Credit Reporting Disputes: Persistence and Record Keeping Key

28 Apr Credit Reporting Disputes: Persistence and Record Keeping Key

MSNBC’s Red Tape Chronicles has this about the process of disputing incorrect information on your credit report:

Unfortunately, this process has been turned into something of a kangaroo court. In a recent report called “Automated Injustice,” the National Consumer Law Center described the disheartening procedures that are now in place.

Consumers who initiate disputes often send in pages of documentation supporting their claims. But in many cases, the paperwork is sent overseas to places like Mumbai, India, for cursory processing, the law center reported. There, employees work under tight quota and bonus systems. Subcontractors for Equifax, for example, must resolve more than 13 disputes every hour, or about one every four minutes, according to the report.

So, according to the report, the paperwork is almost always ignored and the complaint boiled down to a two-or three digit code. About one-third of the time, that code indicates simply that the consumers claims the credit blemish is “not his/hers.” This code is then sent to furnisher, which is asked simply to affirm the original entry. If it does, the bureau will often decide that the case is closed.

The National Consumer Law Center doesn’t mince words when describing this procedure.

“The FCRA dispute process has become a travesty of justice,” it said in the report.

The article concludes that only way to overcome this flawed process is to keep really good records of what you send in the dispute process, in order to maintain your right to recover damages in an eventual lawsuit, and to be persistent.  In my experience, that is good advice.  Often disputes aren’t resolved the first time, so persistence is a must.  But when persistence isn’t enough, you also need the records that show that the creditor (and the credit reporting agency) did not try to resolve the issue in good faith.  I would add one more element to that equation.  You need to maintain a record (in the form of a diary, notes or even a blog) on what the dispute costs you, both in cash and frustration.  Keep your receipts for copying documents and mailing them, and keep a record of the credit applications that were denied, or of increases in interest rates that you had to pay.  You may also want to keep a diary that notes the time you spent trying to resolve the issue, as well as the mental frustration and energy that you expend.  We all hope that such problems can be resolved without litigation, but if litigation is inevitable, best be prepared.

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Däna (pronounced "Donna") Wilkinson, has been a bankruptcy lawyer in South Carolina for 20 years. She is certified as a bankruptcy specialist by the South Carolina Supreme Court.
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