When disputing items on our credit reports, sometimes the decision comes out unfavorably, and the credit bureaus and the creditors have determined that information you wanted removed will remain on the credit report. Perhaps the information is somewhat accurate, but deserves an explanation. The Fair Credit Reporting Act (“FCRA”) allows the right to place a 100 word statement on your credit report explaining any entries on the report and providing your own version of what the history of a particular account may be. But is that something you want to do?
Most consumers believe that adding a statement to your report gives you an opportunity to explain the reasoning behind a poor credit score, bankruptcy, collection accounts, tax liens, etc. Consumers believe that a explanation for failing to pay, such as a divorce or medical emergency will justify bad credit to an existing lender or potential creditor. But the reality is, a consumer statement may not always be as helpful as one would think.
The sad reality, consumer statement or not, a lender is not reviewing your credit report with a fine tooth comb. Regardless of your hardship or reason for falling behind on payment, lenders are looking for one thing and one thing only….your ability to pay off debt in a timely and responsible fashion. And most creditors today rely upon credit scores to make that decision for them. While adding a consumer statement to your credit report may help you to justify your inability to pay, adding a consumer statement may have the exact opposite effect.
Lenders who see consumer statements may take it as an admission of guilt, or the inability to pay off your debt and in response may raise your rates, close your accounts, or refuse to lend you money or credit. A consumer statement won’t necessarily change a lenders mind. On the contrary, in the event you have been the victim of identity theft and you are experiencing ongoing issues with your credit report, adding a consumer statement may help. A lender may review a consumer statement to contact you regarding any negative accounts or requests for credit. When accounts are continuously being opened using your personal information, a consumer statement is definitely a good idea to let lenders know to contact you prior to extending credit.
If you believe your rights have been violated under the Fair Credit Reporting Act and you would like the assistance of counsel, contact SmithMarco P.C. for a completely free case review.