Can Credit Disputes Hurt Your Credit Score?
Understand how credit disputes interact with your credit score. This article clarifies common concerns about challenging errors and charges.
Consumers often wonder if challenging an item on their credit report or a charge on their credit card can negatively impact their credit score. This article explores whether initiating a dispute affects your credit and what the outcomes might mean for your financial standing.
Credit Report Disputes and Your Credit
A credit report dispute involves correcting inaccurate information appearing on your credit report. This could include wrong payment histories, incorrect account balances, or accounts opened due to identity theft. Consumers typically file these disputes with one or more of the three major credit reporting agencies: Experian, Equifax, and TransUnion.
The process involves submitting a dispute online, by mail, or over the phone, providing details and supporting documentation. Under the Fair Credit Reporting Act (FCRA), credit bureaus must investigate disputed information within 30 to 45 days. During this investigation, the item is flagged as “disputed” on your credit report, but initiating this process does not directly harm your credit score.
The purpose of a credit report dispute is to remove or correct inaccurate information that may have negatively affected your credit score. Disputing is a consumer right designed to improve the accuracy of your financial profile, not to penalize you. If inaccurate information is removed, it can lead to an improvement in your credit score, as negative items are no longer factored into the calculation.
Credit Card Charge Disputes and Your Credit
Credit card charge disputes involve challenging a specific transaction with your credit card issuer, rather than with a credit reporting agency. This type of dispute addresses issues such as unauthorized charges, incorrect billing amounts, or instances where goods or services were not received as agreed. These disputes are governed by the Fair Credit Billing Act (FCBA), which provides consumers with protections against billing errors on credit card accounts.
To initiate a charge dispute, contact your credit card issuer, providing details about the transaction. Consumers have 60 days from their statement date to notify their creditor of a billing error. The credit card issuer must acknowledge the dispute within 30 days and resolve the claim within two billing cycles (up to 90 days).
During the investigation, you are not required to pay the disputed amount, and the credit card issuer cannot report it as delinquent to credit bureaus. Filing a credit card charge dispute itself does not directly impact your credit score. The focus of this dispute type is on the transaction’s validity, not on information already on your credit report.
Navigating Dispute Outcomes and Credit Implications
The outcome of a dispute, rather than the act of disputing itself, determines its impact on your credit score. If a credit report dispute is successful, inaccurate information is removed or corrected. This correction can lead to a positive adjustment in your credit score, especially if the disputed item was a derogatory mark like a late payment or collection account. The updated report then reflects a more accurate and healthier financial history.
If a credit report dispute is unsuccessful, the disputed item remains on your report. The dispute itself still did not negatively affect your score, but the original, accurate negative item continues to influence it. Consumers can add a brief statement to their credit file explaining their side of an unresolved dispute. For credit card charge disputes, a successful outcome means the disputed charge is removed, and you are not liable for payment, preventing potential delinquency.
Conversely, if a credit card charge dispute is unsuccessful, you become liable for the charge. Failure to pay this now-validated debt after resolution can lead to late payments reported to credit bureaus, negatively affecting your credit score. The act of disputing is a consumer right; it is the accuracy of the underlying financial information or the subsequent failure to meet valid financial obligations that ultimately impacts your credit standing. Monitor your credit reports after any dispute resolution to ensure all information is accurate.