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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.

It is surely tempting to tell your side of the story by way of the “consumer statement.” It appears as your opportunity to explain why you have negative items on your credit report. There probably is a good reason why you were late on that payment. Perhaps you were sick or got laid off from your job.

Be cautious about adding a consumer statement to your credit file.

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.

Here is a common consumer statement: “The late payments you see on my credit file were not my fault. My employer fired me due to no fault of my own. I quickly found a new job and now pay my bills on time every single month.”

It may seem unreasonable to punish somebody for losing her job. Especially if she caught up on all her bills.

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

Credit bureaus interpret the situation as somebody who is irresponsible. They see her as a bad credit risk because she does not have enough savings to cover bills then things get tough.

Attaching a 100-word statement is really bad for three additional reasons: (1) Such a statement confirms that Yes - you really were late on those payments. (2) The credit bureaus will ignore any future disputes you mail because you already admitted fault. (3) Should you apply for new credit in the future; every creditor will see your candid admission that you are not able to pay your bills during times of emergency - and therefore a bad credit risk. As you can see, attaching a 100-word written statement to your credit report could possibly be the worst step you can take. In fact, it is only an option because it was part of the original Fair Credit Reporting Act enacted in the 1970’s. Thirty years ago bankers actually manually reviewed credit applications and read those statements personally.

In today’s digital world most applications are reviewed electronically. Thus, such a statement only serves as another way for the credit bureaus to ignore your credit report dispute.

In sum, ignore the temptation to tell your side of the story. Resist the urge to “justify” your being late on that credit card bill or car payment. Steer clear of adding the deadly 100-word consumer statement.

Tags: Money

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