Why did my credit score drop after dispute? This could be the question you are asking yourself right now. While filing a dispute should technically have no impact on your credit score, when your dispute is processed it causes changes in the information on your credit report. These changes can either raise, lower, or have no effect on your credit score. This article will walk you through this process, and elaborate why your credit score will probably drop after a dispute, and what you can do about it.
So What Is A Dispute?
Well, first things first: what is a dispute? Your credit report is the document that outlines how you pay your bills. When you get your credit report, it is good practice to review it and make sure all the information is in order. If there are any errors, you have the right to dispute these errors and have them corrected. This is what is called a credit report dispute. My Credit Focus says the dispute can be a letter, a phone call, or an online dispute via your credit bureau's website. It is basically a request to the credit bureau to investigate questionable, inaccurate or erroneous information on your credit report. They are legally required to carry out this investigation within 30 days, after which the error can be corrected or they can determine your dispute to be frivolous.
What Happens When You File A Dispute?
Once you file your dispute and changes are made to your credit report, your credit score may change. This change depends on what you are disputing. If you are disputing information that has no impact on credit scores, such as addresses or identification information, a change will not affect your credit score. If you are disputing information that usually negatively impacts your credit score, such as late payments, your credit scores will likely improve.
It is important, however, to note that when in dispute, some aspects of your credit report will be excluded from your credit scoring. All the money aspects, such as payment history and utilization will be excluded, while non-money aspects like account age are still included. Third party collection accounts and public records will however still negatively affect your credit score even when in dispute.
This is why your credit score may drop after a dispute. Since all the money aspects are no longer factored in, if your disputed items contained positives, such as good payment history, your score will temporarily drop. However, it should be no cause for alarm. Once the dispute is resolved, your credit scores should normalize.
When your dispute results come in, you can take one of two courses of action. You can either agree with the results, or you can choose to disagree. If you disagree with the results, you can opt to do one of three things:
1. Contact the Information Source
Contact the providers of the information. Clarifying the issue directly with them is the best course of action. Their contact details should appear on your credit report.
2. Add a Dispute Statement
This is an optional explanation that you can add to elaborate why you think that information is inaccurate. It will appear on your credit report whenever it is accessed.
3. Dispute Again
You can choose to furnish your bureau with more information and dispute again. This will restart the entire process.
Why did my credit score drop after a dispute? When all is said and done, it is perfectly normal for your credit score to sometimes drop after a dispute. It should normalize after the dispute is resolved, usually within one to two months. In the meantime, you can adopt one of several ways to improve credit score, such as paying off your credit cards on time, leaving that old debt on your report for the good history, and generally not obsessing over your credit. As long as you are a responsible spender, everything should be fine.