A dispute letter is easy enough to write. There are samples all over the Internet. Some of the letters you will find are good, others not so much. Disputing negative credit listings on your credit report is, so they say, the first step in credit repair. However, many people are foiled in their dispute attempts because of the way the credit bureaus actually “investigate” the disputes.
It doesn’t matter how fancy, or intelligent sounding your letter is, or how many smart references you have to the laws of the FCRA; in many cases, your letter will produce nothing more than a, “verified” response from the credit reporting agencies. This is not your fault. It is a necessary step in the dispute process. You MUST initiate the dispute process with the credit bureaus FIRST.
If you get a notice from the credit bureaus telling you the information you disputed has been verified as accurate, and in most cases you will, you can then request the method of verification, which is your right under the FCRA section 611 (a) (7). The credit bureau must give you this information within 15 days of the request.
Why the CRAs are not doing their job
Each credit reporting agency has a different process for handling credit report disputes, but all three use a similar system. The three bureaus collaborated through their trade organization to automate the entire reinvestigation process using an online computer program, E-Oscar.
Want to see the form they use for disputes? Here ya go.
All disputes received by the credit bureaus are done via written letter, the telephone or the credit bureaus online dispute service. Even if the credit bureau receives a written dispute highly detailed and with documentation, each dispute is reduced to a two-digit code - by a low wage earning employee who couldn’t care less about the actual investigation they are supposed to be doing on the trade line you disputed.
Under the FCRA, the credit bureaus are required to send the information on to the furnisher of the consumer’s account (in other words, the original creditor), but all the original creditor receives is the two-digit code produced by the E-Oscar software program.
According to testimony from Leonard A. Bennett, Testimony Before Subcommittee on Financial Institutions and Consumer Credit of the Committee on Financial Services Regarding “Fair Credit Reporting Act: How it Functions for Consumers and the Economy,” June 4, 2003, Leonard A. Bennett P.C. on behalf of the National Association of Consumer Advocates (http://www.naca.net):
The employees of all three CRAs operate under a quota system whereby each employee is expected to process all of the disputes of an individual consumer in less than four minutes. Worse still, the “codes” used by both the CRAs and their subscribers (the furnishers) are limited in number and rarely describe the actual basis for the consumer’s dispute.
For example, in two of my recent cases, both identical, consumers wrote dispute letters to all three bureaus. The disputes were conveyed in great detail and explained that the consumers were not responsible for the disputed accounts and that any signatures claimed to be theirs were forgeries. Each consumer dispute letter also enclosed copies of handwriting exemplars such as signatures on driver’s license, military IDs and other credit cards.had also obtained a copy of the forged note and included it in his dispute letter. When Equifax and TransUnion received the letters, their employees simplified the disputes to a code and the description “not his/hers.” The [two-digit code indicating "not mine"] was all the furnishers received.In a deposition taken in a Pennsylvania case, TransUnion’s responsible employee explained the CRA‘s “investigation procedure.”Q.[T]he dispute investigator looks at the consumer’s written dispute and then reduces that to a code that gets transmitted to the furnisher?A.Yes.Q.Does the furnisher ever see the consumer’s written dispute?A.No.Q.Are there any instances in which the dispute investigator would call the consumer to find out more about the dispute?A.No.This is consistent with CRA testimony in every other case of which I am aware. The Bureaus do not convey the full dispute or forward any of the documents to the furnishers. As an expected result, nearly all consumer disputes are verified against the consumers.
The computer-based system, described above, which all of the credit bureaus use is called eOscar. For more information on this system, here is the link.
Case in point: A real life experience:
“What is the CORRECT way to request the method of verification? I’ll tell you about an experience of someone I know, who had a bogus tax lein which had appeared on their credit report.
They were refinancing their home and their loan officer called to tell them they were approved but they would have to pay off their $5000 Florida state tax lien!! They had never lived in Florida, so they wouldn’t have needed to pay state taxes (you have to be employed in Florida for this to happen); therefore, it was impossible for this lien was theirs. They politely explained this to the loan officer (who happened to be a friend of theirs for many years). As you can imagine, they were extremely embarrassed.
The conversation with Equifax
They called Equifax (the CRA who had this listed) and disputed the tax lien. To their surprise, it came back “verified”. They then called the toll-free number listed at the top of the report sent to me by Equifax and asked for method of verification. The response: “We have documentation.”
“What kind of documentation do you have?” They asked.
“Documentation.”
Silence followed. “Who did you call? Did you call the county clerk?”
“We never call the original creditor,” the Equifax employee responded.
“Never?”
“No, Ma’am.”
Stuttering in surprise, they asked for the number and name of the court house. With disgust so palpable that it could be feel it through the phone line, they were given the name and number of the Florida courthouse.
My own investigation efforts
Naturally, they immediately called the Florida courthouse, asked for the records clerk and explained the situation. The very nice woman on the other end of the phone said, “Well, I can tell you that no credit bureau has ever called here.” She then asked for my social security number and name and after comparing them, “Honey, the social security numbers aren’t even close! This definitely isn’t yours.”
They breathed a sign of relief and asked, “Can I get a letter from you stating this tax lien isn’t mine?”
“I’m afraid we can’t do that, as this information is private. The tax lien isn’t yours.”
“Can I give Equifax your name and number and have them call you so you can tell them what you told me?” The clerk assured me that would be fine, and they wrote down the information.
Forcing Equifax to comply
They called Equifax back, and recounted what the clerk had just told me. They then insisted that Equifax call the clerk to verify what I had said. “Oh we can’t do that,” was the reply.
“You better do that, or I will sue you for willful non-compliance with the FCRA. You are required to investigate my dispute, and consider all information.”
“Does this mean you want to open up a new investigation?” My friend held back the expletive which was on the tip of his tongue, and replied that yes, he did want to open a new investigation. I gave her the clerk’s name and direct line. I was given a new confirmation number for my dispute.
The Results
10 days later he received a letter from Equifax that the account was removed from my credit report. The loan went through.
Update Feb 18, 2008: But wait! There’s more! This little item came back!
The Method
After this experience, they did a little more investigation on the credit bureau’s methods of investigation and someone pointed them to the Bennett testimony. Based on hearing my friends’experience and what he learned, I came up with the following procedure which seems to be working for people:
- Challenge the listing in the normal way.
- If verified, with a copy of the investigation result in hand, call the CRA at the toll-free number listed at the top of the report. (If not, you’re done, you lucky dog!)
- Give the report reference number and ask for method of verification per FCRA Section 611(a)(7) .
- They will have never called the OC (original creditor), but will have relied on a third party database to verify, which they may or may not admit to you. If they can’t cite solid evidence like “we called the OC and they verified”, ask for OC’s phone number.
- Call OC and ask for the records.
- If the OC doesn’t have them (they will typically tell you that the collection agency has them and they don’t keep them), get the person’s name and direct line. If they do have them, demand a copy under the new FACTA act.
- If you are sent records, review them and see how good they are. If they are not conclusive, take the next step.
- If the OC has no records
- Call the CRA back and tell them the OC has no records.
- Inform the CRA that they need to open another dispute. The new information for the disput is the name and number of the person to whom you have just called at the OC.
- If they refuse, inform them you will sue for willful non-compliance under section FCRA § 616.
- If they still refuse, send the information via certified letter along with an intent to sue letter. If not, they will give you a new confirmation number (write it down! and the date!). This acts as a new investigation, and the CRA has 30 days to get back to you.
- If you have written records proving the OC can’t back up the negative listing(s) they are reporting on your credit report
- send them registered mail to the CRA along with an intent to sue letter if the account is not removed.
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