The Deadly 100-Word Credit Report Statement
by: MattDouglas |
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If you have ever tried to dispute items on your credit report, you may have received a response from the credit bureaus stating they performed their "investigation." The bureaus may also tell you that they "verified" whatever item you disputed. This means that negative item will remain on your credit report.
In paragraph number two of a credit bureau dispute response the bureaus encourage you to add a 100-word consumer statement to your report. This is where many people add a short essay on why they deserve credit.
People often mistakenly use the 100-word statement to explain some situation that led to their bad credit. For example, they may want to justify late payments with the loss of a job or a medical condition.
Do not fall into the trap of adding a consumer statement to your credit. It is almost never a good thing.
Do not mistake the 100-word statement for good faith on the part of the credit bureaus. As you will see, such a statement is usually used against your best interests.
Let's assume that you were to attach a statement like this: "I was only late on my credit cards because I was laid off from work. Once I found another job I caught up on all my bills and have never been late since."
Losing her job due to no fault of her own seems like a rotten reason to give her bad credit.
Credit bureaus interpret a late payment one way. They interpret it as an indication of a bad credit risk.
Instead, the credit bureaus see somebody who isn't smart enough to have an emergency fund to cover basic minimum payments should something go wrong financially.
Attaching a 100-word statement is really bad for three additional reasons: (1) Such a statement confirms that Yes - you really were late on those payments. (2) The credit bureaus will ignore any future disputes you mail because you already admitted fault. (3) Should you apply for new credit in the future; every creditor will see your candid admission that you are not able to pay your bills during times of emergency - and therefore a bad credit risk. As you can see, attaching a 100-word written statement to your credit report could possibly be the worst step you can take. In fact, it is only an option because it was part of the original Fair Credit Reporting Act enacted in the 1970's. Thirty years ago bankers actually manually reviewed credit applications and read those statements personally.
Nowadays applications for new credit such as a credit card or car loan are based upon your score - not your statement. Therefore, the statement is only a weapon that the bureaus can use to ignore your credit report disputes.
To summarize, the 100-word statement is out dated and dangerous. Avoid the temptation to explain bad credit. Instead, use the formal channels to challenge misleading credit information such as dispute letters and creditor interventions.
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Looking for quick and effective credit repair? Discover the secrets to deleting charge offs, judgments, repossessions, late payments, and raising your credit score. Plus, get a free credit dispute letter you can use to delete bad credit.
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