Quite a few studies show that 1 out 4 consumer credit reports include errors that will result in the consumer being rejected for credit. While this is a serious fact, what is more critical is what really happens when these consumers actually dispute these errors on their report with the Credit Bureaus.
Many “Consumer Protection” and “Consumer Rights” organizations try to make consumers feel confident by explaining that any errors on their credit report have to be…“Investigated” by the credit bureaus and…any data which the bureaus are UNABLE to verify within 30 days, must be removed from the consumers report.
All that is necessary to make this happen is the consumer must mail a letter (or go online) in order to “initiate” the investigation procedure. When most Americans hear the word…“INVESTIGATION” in regards to an item on their credit report they’re challenging, they normally picture some variation of the following three step process:
An employee at the Credit Bureau receives their dispute and personally reviews it. During this review they gather information and documents in regards to the disputed account by getting in touch with the original creditor or collection agency etc. (a.k.a. the Data “Furnisher”).
The Credit Bureau employee then reviews copies of original paperwork like the credit application, billing statements, billing and payment statements or notes in the account looking for any mistakes in reporting. If anything is in question they will request proof from the “Data Furnisher.”
Once a “complete and thorough” study has been completed, the Credit Bureau employee will then update the consumers account according to the results of the investigation.
Now, let’s talk about how it truly works. Here’s how more than 83% of credit bureau disputes really work:
FIRST: A credit bureau disputes letter is developed by either you, an attorney, or a credit repair company. And it’s then mailed to the credit bureaus. It doesn’t really matter who mails the letter since…
SECOND: When the letter is obtained by the Credit Bureau it’s electronically scanned with “Optical Character Recognition” and…matched against a DATABASE of…Boiler Plate Dispute Letters typically used by Credit Repair Companies or located in Software Programs and Credit Repair Books…
If your letter “matches” one of these letters in their database your dispute will most likely be…Flagged as FRIVALOUS, Marked as SUSPICIOUS or totally IGNORED. If you’ve used a Credit Repair Company or Dispute Letters out of Credit Repair Books you might have firsthand practical experience with this.
THIRD: No matter who writes your dispute letter or how great it might sound…if the SCANNED version of it does NOT match that of a “Boiler Plate” Dispute Letter utilized thousands of times, the scanned version will then be sent electronically overseas for processing in a nation like: India, Jamaica, Philippines or Costa Rica.
There, an outsource worker who doesn’t even speak English as their native vocabulary will look at your scanned dispute and turn it into nothing but a TWO or THREE Digit Code. Yes, you observed that properly. They will take your dispute (even if it has ten pages of detailed documentation supporting your claim) and convert it into nothing but a…TWO or THREE Digit Code
And, to make your blood boil even more, they do this with a highly automatic system the Credit Bureaus produced called e-Oscar which (get this) stands for…E-lectronic: O-nline S-olution (for) C-omplete (and) A-ccurate R-eporting.
The e-OSCAR system takes your dispute and usually employs a pull down “Pick List” to convert the dispute into just one of 26 distinct dispute codes. Even worse, of these 26 Dispute Codes, 85% of disputes will fall under the very same 5 codes. For instance, according to testimony from congressional hearings, credit bureaus utilised the following codes in these percentages with the e-Oscar system:
31% of Disputes “NOT MINE”
21% of Disputes “ACCOUNT STATUS”
17% of Disputes “INACCURATE INFORMATION”
9% of Disputes “ACCOUNT AMOUNTS”
7% of Disputes “ACCOUNT CLOSED”
85% of Disputes fall under the identical 5 Codes. Once your dispute is converted to one of the “Standardized Dispute Codes” within the e-Oscar system, the code is dispatched to the Data Furnisher (a.k.a. the Original Creditor or Collection Agency) using a standardized form known as an “Automated Consumer Dispute Verification Form” (or ACDV for short).
This request is sent to the Data Furnisher through the e-Oscar System. An ACDV merely is made up of a few items of identifying info about the consumer, the Dispute Code and in some cases, extra notes. Any supporting info like…Account Applications, Cancelled Checks, Billing Statements or Pay Off Letters or Confirmations etc…
…are NOT integrated in these electronic communications between Data Furnishers and the e-Oscar System. Your dispute is basically converted into nothing but a “Dispute Code”. In fact, there is NO MECHANISM IN PLACE for the Credit Bureaus to deliver your Supporting Documents and Proof of your claim to the Data Furnishers! So, what happens when a furnisher receives an “Automated Consumer Dispute Verification” (ACDV) from the e-Oscar System?
Do they commence an “in-depth” investigation? If the furnisher is a Collection Agency do they contact the primary creditor for genuine documentation on the account? Hardly… keep in mind, the data furnisher will never even receive nor see all the documentation in your dispute (even if you sent 60 pages of proof).
In fact, there’s a new item of technology to even additionally automate the e-Oscar System for Data Furnishers and it’s called…BATCH INTERFACE. Data Furnishers like large banks and collection agencies can receive thousands of disputes a month. Dealing with all these disputes manually by way of the e-Oscar System quickly becomes…A LOT OF WORK.
The e-Oscars remedy to the problem is to send the Data Furnisher all these disputes in one huge file, all at one time. This is what the BATCH INTERFACE function was developed for. Now, when the data furnisher gets this large file there are many alternatives for processing the data. One such option is something called…REPLY ALL
REPLY ALL permits the data furnisher to pick out a response like…“Account Verified”… And apply this reaction to dozens or even hundreds of records in the file with a single push of a button. But if this doesn’t have fuming enough, then maybe another feature will. And, that function is one known as…AUTO POPULATE
The “Auto-Populate” function makes it possible for the data furnisher to Auto Populate responses of Automated Consumer Dispute Requests before submitting them back to the credit bureau via the e-Oscar System. Of course, we all know the Fair Credit Reporting Act (FCRA) says that all Data Furnishers MUST perform a…sensible investigation. Then again, perhaps it all is dependent on what one calls a “sensible” investigation and how reasonable it can be when programmed.consumer, consumer credit, credit bureau, Credit Repair, credit report