Does Disputing Your Accounts Drop Your Credit Score?

If you’re in the process of rebuilding your credit, you might have started by trying to get negative listings removed from your credit report. Getting these negative events deleted from your report entirely can result in your score jumping significantly. However, if you’re in the dispute process, you might have a few questions.

You might be wondering how long negative listings stay on a credit report. Perhaps you want to know how to file a dispute, and most importantly, you might be asking, how can a dispute affect my credit score? If you had any of these questions, you’ve come to the right place. In this article, we will go over the answers to these questions and give you a detailed overview of how disputing negative listings on your account can affect your credit score.

The Credit Dispute Process

Under the Free Credit Reporting Act, consumers have the right to dispute any negative information showing up on their reports that they believe to be inaccurate. The process is relatively simple. Here’s how it works. The first step is to request a copy of your credit reports. You can request a free credit report every week through April 2022 at www.annualcreditreport.com.

Once you’ve got your report, the next thing you’re going to want to do is to review it carefully.
If you notice any inaccurate information, you’re going to want to dispute that. Once you’ve identified inaccurate listings, you can then send a formal dispute to one or more of the credit reporting agencies about the item you believe to be incorrect.

The credit agencies are mandated by the FCRA to review all claims and the investigation process will usually take a total of two weeks. In some cases, it can take up to 45 days. Once the credit reporting agency contacts the data furnisher—also known as the original creditor who reported the negative event, they will be able to verify the accuracy of the negative listing. At this point, they will notify you of their decision letting you know if the disputed item in question has been deleted from your report.

During the investigation process, the credit bureau will often mark the account as “Consumer Disputes, Investigation in Progress” on your credit report. These notes are known as dispute notations or dispute codes.

How Disputes Impact Credit Scores

When an account is in dispute FICO and Vantage score will ignore certain aspects of your account during the dispute process. Oftentimes, consumers filing a dispute will see a temporary credit score boost during the investigation. However, once the dispute process concludes, the dispute code will come off your credit report and the score protection you’ve been receiving will end. This is especially true if the disputed claim was derogatory.

Disputes that result in your claims being validated and the negative listing being removed for your report will result in your credit score going back to its pre-dispute level.

Note: It is important to understand that lenders have caught on to consumers who use the dispute process as a quick way to boost their score temporarily. Because they’re aware of this, do not try to apply for a loan while you’re in a dispute. The lender will most likely reject the application because the dispute code will show up during their review process.

Specific Ways that Disputes can Affect Your Score

Some specific items that can be disputed are things like late or missed payments that have been inaccurately reported. While a dispute in and of itself will not significantly impact your credit score aside from a short-term boost, the results of the dispute could result in major changes to your score.

Those who can get a late or missed payment removed from their report by successfully contesting the inaccurate information can expect their score to jump dramatically, seeing as these events dramatically impact the health of your credit. If you’re dispute fails, the negative listings will not be deleted, and this could result in your score taking a hit.

With that in mind, it is important to understand that a dispute only changes the contents of your credit report if the information is found to be false. The changes that are made are what will ultimately impact your score. Decisions regarding the removal of negative items will be made by the major credit bureaus like Experian, and Equifax after they’ve consulted the original creditor to verify your claims.

Another example is account charge offs that are disputed. If the disputed claim is found to be accurate, then the disputed entry will remain on your report. In this scenario, your score should remain the same since it will not result in the negative entry being removed. The dispute in itself should not lower your score more than its current level.

Some other things that will not have an impact on your score during the dispute process are things like typos of personal identification information including, your name, address, Social Security Number, etc. Disputing any of these errors will result in no changes to your overall credit score.

But if the misinformation is more than just a typo and contains variations of your name that you’ve never used—and your personal information is connected to loans that you don’t recognize, then this could be cause for concern. In this scenario, you’re most likely looking at criminal activity in the form of identity theft.
In cases like this, we recommend visiting Experian’s online fraud center to have an initial security alert added to your report. The alert will last for one year or until you request that it be removed. This alert will notify creditors that you might be a victim of identity fraud and asks them to verify your identity before granting credit in your name. The fraud alert is built to protect you as you get to the bottom of the situation.

When reporting an identity theft incident, use the contact information on your credit report to reach out to the creditors in question to see if unauthorized accounts have been opened in your name. Once you figure out what happened, make sure to report the illegal activity to the creditors and law enforcement. Also, make sure to contact Experian to notify them of which information is related to identity theft so that those listings can be removed from your report.

What Should You Do if You Disagree with the Outcome of your Dispute?

Those who are not happy with the outcome of a dispute investigation can take the following actions to rectify the situation. First off, they should contact the data furnisher or the original creditor. If you have evidence that a lender, credit card issuer, collection agency, or government agency has provided false information to one or more national credit bureaus, locate the contact information for that entity on your credit report and contact whichever agency provided the inaccurate information and ask them to revise your credit file appropriately.

Once you’ve done that, you can add a statement of dispute to your credit report. A statement of dispute lets you explain why you believe the information in your credit report is incomplete or inaccurate. Your statement will be visible on your report if it’s accessed or requested by a potential lender. If they see this, they will usually just ask for clarification on what the situation is. Dispute statements can be added online at the Experian Dispute Center website.

Sometimes it takes a couple of attempts to get inaccurate information removed from a report. If necessary, you can resubmit a dispute with additional information. If you have additional evidence to prove your claims, it will be helpful in your attempt to get negative listings removed once and for all.

How Long Does Negative Information Stay on Your Credit Report?

If you’re unsuccessful in removing an item you thought was inaccurate, it’s usually because the credit agency was able to verify that the event did happen with the original creditor. At this point, there isn’t much you can do unless you have further evidence to fight the credit bureau’s decision. With that said, you might be wondering how long these negative items can stay on a report. In most cases, negative information can stay on your report for seven years or more. These remarks will potentially hurt your credit score over that time frame; however, you can mitigate the damage by paying all your bills on time and keeping your overall credit card utilization below 30 percent.

Conclusion

Having gone over the main ways disputing inaccurate information can affect your credit score, it has become clear that the dispute process in and of itself will not result in any significant changes to your score. Besides perhaps a temporary boost during the investigation, you shouldn’t see any significant changes. However, depending on the results of the dispute, you will find that after it has been resolved that your score can be impacted either positively or negatively. This will depend on whether or not the item is ultimately removed. If it is, expect a nice increase in your score. If it remains, expect your score to remain at the pre-disputed level. While it can be frustrating to be unsuccessful in removing negative claims, it is not the end of the world. Over time, these negative items will be taken off your credit report. As long as you continue to manage your credit responsibly, negative events such as missed or late payments can be overcome by proper credit usage and paying your bills on time.