Credit Report Dispute Letter

The concept of credit and debt has gained widespread popularity in the modern era. Credit can be simply defined as a facility, where a creditor (like a lender, bank, credit card company or a credit creation institute) loans out a specified amount, to a person or organization or bears the person's or organization's expenditure for a particular period of time. The rise in the use of credit facilities has led to the development of the concept of credit report or credit rating, which determines a person's ability to repay a debt. This rating is also known as creditworthiness. There are many credit rating agencies that are in operation throughout the world. Equifax, Experian and Transunion are some of the well-known credit reporting agencies. At times, credit reports that are produced by these companies turn-out to be inaccurate or have some kind of a false information recorded. An error in the credit report, brings down your economic standing and creates a doubt in the creditor's mind about your ability to repay a debt. In short it tarnishes your creditworthiness and financial identity.

Index

• Credit Facilities
• Credit Report
• Credit Score
• Credit Dispute
• Credit Dispute Letter Sample
• Credit Dispute Letter Template
• Credit Dispute Letter Follow-Up

Credit Facilities
Banks, credit card companies, real estate lenders and other credit facilities have boosted an individual's or an organization's ability to avail quick credit and loans. These types of credit facilities can be classified into two basic types which are as follows:

• Loan: The first type of facility is the conventional system of loans, where a lender (also known as the creditor or the creator of credit) forwards a particular amount of finances to the borrower (also known as the debtor), which is repaid by the borrower to the lender over a period of time along with an interest.
• Spend-now-pay-later: The spend now pay later is a very unique credit facility that has come into being due to credit cards. When you swipe the card, the credit card company bears the expenditure of the transaction on your behalf. At the end of a month, the company sends you a bill that has a list of all the transactions and a service charge calculation.

In both the classifications you must have noticed that lenders or creditors undertake a risk of lending money to the debtor. In the same manner, there are also some other types of debts that can be seen. For example, traders often lend goods to each other and make payments along with some interest later on. Negotiable instruments like bills of exchange and bank checks are in fact credit facilities. Now to make sure that a particular debtor is capable of repaying the debt, creditors refer to a document that is known as a credit report.

Credit Report
The first question that we need to ask ourselves is 'what is a credit report?' A credit report which is also known as a person's credit history, is basically a document that shows the debt records of a person. In a more technical language, the credit report can be designed to be a summary of a persons financial behavior. The following list will provide you a good idea of the constituents of the credit report.

• Loans that have been borrowed in the past, along with the interest, installments, nature of loan, late payments and completion date, and time period of the loan.
• Credit cards that have been used in the past along with the credit limit and late payments, if any.
• Loans that are being currently used and have not been paid back.
• Credit cards in use and their credit limits along with the late payments, if any.
• Current income.
• Assets that can be pledged.

This summary is then utilized to make status figure, that is known as the credit score. One must note that credit report agencies have data warehouses, where all these details are stored and up dated from time to time. Your potential lender has the right to request a paid credit report before sanctioning a debt. The overall process of deriving credit history, score and ratings is sometimes termed as credit monitoring.

There is always strong possibility of mistakes occurring in the constituents of a credit report. The biggest draw back of even a single mistake occurring in the credit report is that it creates a very negative impact on the minds of all the potential lenders and creditors. The second draw back of a mistake in the report is that it dramatically negates the total credit score. The error in the report can be easily rectified with the help of a dispute letter.

Credit Score
As mentioned above, a credit score, which is also known as a credit rating is a sum of all the constituents of the credit report. The credit score is usually mentioned on the credit report and signifies the individuals or organizations creditworthiness in a single figure like '399' or 'A'. All the different companies that are involved in presenting credit reports, use different methods to calculate and explain credit score ratings.

• Numerical: The numerical method is the most common method that is used to display credit score rating. The score is basically displayed in terms of numbers like 500 to 599 or 200 to 299. The methods that are used to derive a credit score are controlled with the help of strict laws.
• Alphabetical: The second method that is used for displaying the credit score, is the alphabetical method. According to the alphabetical method, the credit score is simply displayed with the help of alphabets. Hence your credit score would simply become, 'A' or 'A+' or 'AA'.

