Home Credit report disputes How to Dispute a Collection on Your Report

How to Dispute a Collection on Your Report

A collection entry on your credit report can hurt your business funding. Here is how to dispute one yourself, for free, if it is wrong.

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What a collection entry is and why it matters to a business owner

Lenders use credit reports to help decide whether they will loan you money. The reports also help decide what interest rates they will offer. The CFPB says reports often contain collection items. They also contain missed payments and loans sent to collections. So a collection on your report can follow you into a business loan meeting.

Most people have more than one credit report. The three nationwide bureaus are Equifax, Experian, and TransUnion. Each may get its facts from different places. A creditor does not have to report to every credit reporting company. A collection can show at one bureau and not another.

When a collection item can be disputed

A dispute is a tool for errors. The CFPB says no one can remove accurate and current negative information from your credit report. If the debt is real, current, and reported correctly, a dispute will not erase it.

Collections can be wrong too. The amount may be inflated. The debt may already be paid. It may belong to someone else with a similar name. Or the collection agency may not be able to back up what it reported. The Fair Credit Reporting Act covers this. When an item is inaccurate, incomplete, or cannot be verified, the FCRA requires it to be deleted or corrected promptly.

Step 1: Get your credit reports and find the collection

The FTC says you can always get a free weekly credit report from AnnualCreditReport.com. It is the only website authorized to fill orders for the free annual credit reports. You are entitled to these reports by law. The CFPB says requesting your reports will not hurt your credit score, and it says to check them at least once a year for errors.

Pull all three. Look for the collection entry. Write down what it says. This includes the agency name, the original creditor, the amount, and the date. Note which bureaus show it. The FTC says you should dispute with each credit bureau that has the mistake.

Step 2: Take the dispute to the credit reporting company

The CFPB says fixing an error generally means contacting two places. Begin with whichever bureau has the collection listed.

The FCRA says a dispute notice must name the item you are disputing. It must say why you dispute it. It must include copies of papers that back you up. So say in writing what you think is wrong and why. Include copies of papers that back you up. A payment record works well. A letter from the original creditor also works well. Your letter should include your contact information. It should also give a clear explanation of the dispute. Ask the bureau to remove or fix the wrong or incomplete item.

Send it by certified mail and pay for a return receipt, the FTC says, so you have a record it arrived. The bureaus also accept disputes online or by phone. Do you suspect the collection stems from identity theft? The CFPB points to IdentityTheft.gov.

For a fuller walkthrough of the letter itself, see how to dispute credit report errors.

Step 3: Dispute with the furnisher

The second place to contact is the company that provided the information. The CFPB calls these companies furnishers. A furnisher can be your bank, your landlord, or your credit card company. Here it is the collection agency or the creditor that placed the debt.

Send that dispute in writing too, by certified mail. The CFPB says to send it to the furnisher's address on your report. Or use an address the furnisher gives for disputes. The same rules apply. Identify the collection. Explain what is wrong. Attach your documents.

The FCRA says a furnisher must look into a dispute once it gets notice. It must then tell you what it found. When a furnisher's review finds the item inaccurate, incomplete, or unverifiable, it may modify, delete, or permanently block it. It must then notify all three nationwide credit bureaus. This way your reports get corrected everywhere.

One limit worth knowing. The FCRA says furnishers can skip disputes sent or written by a credit repair company. This is one reason doing it yourself, for free, is the stronger path. For more on what the law covers, see the fair credit reporting act.

Once your dispute is in, what comes next

Once your dispute lands, the credit reporting company has to look into it. It must report the results back to you, the CFPB says. The FCRA makes the agency check the item again for free. It must also tell the furnisher about your dispute. You must get written notice of the results.

If the collection comes off, that is not always the end. The FCRA says deleted information cannot go back in your file. Not unless the furnisher certifies it is complete and accurate. If deleted information is put back in your file, you must be notified in writing.

If the dispute does not resolve it

Say the investigation ends and the collection stands. The FCRA says you may file a brief statement of the dispute. The CFPB says you can ask the credit reporting companies to include a statement. This statement explains the dispute in your reports. It goes in your file and is provided to anyone who requests your report in the future. Later reports must clearly note that the information is disputed by you.

A bureau can also refuse to investigate at all. The FCRA lets it stop if it reasonably determines the dispute is frivolous or irrelevant. The notice must say why it made that call. Read those reasons.

Where to go next

If you have a problem with your credit report, the CFPB takes complaints. That includes a dispute that went nowhere.

Two more pages can help. Our guide on how to dispute credit report errors covers other kinds of mistakes. And what happens after you dispute a credit report walks through the follow-up in more detail.

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