NEW YORK (MainStreet) — By far the most questions we receive from readers for our weekly credit Q&A series concern credit report disputes. And while we’ve previously covered the option of contesting information appearing on a credit report, we’ve never actually delved into what happens after a consumer has done so. That is, until now.
The infographic above illustrates how a dispute is handled by the three major credit bureaus – Equifax, TransUnion and Experian. As previously reported, the big three furnish varying reports to a vast majority of the nation’s lenders.
Under the Fair Credit Reporting Act (FCRA), both the credit reporting company and the information provider (typically the lender or collections agency) are responsible for investigating and/or correcting inaccurate or incomplete information appearing on a person’s credit report, and are given 30 days to do so.
But careful observers will be quick to notice that, under current operating procedures, this investigation is handled by the lender, not the bureau who is being notified of the dispute.
“We go back on behalf of the consumer to the source to verify the records are being reported accurately,” says Rod Griffin, director of public education for Experian. “They let us know if the information should be updated or removed.”
The process, which Griffins says typically takes a week to 10 days to process instead of the 30 days permitted under federal law, seems an adequate way to address simple factual errors, like a misspelled name or incorrect Social Security number. But what happens when an issue is complex, or worse, when a dispute is related to difficult-to-prove factors such as whether a consumer owes the lender to begin with. (The second, incidentally, is what drives a majority of the questions we get on the subject.)
Griffin says that consumers can aid such cases by sending any documentation they may have showing that the information should be removed to the credit bureaus directly. He also says Experian tries to minimize the number of subjective disputes it encounters by making sure it deals only with reputable lenders. (And not just anyone can report information to the major credit bureaus.)
Ultimately, however, “If you disagree with the lender’s response, you can add a statement of dispute to the report,” Griffin says.