If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

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.

In paragraph number two of a credit bureau dispute response the bureaus encourage you to add a 100-word consumer statement to your report. This is where many people add a short essay on why they deserve 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.

Do not fall into the trap of adding a consumer statement to your credit. It is almost never a good thing.

This “concession” by the credit bureaus is not a concession at all. In fact, the 100-word statement will only make matters worse for you.

People often send in statements like this: “I fell behind on my credit card bills, but I have since caught up. My boss laid me off from my job of 20 years. Even though I could not pay my bills, it was only a temporary situation and now I am current.”

Losing her job due to no fault of her own seems like a rotten reason to give her bad credit.

Credit bureaus interpret a late payment one way. They interpret it as an indication of a bad credit risk.

Instead, the credit bureaus see somebody who isn’t smart enough to have an emergency fund to cover basic minimum payments should something go wrong financially.

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. As you can see, there is no benefit to the consumer when they attach the consumer statement. In fact, the purpose of the statement is so old and out-dated that it probably should be simply abolished. It was part of the original Fair Credit Reporting Act enacted by Congress in the 1970’s. The statement has no purpose nowadays since most credit applications are reviewed electronically.

If a creditor does not read your statement, then nobody will. Most applications are reviewed digitally and so the 100-word statement serves no purpose other than a weapon credit bureaus use against you.

To summarize, the 100-word statement is out dated and dangerous. Avoid the temptation to explain bad credit. Instead, use the formal channels to challenge misleading credit information such as dispute letters and creditor interventions.

Tags: Money

Popularity: 4% [?]

Share This