Disputing items on your credit reports online with the Credit Bureaus, may seem on the surface, like a quick and efficient way to handle disputes. However, the electronic dispute process can cost you dearly in the long run. By filing online disputes you may be giving up your consumer rights and some of the most effective dispute strategies available to you.
If you dispute an item from your credit report the credit bureaus have 30 days to complete their investigation pursuant to your dispute. If the item cannot be verified within 30 days the credit bureaus must remove it because they are not allowed to maintain information that is unverifiable.
The Credit Bureaus will try to convince you that online disputes are the most convenient and efficient way to dispute items on your credit reports. However, developing and mailing personalized letters has been shown to get much better results than online disputes. Maintaining good records is a very important part of the credit repair process. You need to have a paper trail while building your case of disputed items. When you dispute electronically, you lose the ability to attach supporting documentation, fully explain the situation and make your case for why you feel the item should be removed.
The Credit Bureaus use an automated system called E-Oscar, to create and respond to consumer credit history disputes and verify the accuracy of an account. Instead of calling the creditors themselves to check on information a consumer has disputed, it is all done via a computer. Every dispute is reduced to a 2-character code and supporting documentation is NEVER sent to the information furnishers, who are the credit companies, mortgage companies, courts and collection agencies. The credit bureau investigators have only a maximum time of 4 minutes to determine which 2-digit code to use for the dispute and send it through E-Oscar, back to the information furnisher. The bureaus are required by law to do a reasonable investigation of each dispute. However, a 4 minute investigation would hardly seem very thorough and reasonable to most people.
If you receive a response letter from a Credit Bureau, which states that a creditor has verified information in your credit report to be accurate and you believe it to be false, then you can send another letter asking the Credit Bureaus to inform you of the “Method of Verification.” In other words, you are asking the original creditor for records of the debt. However, if you dispute online, you lose this right due to the clause in the Fair Credit Reporting Act (FCRA), which states that “the agency shall not be required to comply with paragraph 7. “ This hurts consumers as they lose that leverage to take any action against the Credit Bureaus in court, or with the Federal Trade commission (FTC). By filing electronic disputes you are giving up one of the best dispute strategies of being able to demand to receive documentation of the debt.
The consumer protection laws require Credit Bureaus to provide you with a 5-day written notice prior to re-inserting deleted items, usually called “Soft Delete.” If you dispute online, you lose this leverage. They are not required to provide the 5-day written notice and deleted items can be placed back on your credit report pretty much without notification.
Disputing online with the Credit Bureaus makes their job much easier, reduces their liability and allows them to claim that they verified the transactions,without having to provide documentation to the consumer. The best chance for consumers to clean up their credit reports is not to dispute electronically, but to take the time and effort to send well written personalized letters. This method protects consumers rights and helps to maintain a level of pressure on the Credit Bureaus to remain in compliance with the FCRA.