Why Did My Credit Score Go Down After a Dispute?

Disputing errors on your credit report is an important part of maintaining an accurate credit score. However many consumers are surprised to see their credit score drop after disputing information on their credit report.

Common Reasons for Credit Score Drops After Disputes

There are a few key reasons why your credit score may decrease after filing a dispute

• The disputed information is verified as accurate: If the credit bureau investigates your dispute and determines the negative information is correct, it will remain on your report and continue to impact your score.

• The scoring algorithms react to changes: The algorithms that generate credit scores are complex. Any change to your credit report can cause your score to shift up or down.

• Reduced credit limits or closed accounts If the disputed information relates to an account closure or lower credit limit, your credit utilization rate may increase after the dispute. Higher utilization can lower your score

• New hard inquiries: Disputes generate hard inquiries on your credit report as the bureau investigates. Too many hard inquiries in a short timeframe can ding your score.

Tips to Avoid Score Drops After Disputes

While a drop after a dispute can be frustrating, there are things you can do to help avoid significant score impacts:

• Check reports carefully before disputing: Be certain the information is truly inaccurate or misleading before filing a dispute. Disputing accurate information won’t benefit your score.

• Dispute with relevant proof: Provide as much supporting documentation as possible to back up your dispute. This gives it a better chance of resulting in removal of negative items.

• Don’t dispute too often: Limit disputes to truly incorrect information. Too many disputes could trigger excessive hard inquiries.

• Monitor your credit: Keep an eye on your reports and FICO score so you can detect any changes right after disputes. This allows you to take mitigating actions if needed.

• Improve other credit factors: While dealing with disputes, focus on improving payment history, lowering balances, and limiting hard inquiries. This can offset scoring dings.

The Impact is Usually Temporary

It’s important to understand that score drops resulting from disputes are usually temporary. The hardest inquiries fall off your report after two years. Any changes to your credit limits or utilization rates can be corrected over time.

As long as you maintain otherwise positive credit behaviors, your score should rebound after it absorbs the effects of your disputes. Don’t get discouraged if your score initially decreases. The long-term benefits of disputing inaccurate information outweigh short-term drops.

When to Dispute Credit Report Errors

Disputing legitimate errors on your credit reports is recommended. Here are some tips on when to initiate the dispute process:

• Dispute late payments you paid on time.

• Dispute accounts that aren’t yours.

• Dispute inaccurate account statuses, like closed accounts listed as open.

• Dispute debts that have been paid or settled if they appear unpaid.

• Dispute incorrect balances or credit limits.

• Dispute duplicate entries for the same debt.

• Dispute inaccurate personal information like wrong addresses.

• Dispute fraudulent activity you aren’t responsible for.

How to Dispute Incorrect Information

If you verify errors on your credit reports, here is the standard process for disputing them:

• Review your reports from Equifax, Experian, and TransUnion. Compare them for consistency.

• Identify which bureau/bureaus are reporting the inaccurate data.

• Get the dispute address for each bureau.

• Write dispute letters addressed to the bureaus. Include identifying information, the specific item(s) disputed, and documentation.

• Send via certified mail and keep records.

• Follow up if errors persist after 45 days.

Be Persistent and Patient

Errors on your credit reports can definitely be frustrating. But diligently disputing incorrect information and monitoring your score over time can improve your credit standing. Be persistent and patient through the dispute process, and keep focusing energy on healthy credit management habits.