After understanding credit scores and what they mean, as a conclusion, we can say that a single figure represents the borrowers ability to repay the loan. This ability when measured is also termed as a credit score range. The worst draw back of this system is that a small mistake in the credit report drastically affects your credit score and also your chances of getting a sanction for a really good credit offer. Hence, if your credit report has some error, then it is high time that you take a serious step in order to repair the credit report and score and hence have a good credit score. The repair process can be easily initiated by you with the help of a dispute letter.

Credit Dispute
A credit dispute is a process of rectification of a credit report of a particular person or an organization. The credit dispute is usually initiated with the help of a letter, that is issued by an individual to the credit report agency as a request to rectify the errors that have occurred in the credit report. In some cases the dispute letter is also issued by credit repair companies as a part of their credit repair services or the debt management companies. Many of the best debt management programs have credit dispute letters framed as a part of their services. If you are planning to issue the letter in a do-it-yourself manner, you may also follow the following tips.

• Clarify the Facts: The first and the most important step is the process of clarification of facts. The significance of verifying and conforming all the facts is that, you tend to have complete confidence of facts that you are mentioning in the dispute letter. Another significant advantage of clarifying the facts is that you tend to be well aware of the error that has occurred in the credit report.
• Stating the Facts Confidently: The second most important feature of the letter is that, the facts about the errors should be confidently stated in the letter in chronological order. If you take a look at the different credit dispute letter samples and templates you would notice that the letter sounds even better, if rectifications that you expect are also stated.
• Company Procedure: Many credit report agencies and companies have stated procedures on their website to initiate disputes. I would recommend that you go through the procedures and provide the company or agency with all the information it needs. Some companies have also started providing dispute letter forms on their websites to make things easier
• Firm and yet Polite: The last and not the least is maintaining the tone of the letter. The letter should sound polite, yet firm.

You may follow these points for all types of credit report disputes, initiated with the help of Emails, Phones or even on the official website of the company, in order to improve your credit score rating.

Credit Dispute Letter Sample
The following is a sample of a credit report dispute letter, which will help to better illustrate the point.

Credit Dispute Letter Sample Name: Address: Date: To (1)_______________, This letter is in reference to the errors and inaccurate information provided in Credit Report Number (2)__________, that you issued on (3)__________. In good faith I request you to change the following elements of the credit report that have been misrepresented. Auto Loan from (4)________________, has been totally repaid on (5)_________. In contrast the report issued by you states that the loan has not been totally repaid as yet. The payment of the bill of that credit card issued by (6)_______________, has been paid on full along with the late payment fees. Your report in contrast shows that the credit card payment has not been made. I hope that you are able to address the mentioned problems at its earliest and it is my request that the required processes should be initiated with the highest priority. As a proof, I have also affixed the copies of my bank statements and acknowledgments from my credit card company. I hope that you rectify the errors in the shortest possible time. I also hope that these errors or mistakes would never be repeated in future. Thanking You, Yours Truthfully, (7)_______________

1. Name of the credit report agency
2. The number of the credit report in which the error is observed
3. Date on which the credit report was issued
4. Name of the lender from whom the auto loan was borrowed
5. Date of payment of final installment
6. Name of credit card company
7. Your Name and signature

Credit Dispute Letter Template
In order to help out consumers to solve their problems about wrong credit reports and scores, many credit reporting agencies have provided dispute letter templates on their official websites, so that consumers are able to initiate a very quick credit dispute. Such templates are available on other sources on the Internet as well as along with the templates for debt settlement letters and letters to creditors.

Credit Dispute Letter Follow-Up
Once the credit dispute letter reaches the credit reporting agency, the actual work of verification and changing of data in the data-bank of the credit report agency begins. Usually this process is completed in a few hours time, but cases where the number changes is very high, it may go on for a number of days. If you have submitted a report with the help of the credit dispute facility that is available on the official website of the credit report agency, then you would receive a follow-up automatically. Most of the credit report agencies have a standard practice of sending follow-up emails, hence you need not worry. However, if you do not receive any response within two days, you need to send a dispute letter and also a note for follow-up. The follow-up mails are significant as the errors and mistakes have to be rectified immediately.

There are also numerous advantages of a good credit report, which you can take benefit of. I would recommend that you send the credit dispute report letter the moment you spot an error or mistake in your credit report in order to prevent any kind of negative effects of the error.