Clearing errors on your credit report through direct disputes is one of the best things you can do for your financial health and credit score. Here’s a closer look at how direct disputes work.
Definition and Examples of a Direct Dispute
A direct dispute occurs when you contact a creditor or lender because you believe they’ve given the credit bureaus incorrect information about your account. The purpose of filing a direct dispute is to get errors removed from your credit report (and hopefully boost your score). For example, suppose you review your credit report and see a note that you made a late payment on your Discover card. Your credit score has dropped a few points as a result. You know you’ve made all your payments on time. So you contact Discover directly, providing proof that the payment wasn’t late. They then update the information in their system and notify the credit bureaus of the mistake.
How Does a Direct Dispute Work?
The Fair Credit Reporting Act (FCRA) gives you the right to dispute inaccurate information on your credit report from credit card issuers, mortgage lenders, auto loan providers, debt collectors, and more. You can file a direct dispute by contacting the company that provided the information, or you can send a letter to the credit bureau that’s reporting the error, which is called an indirect dispute. Some common issues you can dispute directly with a credit or lender include:
Accounts that aren’t yours (or anything else that looks like fraud or identity theft)Inaccurate late payments, loan amounts, or credit limitsAn account’s open or close date
How To File a Direct Dispute
Follow these steps to start the direct dispute process:
Contact the Company That Gave the Misinformation to the Credit Bureaus
The first step is to contact your lender, creditor, or whichever company reported the false information. Tell them about the error you found on your credit report, provide proof of documentation, and ask them to correct it. Most companies will ask you to submit your direct dispute either electronically or in writing. If you don’t see how to start the process, give the company a call. At the very least, a customer representative can tell you where to file your dispute and what supporting documents you need to include.
Wait for Them To Conduct an Investigation
Companies typically have 30 days to investigate direct disputes, although it can be extended to 45 days if they receive additional information during that period. During this time, they’ll review all the information you provided against what they have in the system. The exact length of time it takes to resolve a direct dispute depends on the complexity of the situation. If it’s something simple—such as when an on-time payment is reported as late—the company can simply review the data in their system and verify the bill was paid on time. But in cases of bigger investigations, it may take the full month. Companies do not have to investigate a direct dispute if it’s found to be “frivolous” or “irrelevant.” Frivolous or irrelevant disputes can happen if:
You didn’t provide sufficient information to investigate the direct dispute, orYou submitted “substantially similar” information to a previous dispute the furnisher has already investigated.
The Company Notifies You of Their Decision
Federal law mandates that a company must notify you within five business days of reaching a direct dispute decision. When that time comes, three things will happen:
Direct Dispute vs. Indirect Dispute
Direct and indirect disputes are both ways to remove errors from your credit reports, but there are some differences. Direct disputes can be more effective than indirect disputes because you’re going straight to the source. Your lender is the one who receives your payments, knows your balance, and has the paperwork needed to verify and update a claim. So when you go straight to them, they can quickly rectify the situation. Filing an indirect dispute with your credit reporting agency, although helpful, can take longer and require more information on your part because they’re essentially a middle-person. It’s often best to go to your lender or creditor first, then on to the credit agency if things don’t get resolved. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
