How Do Credit Bureaus Verify Debt?
If you discover incorrect information within your credit report, the Fair Credit Reporting Act gives you the right to dispute the incorrect data directly with whichever credit bureaus are reporting it. Once it receives your dispute, the credit bureau will then attempt to verify the information with the information furnisher. If it cannot verify the information, it must remove the data from your credit record.
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Facts
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The FCRA requires that credit bureaus conduct an investigation into the validity of every dispute that they receive. Due to the high volume of consumer disputes the credit bureaus process each day, their investigation simply consists of verifying the accuracy of the current information with the creditor who originally provided it. The credit bureaus do this by assigning the consumer's dispute a code number to identify the reason behind the dispute. The credit bureau then faxes a notice of the dispute, along with the code, to the creditor along with a request to verify the validity of the information already present on the consumer's credit report.
Significance
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When a consumer disputes incorrect or unrecognizable information with the credit bureaus, the creditor who originally furnished the information has no knowledge that the information he provided is in question until he receives the credit bureau's request to verify the data's accuracy. Unless the creditor has some reason to believe that the original information he provided is incorrect, he will automatically verify that his initial report was, in fact, correct. Because of this, consumers have little chance of having disputed trade lines removed through credit bureau disputes alone.
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Benefits
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As of July 2009, the FCRA allows consumers to file formal disputes directly with the creditors reporting the incorrect information to the credit bureaus. According to MSN Money, creditors can better assess the accuracy of their report using a detailed letter from the consumer than they can when they have little more than a coded dispute notification from a credit bureau.
Misconceptions
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Many consumers mistakenly believe that their well-documented disputes help them correct information within their credit reports. In reality, the information furnisher's response to the credit bureau's query of the entry's validity carries more weight with credit bureaus than even the most thorough documentation.
Typically, when a credit bureau removes a disputed item from an individual's credit report, this occurs because the information furnisher failed to respond to a query for validation -- not because a credit bureau representative evaluated the documentation that accompanied the dispute.
Effects
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The FCRA requires that information providers only submit accurate information to the credit bureaus. If a creditor knowingly verifies incorrect information to the credit bureaus following a consumer dispute, the individual has the right to file a lawsuit against the creditor for violating federal credit reporting laws.
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