What Happens When You File a Dispute with a Credit Reporting Agency?

In a perfect world you would never have to worry about errors or mistakes showing up on your credit reports. We don’t live in that world. In our world credit reporting errors happen despite efforts to maintain accurate information. The volume of information managed by the credit bureaus, Equifax, Experian and Trans Union, is staggering and over 10,000 companies send them information every single month.

When credit reporting errors occur the good news is that you can absolutely do something to try to correct them. The Fair Credit Reporting Act (FCRA) gives you the right to challenge or dispute any item on your credit reports which you believe to be inaccurate. When you properly submit your dispute to a credit reporting agency (CRA) they are legally required to perform a “reasonable” investigate into your claim. This is the chronology of events, at a high level.

1. You File the Dispute
The dispute process officially begins when you inform a CRA that you disagree with information contained in one of your credit reports. There are multiple ways to communicate to the CRAs that you disagree with a reported item. You can initiate a dispute via mail, via phone, via fax, or online. Unless your dispute is deemed to be frivolous or is otherwise incoherent, the submission triggers a CRA’s obligation to investigate.

2. Homogenization
Homogenization is a somewhat complicated way to explain that your dispute, no matter how long or eloquently written, is going to be boiled down to a simple 3-digit numerical code. Even if you write several pages explaining why you believe an item on your credit report is incorrect, the CRAs will homogenize those pages into one of several available uniform codes. For example, if you claim an account doesn’t belong to you that’s dispute code 001, “Not his/hers.”

Uniform codes make the dispute process run more efficiently for the CRAs. While this might seem unfair, the CRAs will now share the actual communication from the consumer with the furnisher of the information, a practice that hasn’t always taken place.

3. The Investigation Begins
The FCRA gives the CRAs 30 days (in most cases) to investigate disputed information. Once a CRA has received your dispute and homogenized it into a uniform code that code will next be communicated with the data furnisher who provided the information to the CRA in the first place.
The CRAs use an online system called e-OSCAR (Online Solution for Complete and Accurate Reporting) to communicate back and forth with data furnishers during the investigation of a dispute. Via e-OSCAR the CRAs will send an ACDV (Automated Credit Dispute Verification) form with the code representing your dispute.

4. The Data Furnisher Takes Over
Once a data furnisher (normally a financial services company or a debt collector) receives notice of your dispute through e-OSCAR it is their job to let the CRA know whether or not the previously reported information is accurate or if it needs to be changed or deleted. For example, if the dispute code informs the data furnisher that you believe an account belongs to someone else then the data furnisher would likely consider their internal records system to investigate if the information being reported to the credit bureaus matches what they have in their file or records.
If the information does not line up then the data furnisher would let the CRA know the account needs to be deleted or updated. If the information being reported is believed to be correct then the data furnisher would verify that there is no error. Either response will be communicated back to the CRA via e-OSCAR utilizing another ACDV form.

5. The Conclusion
Once the CRA receives a reply from the data furnisher it will either update the item on your credit report, delete the item, or leave it reporting as is – depending on the direction of the data furnisher. Furthermore, if the data furnisher does not reply in a timely manner the disputed item will be deleted for this reason as well.

The CRA will send you information regarding the results of your dispute either via mail or electronically, depending on how your dispute was initiated. If your dispute was rejected you can always re-dispute the item in question again; however, the credit bureaus might choose to ignore your dispute for being “frivolous” if you fail to provide any new or additional information.