Credit scores are a measure of your overall financial health and how responsibly you manage debt. If you’re curious about which entries on a credit report will decrease your credit score, the biggest culprits are late payments, missed payments, collection accounts, foreclosure proceedings, and bankruptcy filings.
Are those the only things that can negatively impact your credit scores? Not necessarily. Can you do anything about entries on your credit that decrease your score? Perhaps, if you’re able to dispute them. Filing a credit report dispute may help to add points back to your score.
Credit Report Basics
A credit report dispute allows you to challenge information that you believe is inaccurate. If you’d like to initiate a dispute, you’ll first need to know how to read a credit report.
Credit reports include four categories of information:
• Personal information. This section of your credit report includes your name and any other names that you’re known by, your date of birth, Social Security number, addresses you’ve lived at, and employment history. Your personal information does not affect your credit scores in any way.
• Credit accounts. Information about your credit accounts is used to calculate your credit scores. Here, the most relevant details include what types of credit you’re using, when your accounts were opened, your available credit limit and current balance, the monthly minimum payment, and your payment history.
• Credit inquiries. A credit inquiry can show up on your credit reports when you apply for a loan or line of credit if it’s a “hard” credit pull. The difference between a soft credit inquiry vs. hard credit inquiry is that hard inquiries can affect your credit scores, while soft inquiries do not.
• Public records. Information that’s included in the public record about your credit accounts goes here. The types of things that can be listed include collection accounts, judgments from creditor lawsuits, and bankruptcy filings.
There are three major credit bureaus that compile credit reports: Equifax®, Experian®, and TransUnion®. Thus, you can have multiple credit reports. A tri-merge credit report compiles information from all three bureaus into a single report. As far as which credit bureau is used most, there’s no single answer as it depends on the lender.
💡 Quick Tip: Check your credit report at least once a year to ensure there are no errors that can damage your credit score.
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When Can I Dispute Credit Report Information?
Under the Fair Credit Reporting Act (FCRA), you have the right to dispute inaccuracies on your credit reports with the credit bureau that’s reporting the information. You can file a dispute at any time.
Examples of errors you can dispute include:
• Credit accounts listed that don’t belong to you
• Inaccurate payment history or balances
• Current accounts that are erroneously reported as past due
• Duplicated entries for the same account
Why would someone want to dispute a credit report? In short, doing so can help your credit score if you’re able to get inaccurate information corrected or removed.
Information from your credit reports is used to calculate your credit scores. FICO® scores are the most widely used credit scoring model. Simply put, it’s a three-digit credit score ranging from 300 to 850 that reflects your credit health. The higher your score, the less risky you appear to lenders.
A middling or “fair” credit score is anything between 580 and 669. Fair credit can get you approved for loans, but you’ll need a good to excellent score to qualify for the lowest interest rates.
Does Filing a Dispute Hurt Your Credit?
Disputing credit reporting errors won’t hurt your credit. Depending on the outcome of the dispute, it could even help your score. During the dispute process, the credit bureau is legally required to investigate your claim to determine if your reason for the dispute is valid.
Keep in mind that disputing credit report errors isn’t necessarily an instant fix for bad credit. If you have multiple negative items on your report, then getting just one of them corrected or removed may do little to improve your score. Disputing information could hurt your credit if a correction negatively affects your credit file.
It’s also important to know that disputing credit report information doesn’t guarantee its removal or correction. If there’s negative information on your credit reports but it’s accurate, you can’t dispute it. The upside is that most negative information falls off your reports after seven years, though it can take up to 10 years for a Chapter 7 bankruptcy filing to disappear.
💡 Quick Tip: An easy way to build your credit score? Pay your bills on time. Setting up autopay can help you keep your account in good standing.
Possible Outcomes of Disputes
When you file a credit report dispute, the credit bureau has 30 days to investigate it. That involves reaching out to the business that reported the information initially to confirm whether it’s correct. The business must review your account history and report back to the credit bureau that’s handling the dispute.
There are several ways your dispute might be resolved.
• Scenario #1: Your dispute is deemed to be frivolous by the credit bureau. The investigation will stop and you’ll be notified as to why. You may be given an opportunity to provide additional information to support your claim.
