Choosing your weapons:
The first weapon in the consumers war chest is the right to request that a credit reporting agency reinvestigate any item contained in his or her credit file. Often referred to as a dispute, this right is provided for in The Fair Credit Reporting Act (FCRA). Of the remedies spelled out by law, a dispute is the easiest to use and the most powerful weapon for ridding credit reports of inaccurate, incomplete and unverifiable information.
These reinvestigations have been requested so often that, today, the agencies include a standardized dispute form with each credit report so that they can operate more efficiently.
Section 611 (a) (1) (A) of the FCRA requires that "if the completeness or accuracy of any item of information contained in a consumers file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly of such dispute, the agency shall reinvestigate free of charge ".
The credit reporting agency must record the current status of the disputed information, or delete the item from the file in accordance with paragraph (5), before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute from the consumer. The agency is allowed 30 days to correct the status of the item; or, if the item is found to belong to someone else, or, can no longer be verified, then the agency must immediately delete the item from the consumer's record.
The agency however does have an out-if you give it to them. The agency is not required to reinvestigate an item for which it deems the dispute "frivolous or irrelevant.11 Section 611 (a) (3) (A) says:" … a consumer reporting agency may terminate a reinvestigation of information disputed by a consumer under that paragraph if the agency reasonably determines that the dispute by the consumer is frivolous or irrelevant, including by reason of a failure by a consumer to provide sufficient information to investigate the disputed information. "
The law requires that an agency notify you within 5 business days if they determine your dispute to be frivolous or irrelevant. The law does not dare to define what the grounds are for making such a determination except for "failure by a consumer to provide sufficient information to investigate the disputed information."
Yes, that's pretty vague. To insure you don't get tagged as one making frivolous charges, you need to find reason to support everything you do. It's usually not hard. If, an item's not 100% accurate, then it is disputable. The bottom line is that you realize early on that this is a "smart weapon" to be used with in attacking a specific problem. It is not to be used as a shotgun approach on your entire credit report.
You're not likely to hit anything, just make a lot of people mad, so to speak. Of course, with this dispute process the incorrect items are easily * deleted. And in many cases, even correctly reported negative items are removed. Often the item is deleted because the creditor no longer has the file, or cannot maintain personnel for the purpose of responding to inquiries of this nature.
Historically, an item that was deleted would occasionally reappear on a consumer's credit file. This occurred when a credit grantor automatically updated a consumer's payment history. Most often, this happened with a credit granter with whom the consumer still had payment activity. However, the new FCRA does not allow a deleted item to be added again unless the creditor certifies that the information is correct (See Section 611 (a) (5) (C)).
Grounds for Reinvestigation
If you have sent in a number of items and the bureaus begin to balk and send you back reports that might say "Information updated" or "Creditor has updated", don't quit there. Now is the time to start picking on certain items within the report or related to that account that you know could possibly be due to human error or where an account has been transferred or sold.
My daughter opened a Montgomery Wards account while in college. She had problems and didn't pay off the bill. The account was sold / transferred to a collection agency. Later on, that agency sold it to another agency. Meanwhile, my daughter has been receiving collection notices for almost ten years. Her first letter to the bureau indicated that she felt the information on her credit report was erroneous because of the account being more than seven years old from the last date of activity.
Her initial dispute letter was answered with a typical "information has been updated". She would not settle for that answer and under Section 611 (a) (5) (C), her dispute was re-entered. The law is specific. Even though your account can be sold, the Statute of Limitations is specific. "A collection account must be deleted after seven years from the date which the account was first late and never got caught up. Be VERY CAREFUL HERE AND READ SLOWLY. If you made partial payments BUT never got caught up, they cannot restart the (7 ) year clock BUT MANY DO.
Most collection agencies have their computer systems already programmed to recognize when an account that has been either charged off or placed for collection reaches the sixth year and sixth month. About this time, poor little Freddie and Annie received an extremely friendly letter from that happy bill collection agency. The letter might open with, "Greetings from your new friends down here at Misery Headquarters. We know you would like to settle this past bill that you owe to Lifetime Television Repair. So what we are prepared to do is to help you.
If you will send in a token payment of only $ 20.00, to show your good faith, we will work with you to settle this account in a friendly manner ". DON'T FALL FOR THIS TRICK. What Misery Headquarters Collection House is really doing is trying to re-start the seven- year clock again. Because they simply wrote a letter does not constitute activity. Activity is noted as a payment or partial payment received on the account.