The dispute process can be unnecessarily long and frustrating. But why is that the case? Shouldn’t credit bureaus want the most accurate information about consumers? Unfortunately, in many cases accuracy is not the bureaus’ primary goal. Credit bureaus are often more concerned with profitability and convenience than accuracy, and they rarely take the time to thoroughly investigate every dispute. If you’re starting a credit repair business, this is actually good news to you, because this shift is one of the primary reasons that credit repair companies have become so popular.
“In many cases accuracy is not the bureaus’ primary goal.”
The majority of consumer credit reports contain inaccuracies, inconsistencies, or outdated information; but consumers do not have the information or representation necessary to rectify them. Understanding the means by which credit bureaus gather information and investigate disputes is an important part of operating a successful credit repair company.
When a consumer sends in a dispute letter it is first sent through the E-Oscar automated re-investigation system to filter out any duplicate or “frivolous” requests. The disputes are then electronically diluted into one of twenty-six two-digit codes. That code is then shared with the original information furnisher to “investigate”. It should be noted that, for the credit bureaus, the more information they can gather from information furnishers the better. They want to have a large quantity of data that can be sold to other organizations, so the accuracy of this data isn’t as important as the quantity.
This is a very problematic system for several reasons:
- First, distilling a complicated issue down to a 2-digit code is an unacceptable oversimplification. This is especially true because over 40% of disputes are dumped into a generic “catch all” category.
- Additionally, 70% of disputes employ nothing in the “comments” field to provide elaboration or explanation. It is impossible for these issues to be adequately explained in this situation. Consumers are often frustrated because their disputes are not investigated based on the full nature of the issue, as outlined in their original dispute letter.
- Another major problem with this system is the way that disputes are “investigated”. When a consumer writes a dispute letter because information on their report is inaccurate, the bureau will investigate by consulting the same inaccurate information they have on file, thus “verifying” that the information is correct. This type of circular reasoning can be difficult for consumers to understand, because false information is verified as correct based on the same false information.
In order to get around this exasperating and inefficient system, consumers need to be empowered with the information necessary to submit a successful dispute. The best way to do this is to send back-up documentation for every dispute. This will force the bureaus to investigate your dispute beyond comparing it with their existing inaccurate information. Additionally it is crucial to hold the bureaus responsible by continually disputing requests on a strict timeline. The Fair Credit Reporting Act
(FCRA) gives bureaus 30 days to investigate each request. Consumers should follow up every 35-40 days to ensure that their disputes are not ignored. This is why it may be necessary to submit the same dispute multiple times. Finally, if all else fails it is possible to pursue a lawsuit against the bureau for violating the FCRA by failing to properly investigate inaccurate information.