If your credit isn't in the best shape, it's worth it to make sure there are no errors on your credit reports. Disputing errors on your credit reports can help improve your credit score, which in turn can aid you when financing big-ticket items, such as your next car.
Several factors have an impact on determining your credit score, and an error in just one of them could drag your score down significantly. A discrepancy in your length of credit, revolving balance, account information, or numerous other categories could mean your score is higher than reported. Resolving an error in any of those instances could positively impact your score and help you get a better rate on your next auto loan.
What is a Credit Report Dispute?
A credit report dispute is a formal notification to your credit reporting agency that you've found inaccurate or incomplete data in your credit report. Per Experian, common areas of dispute include inaccurately stated credit limits or balances, on-time payments reported as delinquent, closed accounts reported as open, and the inclusion of balances that were the result of fraud or theft. Your credit score, however, is not directly negotiable; only aspects of the report.
The act of disputing your credit report will not directly impact your credit score. However, your score may increase if an inaccuracy is resolved.
Why Dispute Credit Report Errors?
Cleaning errors off your credit reports can improve your score because it removes items that are old, paid, or just plain wrong. All of those negative marks have the potential to lower your credit score while they're there. Removing them can raise your score.
Unfortunately, there's no way to know how much your score can improve once you've disputed any errors. What we do know is that the more severe the error, the more your credit score can be impacted in a positive way.
For instance, if you find there's a repossession listed on your credit reports, but your vehicle has never been repossessed, removing this could make a big impact on your credit score. On the other hand, if you find there's a paid-off account that's still lingering on your credit report years after it's paid off, removing this may only change your credit score by a few points. A few points, however, could be all it takes to get you a better chance at the credit you need.
What Is the Purpose of a Credit Report Dispute?
The purpose of a credit report dispute is not only to correct errors on your report, but to potentially raise your credit score and improve your favorability as a loan candidate. Although removing errors like falsely reported delinquencies or out-of-date personal information can raise your score, filing a dispute does not guarantee an increase in your score. Any discrepancies you point out in the report will need to be legitimate and amended by your credit reporting agency.
How Do I Dispute My Credit Report
- Naturally, the first step in disputing your credit report is to obtain one from your reporting agency.
- Next, you'll have to identify any errors or inaccuracies in your report.
- Once you've found any errors in your report, you'll have to choose your dispute method. Traditionally, you would have to do this in the form of a letter to your credit reporting agency. Now you also have the option of reporting any mistakes online or over the phone with your CRA.
- Whichever method you choose, you'll have to back up your findings with supporting documentation. For example, you might need to show proof that an account you claimed is closed is, in fact, closed.
- After you've submitted your information, you'll have to wait for your results. Once you've filed a dispute, the credit bureau has 30 days to look into it from the day it receives it. If they find that something is wrong, they'll remove it from your credit report(s). According to the Fair Credit Reporting Act, if you've waited more than 30 days for a response and have not heard any word back after filing your dispute, the credit bureau(s) has to remove the negative mark from your report(s).
- After the credit bureau resolves your dispute, be sure to continue monitoring your credit reports to ensure the changes took effect and to keep an eye out for any potential discrepancies in the future.
You have to follow these steps at each credit bureau for each error you want to report. If you want to keep up with your credit year-round, you can go through this process every four months with a different credit bureau.
However, if you notice some significant mistakes or have never reviewed your credit reports before, now is a great time to address them all at once to get the ball rolling. Then, once you've had the bulk of the mistakes disputed, you can move on to doing a regular sweep throughout the year.
The Bottom Line
Resolving a credit report dispute can be a great way to give your credit score a bump. Even if the improvement to your credit score from disputing errors didn't land you in the good credit score range, you could still be eligible for a subprime car loan.
These loans are designed for people who have less than perfect credit. The lenders that offer them know there's more to you than just a number, so they use other factors in addition to your credit score for auto loan approval. However, these lenders aren’t found everywhere – they work exclusively through special finance dealerships.
If you're not sure how to tell the difference between a traditional dealer and a car lot with a special finance department, turn to us for help.
At Auto Credit Express, we work with a nationwide network of special finance dealerships that are teamed up with the lending resources you're looking for. The process is simple, free of charge, and there's never any obligation to buy. So, why wait any longer to get the vehicle you need? Start here by filling out our auto loan request form today.
