Credit bureaus respond to consumer credit disputes via mail. They will either delete or verify the information. If the item is verified, it means the bureau is keeping that information on your credit file.
The Fair Credit Reporting Act (FCRA) allows you to attach a 100-word essay to your credit report. This is the opportunity to explain the negative information and argue that you deserve new credit.
People often mistakenly use the 100-word statement to explain some situation that led to their bad credit. For example, they may want to justify late payments with the loss of a job or a medical condition.
However, do not be misled by the “opportunity” to add a consumer statement to your credit report.
Do not mistake the 100-word statement for good faith on the part of the credit bureaus. As you will see, such a statement is usually used against your best interests.
Let’s assume that you were to attach a statement like this: “I was only late on my credit cards because I was laid off from work. Once I found another job I caught up on all my bills and have never been late since.”
The unexpected loss of employment may sound like a reasonable explanation to be late once or twice on a credit card bill. Plus, I would give that person credit for catching up on her bills and staying current since the bad financial spell.
However, the credit bureaus and creditors read such a consumer statement entirely different. They don’t see a good person who went through some brief and unexpected hard times.
Her inability to make payments is seen as a sign of weakness and/or irresponsibility. They believe that she should have emergency money to pay bills during times of emergency.
Writing a 100-word statement can damage your credit for three more reasons. First, such a statement only cements the fact that you paid your bill late. Second, the credit bureaus already have confirmation that the late payments are accurate. Thus, should you dispute the items in the future, the credit bureaus will ignore that dispute or deem it “frivolous.” Third, any future creditor will expect you not to pay them should you run into another financial emergency.
There is no reason for them to conduct an investigation. Finally, you have put yourself into a category of consumers that potential creditors avoid. Any potential creditor may avoid giving you credit out of fear that you will likewise default on payment should you run into a rough financial patch in the future.
Nowadays applications for new credit such as a credit card or car loan are based upon your score – not your statement. Therefore, the statement is only a weapon that the bureaus can use to ignore your credit report disputes.
Briefly, the 100-word statement is dangerous to your credit file. It serves no good purpose for the consumer whatsoever.
