While the account may appear to removed during the dispute process on the report provided by the credit bureau, the reality is that account is most likely to return to a credit report at some time in the future because it’s your account. This is true whether it’s a positive or negative account.
In other words, if that account was truly yours to begin with, it’s going to reappear at some point on the credit report. The confusion arises from the dispute process. During the dispute, the credit bureau is required by law to remove the disputed account from the credit report while they investigate the validity of the information with the original creditor.
Often, the bureau provides an updated report showing the removal. And the investigation process, required to be only 30 days by law, often takes longer. Thus, the credit bureau “extends” the 30 day investigation period, and representing to the consumer that the information has been removed during the investigation.
This is the part where you need to pay attention.
This is one of the major frauds of the entire credit repair concept. Once the credit bureau receives the accurate information from the original creditor, that account goes back onto the credit report.
A credit report can only be “repaired” to the extent that incorrect information can be amended to accurately reflect:
- Correct status of an account (such as paid)
- Removal of a duplicate account (often happens when a minor discrepancy in account balance or account number is reported by the creditor)
- Removal of an account from a family member with the same name that appears on your credit report (John Jones Sr. mortgage appears on John Jones Jr. report)
- Correct name misspellings or home addresses, and other personal identifying information of that nature.
Closed accounts aren’t necessarily the problem with improving a credit score. That’s only one component of the overall scoring algorithm. What most consumers with decent credit misunderstand is their use of their current accounts. Such as, the more legacy accounts you have open and active today, with 50% or less utilization (relative to credit limit) and an on-time payment histories, will generate a better score.
Even with a higher utilization of 50% or more on several revolving accounts, assuming 3-5 active accounts with two years or longer histories and active use, scores can be very good and even excellent.
Please reach out for any further clarification. This is where we see most consumers flail with thinking through the process of “repair” and/or hiring someone to manage the minutia, which will only result in frustration and regret.
When we work with our business financing clients, we include a merged credit report with Classic FICO scores from Experian and Equifax as part of our qualification process from the very beginning.
Most Lenders won’t run a credit report until late stages of the loan application process. Our method helps us to understand and advise the business owner of any challenges on the credit report that may impinge on our ability to secure financing from a Lender.
Trevor, our Chief Financing Rock Star, was a Mortgage Banker for 30 years; credit is one of his areas of special expertise.
Reach out to discuss what you may be experiencing that is contrary to this or perhaps inhibiting you from moving forward in a financing request you’re currently pursuing.