Credit Reporting Disputes: Do I Have to Respond to Them?

By Richard Hudson
Chief Optimization Officer
Ignite Consulting Partners

To most businesses that report consumer credit, the most time-consuming aspect is responding to disputes. The biggest mistake I see is companies that don't think they have to respond to direct disputes because they are frivolous and just throw them in the trash. I hear excuses like, “They didn't even tell me what was in dispute!”, and “That guy has sent me three of the same disputes in the last six weeks!” The second most common mistake with direct disputes is not notifying the bureau that you received them.

Although a data furnisher is not required to investigate a frivolous or irrelevant dispute, they are required to notify the consumer of that determination within five days of making it. You can have a basic form letter that explains that you have deemed it to be frivolous and a checklist of the possible reasons. Also, as a data furnisher, you have an obligation to notify the bureau that an account is in dispute when it comes directly from the consumer to you. This is done using a Compliance Condition Code. Your software provider should be able to show you where this can be changed in your system.
Remember, if you are reporting credit on consumers, it is important that you comply with your obligations under the FCRA. First, have policies, procedures, and training in place to ensure your business can identify and properly respond to direct disputes. Second, verify that you are communicating to the credit reporting bureaus that an account is in dispute. These two simple things must be part of your credit reporting compliance infrastructure.


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