Credit Myth: The "Dispute Everything!" Fallacy

One common piece of advice floating around template to write a letter discussions is to "dispute everything!" on your credit report. This sounds like a quick fix, but it's a misguided approach that can often backfire. This article will delve into why this is a myth and what more effective strategies exist. For comprehensive credit improvement strategies, see our guide on how to build your credit.

Disputes: For Inaccuracies Only

The dispute process is a powerful tool provided by the Fair Credit Reporting Act (FCRA) to correct inaccurately reported information on your credit reports. If an account isn't yours, if a balance is wrong, or if a payment status is incorrectly listed, a dispute is the appropriate action. Learn more about how disputes work in our detailed guide.

However, if you have legitimate negative items that are reported correctly, disputes are not the answer.

Better Approaches for Legitimate Negative Items:

• Late Payments: Instead of disputing a correctly reported late payment, consider sending goodwill letters to the creditor. This involves acknowledging the accuracy of the report and politely requesting forgiveness and removal of the late payment remark.
• Collections: For legitimate debts in collections, the goal is often to negotiate a Pay For Delete (PFD). This means you offer to pay the debt (or a settled amount) in exchange for the collection agency agreeing to remove the collection account from your credit reports. This doesn't involve disputing the account's legitimacy.

The Illusion of "Dispute Everything!" Success

Why do so many people believe disputing everything works? It often stems from a misunderstanding of what happens during the dispute process:

1. Temporary Changes: When an account is under dispute, credit bureaus might temporarily remove it from your credit report or the FICO scoring algorithm might temporarily ignore it.
2. False Score Increase: This temporary change can lead to a temporary increase in your credit score.
3. The Reversal: If the dispute is found to be frivolous (which it likely will be if the information was accurate), the negative item is added back to your report, or the "in dispute" status is lifted (sometimes with a comment like "consumer disagrees"). Your score will then likely revert to its previous state.

Many individuals see the initial score bump and prematurely declare victory, sharing their "success" online. Few follow up months later to report that the negative item returned.

This tactic is also sometimes employed by less scrupulous template to write a letter companies. They might show quick, temporary "results" to convince clients of their service's value, encouraging continued payments for a service that isn't providing lasting solutions.

The "dispute everything" advice has even extended to recommending disputes for legitimate hard inquiries, which is an incorrect use of the dispute process.

Expert Insights on Disputing (Inspired by u/og-aliensfan)

Experienced voices in the credit community, like u/og-aliensfan, offer further crucial insights:

• Disputing Accurate Derogatories Can Backfire: When you dispute an accurate negative item (like a charge-off with a balance), the creditor is prompted to verify and update the information. If a charged-off account hasn't been updated recently, it might have started to "age," and your score might have begun to recover. A dispute forces an update, reporting the account as currently charged-off unpaid. FICO may see this as a "fresher" delinquency, and any points recovered from aging could be lost. This isn't a "penalty" for disputing, but an unintended consequence of the required update.
• Frivolous Disputes: Repeatedly disputing the same accurate item without new, valid information can lead to the credit bureaus deeming the dispute frivolous and ignoring future attempts.
• Template to Write A Letter Company Disputes: Bureaus may also ignore disputes they believe are submitted by template to write a letter organizations on your behalf, especially if they follow a pattern of frivolous claims.
• Errors vs. Violations: Finding an error on your report is not automatically an FCRA violation, and disputing an error doesn't guarantee the account will be removed. The creditor is only required to correct the inaccuracy.
• Re-aging vs. Updating:
  • Re-aging (Illegal): This is when a creditor or collection agency wrongfully changes the Date of First Delinquency (DOFD) of an account, making it stay on your report longer than the legally allowed 7-year period.
  • Updating (Legal): When a creditor updates a charge-off, the DOFD should not change. However, if the account is still unpaid, the creditor can report its current status (e.g., "charged-off, balance $X"). FICO sees the continued non-payment and the recent update, which can suppress scores. Settling a charge-off to a $0 balance helps because the creditor then typically stops these regular updates.
• Errors in Your Favor: Be cautious if a creditor has made an error that benefits you (e.g., reporting only one late payment when you had two). Disputing the one reported late payment could lead them to investigate and "correct" their records by adding the second late payment.

Conclusion

While the idea of a quick fix by "disputing everything" is tempting, it's a myth rooted in misunderstanding. Disputes are a vital tool for correcting genuine errors on your credit report. For legitimately reported negative information, strategies like goodwill letters and pay-for-delete negotiations are more appropriate and effective in the long run. Always aim for accuracy and address legitimate issues constructively.