New Law Lets Consumers Dispute Credit Errors More Effectively

Soon consumers who find errors on their credit reports will be able to request corrections directly from the merchant who reported the inaccurate information.

Previously, consumers had to report the error to the credit bureau who included it in their credit report. The credit bureau would then contact the merchant and wait for a response. Unfortunately, the method of contact made resolution difficult for merchants because the credit bureaus use a code number to describe the complaint, rather than an explanation.

This rule change by federal banking regulators was finalized in July 2009 and goes into effect July 1, 2010.

The new rules also require merchants who report information to do so with “integrity.” In this case, integrity means that they must clearly identify you and use a standardized format to convey their information. The information must include the time period to which the information refers and the credit limit on your account.

Reporting credit limits has the potential to raise consumer credit scores in the event that the consumer is using only a small portion of their available credit.

One danger to consumers is that their complaint may be disregarded as “frivolous” unless they comply with reporting requirements. So if you’re a consumer upset over an error on your credit report, don’t get angry and ramble. Instead, use this standard format:

• Provide your full name and your account number.
• Clearly state the reason for our dispute. Give the date of any transaction in dispute and explain the nature of your complaint. For instance, if they have reported a payment as late and you believe it was paid on time.
• Provide documentation to show why the report is incorrect. In the case of a late payment, provide a copy of electronic banking records or your cancelled check. If an account has been paid in full, provide a copy of a final statement as proof.

Once you have provided proper information, the merchant will have 30 days in which to investigate and get back to you. Should they fail to do so, the FTC, state attorneys general or bank regulators could potentially bring a case against them, with civil penalties of up to $3,500 per occurrence.

After an error has been verified and correction has been made, the merchant is required to send a corrected report to the credit bureau.

Considering the amount of data transmitted daily and the ease with which a typographical error can be made or a line in a report skipped, consumers with errors should not take them as a personal affront. Instead, they should take immediate action to correct the error.

The fact that over 70% of all credit reports contain errors is one reason why we believe all consumers should read their own credit reports monthly. Just one 30 day late payment can reduce credit scores from 60 to 110 points – having a serious effect on the consumer’s ability to qualify for good interest rates.

Author: Marte Cliff your resource for credit reports, credit cards, loans and Ground Breaking Credit News.

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Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.