Your credit score dropped after a dispute because the dispute caused certain changes to your credit report. How much these changes affect your credit score depends on the kind of dispute you have and the outcome.
Fortunately, you can minimize the adverse effect of a credit dispute on your credit score by working with the right credit dispute companies. They’ll review your credit report for any inaccuracies and reach out to the credit bureau with queries about your credit report.
A reliable credit repair company will also advise you on ways to improve your credit report. They’ll also answer important questions related to credit score, such as, ‘Does a student loan affect credit score?’ ;How does a dispute affect my credit score?’ and, ‘Is it bad to close a credit card?’
What Is a Credit Dispute?
A credit dispute is a situation in which you reach out to a credit bureau requesting to remove inaccuracies in your credit report. For instance, if you find errors in your credit card report, you can submit a formal request to the credit bureau and ask them to fix the inaccuracies.
It’s important to note that not all disputes can be fixed by the credit bureau. For example, if you paid for an item or service with your credit card and you didn’t like its quality, you can’t report it to your credit card provider as a fraudulent charge. The best you can do in such a situation is to resolve the issue with the merchant, but your credit card issuer might consider your dispute if it is related to products or services that were purchased but never delivered.
Before you submit your credit dispute, you need to understand how it might affect your credit score.
How a Credit Dispute Affects Your Credit Report
When you submit a credit dispute, credit bureaus will indicate your account as being “in dispute” in their reporting. Essentially, this hides your credit account from credit scoring representations.
If your credit account’s status is derogatory, your credit score might increase, albeit artificially, as a consequence of the dispute. However, this improvement is only temporary because once the dispute has been resolved, regardless of the outcome, the trade line will be updated and your credit account will become visible again to the bureaus.
So, if your credit card still has a derogatory status, your credit scores will be updated, lowering your credit status. It’s important to understand that filing a credit dispute doesn’t necessarily affect your credit scores, especially if it doesn’t change the information on your credit report.
In this case, your credit scores will remain the same, even after they’ve been updated. But if the dispute changes your credit report, your credit scores will be affected. So, as noted above, how the dispute affects your credit scores (whether they drop or increase) depends on the type of dispute you submit and its outcome.
For example, if your dispute is about an incorrect physical address or first name, it won’t have any effect on your credit score because your name and address aren’t used to calculate your credit score.
But if your dispute is about late payments, it can affect your credit score because it will appear in your credit report. If the late payment was incorrectly included in your credit report and you manage to have it corrected, your credit scores will automatically increase.
What Do I Do If I Disagree with the Outcome of a Credit Dispute?
Submitting a credit dispute isn’t the last resort. If you disagree with the results of your credit dispute, you can contact your lender and ask them to fix the inaccuracies in your credit billing records. Alternatively, you can file another dispute with the same credit bureau and include further evidence to support your claim–but you shouldn’t re-submit a dispute with the same evidence, as this will only generate the same outcome.
If the two options fail, include a short note indicating that you dispute the entry. Many credit bureaus allow borrowers to add a statement of dispute to their credit reports. You should also seek assistance from a reputable credit repair firm, like The Phenix Group, to help make sure your credit dispute goes as smoothly as possible!