), it may continue to be deemed “accurate.”

Norm Magnuson, CDIA Vice President of Public Affairs, believes that consumers have more leverage than they realize. “I don’t buy that argument that lenders don’t really care. I think they do. But none of us are infallible,” he insists. “The creditor is probably predisposed to work with its customers. Creditors know their customers can take their business elsewhere.”

You’re mixed up with someone else. According to the NCLC’s report, “mixed files occur largely because the credit bureaus’ computers do not use sufficiently rigorous criteria to match consumer data precisely, even when such unique identifiers as SSNs are present.” Mixed files can be a persistent problem for someone with a common name, or someone who has a relative by the same name (Jr., Sr., for example).

Evan Hendricks, founder of Privacy Times and author of Credit Scores and Credit Reports: How The System Really Works, What You Can Do (3rd edition), says that when you dispute an item because you don’t believe it belongs to you, the credit reporting agency may “soft delete” or “cloak” the item. It’s not removed from the system, but is flagged to help prevent it from reappearing on your report. “Mixed files continue to be a problem,” he says. But “we don’t have the research we need (to determine the extent).”

What you think is a mistake isn’t. Over the years I’ve spoken with many people who have misconceptions about how the credit reporting system works. For example, they think that an account that was paid off years ago should not be on their credit reports. (Not true. As long as information is not negative, it may be reported indefinitely, and those older accounts may be helpful.)  Another example: expecting up-to-the moment balances on credit cards. (In reality there may be a lag between the time when you pay a credit card bill and the balance is updated with the credit reporting agencies.)

In written testimony submitted to the House Financial Services committee in 2007, Stuart K. Pratt of the CDIA asserted that “Many disputes, perhaps as much as 55 percent, are in reality a request for an update of accurate data.

Your dispute is flagged for fraud. Credit reporting agencies say that as many as a third of all disputes come from credit repair clinics that flood them with challenges to accurate, but unfavorable, information. Under the FCRA, they are allowed to refuse to investigate disputes of “frivolous” information.

[Resource: Get your free Credit Report Card]

Tips for Disputing Credit Report Mistakes—and Getting Results »

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