A credit dispute letter is a letter which is mailed to a creditor or credit rating agency when a financial debt is believed to be in error for any reason. If any mistakes are observed on any of the three main credit reports for an individual then these problems need to be disputed as soon as possible. Mistakes can have a drastic result on the credit rating of the individual, and their capability to qualify for credit in all forms.
Once the credit agency that reports the incorrect details receives in writing a notice of dispute regarding a particular debt then the agency should check out the debt and be sure that the details are accurate and updated. If the debt can’t be verified within a limited amount of time (30 day time at the time of this writing), the by law the debt must be removed from the credit report of the individual.
If a credit agency receives a credit dispute letter and the debt questioned is not confirmed or removed in the allowable time then the credit agency can face civil action and monetary fees. It is more prevalent than most people think to find a number of incorrect entries on a credit report. It is also common for companies to include debts that are not legitimate or confirmed in some cases. The federal regulations protecting consumers outline the penalties that the credit agency may experience.
In some instances mailing a letter of dispute concerning a financial debt may result in the company being unable to verify the debt. This is especially true if the creditor is audited. The law maintains that the creditor should have a copy of the original debt documents that includes the signature of the borrower, and if this can not be produced then the debt might not be collected on or listed in a credit file in most cases.
Should this happen the common outcome is a higher credit rating because old debts are not dragging this score down.
Mailing a credit dispute letter for older debts may result in these debts being taken from the credit report simply because they can not be verified quickly.
Learn more: Fair Debt Collection Practices Act (FDCPA)