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What Is a Credit Dispute Letter and Its Different Types?

25 May, 2022
6 min read
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What you'll learn

  • What is a Credit Dispute Letter?
  • Common errors found in business credit reports
  • What are the different types of credit dispute letters?
  • Alternative ways to dispute credit report information
CONTENT
What is a credit dispute letter?
Common errors in credit reports
What are the different types of credit dispute letters?
What are the different ways to dispute credit report information?
FAQs
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One of the main reasons a business’s credit rating may suffer is the mistakes made by the credit agency. For example, a business might have repaid its loan, but its credit score will be adversely affected if the loan account hasn’t been closed in the report. Therefore, it becomes crucial for companies to monitor their credit reports and scout for errors.

If a company disagrees with any information present in the report, they can write a credit dispute letter to the agencies. By writing a dispute letter, the business makes it compulsory by law for the agencies to investigate the reported information. They are also obligated to correct or delete the wrong information from the credit report within 30 days.

What is a credit dispute letter?

The Fair Credit Reporting Act (FCRA) protects consumers from inaccurate information on their credit reports. However, no such provision is available to businesses. Instead, they can write a credit dispute letter to the agencies directly if they find any irregularities in their credit report.

A credit dispute letter includes all the information that a business deems incorrect in the report with supporting pieces of evidence to back the claim. It will also include how it believes the agency shall present the information in the credit report.

Common errors in credit reports

If this is the first time your business is looking for mistakes in a credit report, then here are some common errors to watch out for.

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1) Identify theft

Business credit reports are not private and can be easily accessed online. This makes it easy for fraudsters to steal the identity of a business and open loan accounts, get credit cards, or do other financial transactions in the company’s name. Therefore, a business needs to identify any dubious transactions on their credit report and inform the credit bureaus.

2) Information mix-up

Credit bureaus often mix information from different companies in a report. If a company’s address is similar to yours, the credit bureau might add their accounts to your reports. So, businesses need to identify accounts in their credit report that might not belong to them.

3) Age of your Business

The age of your business is critical to the credit rating you get. It’s a common error that credit agencies make on a report, and no matter how slight the difference is, a company must get it corrected.

What are the different types of credit dispute letters?

There are 4 primary types of credit dispute letters based on a company’s request to a credit agency. 

1) General dispute letter

This format is the basic form of a credit dispute letter and doesn’t invoke any Fair Credit Reporting Act laws. The letter points out the error in the credit report and backs it up with evidence. Companies use it to request agencies to remove an error from their credit report.

2) 609 credit dispute letter

If a business finds information on its credit report it is unsure about; it can use the 609 credit dispute letter. The letter refers to the 609 Section of the Fair Credit Reporting Act (FCRA) and requests the credit agency to verify the mentioned information. If they are unable to verify the information, it must be removed.

3) 611 credit dispute letter

The 611 credit dispute letter is a follow-up letter when a credit agency replies that they have verified the mentioned information. It requests the agency’s verification method of the disputed information and refers 611 Section of the Fair Credit Reporting Act.

4) 623 credit dispute letter

A business uses a 623 credit dispute letter when all other attempts to remove dispute information have failed. It refers to Section 623 of the Fair Credit Reporting Act and contacts the data furnisher to prove that a debt belongs to the company. It is applicable for the validation of third-party debt collection accounts.

What are the different ways to dispute credit report information?

We have already discussed how credit dispute letters are one of the main ways to call out wrong information in your business’s credit report. However, there are two other ways you can ask the credit bureaus to fix any errors.

1) Online forms

All major credit bureaus have online forms to dispute errors in their credit report. However, it is not recommended unless you have no other option. Credit agencies might get you to accept specific terms and conditions, which could waive your Fair Credit Reporting Act rights. Therefore, this method isn’t very effective.

2) Over the Phone

Disputing errors over the phone is another option, but with a low success rate. That’s because you do not have any solid evidence backing your actions. If you still choose to go with this option, ensure that you record every conversation you have with the agency.

If you want to increase the possibility of fixing errors in your credit report, writing a letter is the best option. Keep track of all your communications and request a confirmation of receipt in every letter to ensure that the agency cannot deny receiving your letter.

FAQs

1) Do dispute letters work?

Dispute letters are the most effective way to correct errors on your credit report. It also makes the credit bureau obligated by law to investigate your issue. Yet, a dispute letter doesn’t ensure that your credit score will improve unless you have strong evidence backing your claim.

2) Can I dispute my credit reports online?

Yes, you can dispute your credit reports online, but it is not the most effective way of resolving errors. It gives the credit agencies an upper hand, and you might unknowingly waive off your Fair Credit Reporting Act rights.

3) Can disputing hurt your credit?

Disputing your credit report has no direct impact on your score, but if a credit bureau makes any changes after the claim, your credit rating might be affected.

4)How many days does the complete dispute process take?

It takes around 30 days to resolve credit report disputes. This is the maximum time an agency can take to reply to your dispute claim. However, if the dispute is not approved, follow-ups can add to the time taken for the entire process.

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