Credit Cards

When Should You Dispute Bad Credit?

Bad credit can sneak up on any of us. All it takes is one forgotten bill, a change of address, or even clerical error on the part of the creditor. You can dispute bad credit in many instances, if you know what to look for and how best to handle the situation.

Top 5 Reasons to Dispute Bad Credit

1. There is an error in the credit file.

The wrong name, the wrong address, an incorrect amount listed — any of these could be a reason to dispute bad credit listings from a creditor. If they have the basic information wrong, chances are good that their records are not what they should be.

They may not be able to prove that the debt is yours at all, and if that is the case then they will have to remove the listing from your credit report. This is especially true of older debts that may have been bought and sold multiple times, so if you decide to dispute bad credit on your credit report you should definitely start with the records that have obvious errors first.

2. The debt is past the federal credit reporting period.

Debts can only be listed for a certain amount of time on your credit report. After that, they have to be removed, and you can dispute bad credit and have the listing taken off of your credit file even if it is a debt that you owe.

For most debts, the reporting period is around 7 years, but for some types of debts, like bankruptcy, the listing can remain on your report for 10 years. If you aren’t sure about whether or not the debt is past the federal reporting period, you can ask a credit repair specialist for clarification and advice.

3. The debt is listed incorrectly.

This is different from a material error on your credit report. Here, the debt may be listed as 30 days late when you have proof that it was only 5 or 10 days late, for example. If that is the case, then the 30 days late derogatory listing must be removed. You can dispute bad credit entries like this and bring your credit scores up dramatically.

This is especially the case if you have multiple listings on your credit report that are 60, 90, or 120+ days past due that you have proof of having paid sooner. Missed payments do hurt your credit score, but a 30 day listing hurts much less than a 90 or 120+ day listing.  Plus, you can typically avoid charge-offs this way as well, as most debts aren’t charged off before the 120 day point.

4. You are a victim of identity theft.

Identity theft brings a whole slew of problems to the forefront, not the least of which being the non-paid accounts that were opened without your permission. You can dispute bad credit that occurs as the result of identity theft, as long as you actually file a report with the police. The credit bureaus will want a copy of the report, but this is a necessary first step to getting your credit back on track.

5. You aren’t sure if the debt is yours.

Sometimes there are debts listed on your credit report that you are completely unfamiliar with and may never have heard of. Whether or not these are valid debts cannot be proved without some form of verification.

However, if the debt collector or creditor cannot or will not supply verification of the debt, you can dispute it and have it removed from your credit file.

Disputing errors on your credit report is not “cheating”. It is your right as a consumer to dispute bad credit that is the result of errors or omissions on your credit file. By being proactive and managing your credit, you can dispute bad credit and improve your credit scores dramatically.

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