Resolve Credit Disputes
Credit Disputes
Your credit history is regularly tracked by credit rating agencies. The data reported by these agencies is primarily provided to them by creditors and includes detailed records of the relationship a person or business has with the lender. Detailed account information, including payment history, credit limits, high and low balances, and any aggressive actions taken to recover overdue debts, are all reported regularly (usually monthly). This information can be quite detailed and arduous to navigate by a potential lender dealing with a new applicant. To address this issue, credit scoring was invented.
5 Steps to Resolving a Credit Dispute
1. Get your credit card bill and identify any incorrect charges. If there are multiple charges that you're not responsible for contact your credit card company and have them cancel the card. Double check that you are not responsible for the charges, some companies bill under a different name.
2. Contact the merchants that made the incorrect charges directly. They may be able to directly void the charges.
3. If the merchant cannot assist you contact your card company. Most major credit card providers offer no fault reimbursement for card or identity theft. A customer service rep will be able to tell you what your liability is and what the next steps to take are.
4. Give your information to your credit card company. Depending on the company you may need to fill out a form, or the information can be given over the phone. You will need to provide copies of the receipts and give a description of the situation.
5. Credit card companies must give you resolution within 30 days, so expect to hear back within this timeframe.
6. Contact a credit dispute lawyer if none of the above steps resolve your issue. Familiarize yourself with attorney reviews prior to making a decision.
Credit History
Credit history or credit report is, in many countries, a record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy. The term "credit reputation" can either be used synonymous to credit history or to credit score.
When a customer fills out an application for credit from a bank, store or credit card company, their information is forwarded to a credit bureau, along with constant updates on the status of their credit accounts, address or any other changes you may have made since the last time they applied for any credit.
This information is used by lenders such as credit card companies to determine an individual's or entity's credit worthiness; that is, determining an individual's or entity's means and willingness to repay an indebtedness. This helps determine whether to extend credit, and on what terms. With the adoption of risk-based pricing on almost all lending in the financial services industry, this report has become even more important since it is usually the sole element used to choose the APR (annual percentage rate).
Credit ratings are determined differently in each country, but the factors are similar, and may include:
•Payment record - a record of bills being paid overdue will negatively affect the credit rating.
Control of debt - Lenders want to see that clients are not living beyond their means. Experts estimate that non-mortgage credit payments each month should not exceed more than 15 percent of your after tax income.
Signs of responsibility and stability - Lenders perceive things such as longevity in clients home and job (at least two years) as signs of stability. Having a respected profession can improve a credit rating.
•Re-Aging - Through re-aging, a credit history is re-written and you are given a fresh start on that particular account. This can dramatically improve the credit score. In 2000 the Federal Financial Institutions Examination Council (FFEIC) clarified guidelines on re-aging accounts for delinquent borrowers.
•Credit inquiries – An inquiry is a notation on a credit history file. There are several kinds of notations that may or may not have an adverse effect on the credit score. Soft pulls don't affect the credit score and are characteristic of the following examples:
•A credit bureau may sell your contact information to an advertiser purchasing a list of people with similar characteristics, like homeowners with excellent credit. A creditor can check your credit periodically. Or, a credit counseling agency, with your permission, can pull your credit report with no adverse action. Each of the preceding examples are commonly referred to as a "soft" credit pull.
However "hard" credit inquiries are made by lenders. Lenders, when granted a permissible purpose by you for the purposes of extending you credit, can check your credit history. Hard inquiries from lenders directly affect your credit score. Keeping credit inquiries to a minimum can help your credit rating. A lender may perceive many inquiries on your report as a signal that you are looking for loans and will possibly consider you a poor credit risk. To keep your credit rating good, try not to let companies access your history unnecessarily.
Cards you don't use - Although it is believed that having too many credit cards can have an adverse effect on a credit score, closing lines of credit can not improve the score and may even hurt it. The credit rating formula looks at the difference between the amount of credit you have and the amount being used, so reducing the total credit can make the balance carried seem larger and take points off the score.
A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations. In most cases, these issuers are companies, cities, non-profit organizations, or national governments issuing debt-like securities that can be traded on a secondary market. A credit rating measures credit worthiness, the ability to pay back a loan, and affects the interest rate applied to loans. (A company that issues credit scores for individual credit-worthiness is generally called a credit bureau or consumer credit reporting agency.)
Interest rates are not the same for everyone, but instead are based on risk-based pricing, a form of price discrimination based on the different expected costs of different borrowers, as set out in their credit rating. There exist more than 100 rating agencies worldwide.