• Scenario #2: The business that reported the information acknowledges an error. It must send written notice to all three credit bureaus to have the information corrected. The credit bureau must send a correction notice to anyone who received your credit report in the previous six months. Notices must also be sent to anyone who ran a credit check for employment for you in the past two years.
• Scenario #3: The business verifies that the information is accurate. No change is made to your credit report.
When your dispute is upheld, the credit bureau must correct or remove the inaccurate information. If a dispute is not resolved in your favor, you can ask the credit bureau to include a statement of the claim in your credit file. You can also ask the credit bureau to send a copy of the dispute statement to anyone who’s received your credit report but you might pay a fee for that.
Note that you can also add or update personal information to your credit file. For instance, you might choose to add a recent address or a job to your employment history. Changes to personal information won’t affect your credit scores.
Disputes Related to Accounts, Inquiries, and Bankruptcy
Disputes involving credit accounts, inquiries for credit, and bankruptcy cases can have the same outcomes as described above. Depending on what the investigation finds, your account may be:
• Updated to reflect accurate information
• Deleted entirely from your credit report
• Unchanged, if the information is deemed correct
The outcome can determine what changes you might expect, if any, to your credit score. Having negative information corrected or removed can help your score, though the extent of the improvement depends on whether you have other negative items on your report.
If you’re interested in how to find out your credit score free, there are a few ways to do it. First, you might be able to get your credit score for free from one of your credit card companies. Many issuers offer free FICO scores as a cardmember benefit.
Signing up for free credit score monitoring is another option. In terms of what qualifies as credit monitoring, it generally refers to any service that automatically tracks changes to your credit reports that affect your credit scores. For example, that might include opening or closing credit accounts, late or missed payments, or paid-off accounts.
Recommended: Do Banks Run a Credit Check for Checking Accounts?
How Long Will Information Stay on My Credit Report?
Generally, negative information can stay on your credit report for seven years. That includes things like:
• Late payments
• Missed payments
• Charge-offs
• Collection accounts
• Creditor judgments
• Foreclosure proceedings
As mentioned, a Chapter 7 bankruptcy filing can stay on your credit report for up to 10 years. A Chapter 13 bankruptcy can linger for up to seven years. As long as information on your report is accurate, it can’t be removed prematurely, even if that information is negative. Once the time is up for reporting of a negative item, it will fall off naturally; you shouldn’t have to request its removal.
Credit inquiries can stick around for 24 months, while positive information about your credit accounts can remain indefinitely. If you close any credit accounts in good standing, they can stay on your credit reports for up to 10 years.
What Are Some Ways to Avoid a Credit Score Drop?
Practicing good financial habits is the easiest way to avoid a credit score drop. You can do that by:
• Paying credit accounts on time
• Keeping credit card balances low relative to your credit limits
• Limiting how often you apply for new credit
• Using a mix of credit types, including loans and credit cards
• Keeping older accounts open
Reviewing your credit reports regularly for errors or inaccuracies is another way to prevent credit score hits. You can dispute those errors to have them removed or corrected, which can help your score recover if it’s dropped temporarily.
How to Dispute Accurate Information in Your Credit Report
Accurate information on a credit report usually isn’t up for dispute, unless the same account is being reported multiple times. In that case, you dispute the “extra” entries on your report to have them removed.
If there’s negative but accurate information on your credit report, then you might try writing a goodwill letter to the creditor asking them to remove it. However, they have no obligation to honor your request. If the account is past due and they’ve been trying to collect what’s owed, they may also ask you to pay before they delete the item.
Credit repair companies charge you to remove negative items from your report. However, the tactics they use are ones that are already available to you, including disputing negative information, goodwill letters, and paying for deletion. It’s important to weigh whether paying a fee to repair credit is worth it, especially if the company’s promises seem too good to be true.
The Takeaway
Keeping up with credit scores is important if you plan to borrow money. The better your score, the easier it is to get approved for loans and qualify for the lowest rates.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
FAQ
What factor causes your credit score to decrease the most?
Negative payment history has the biggest impact on credit scoring under the FICO model. Late payments, missed payments, charge-offs, collections, foreclosure proceedings, and bankruptcies can all hurt your credit score more so than things like new credit inquiries or closing credit accounts.
What are negative entries on a credit report?
A negative entry on a credit report is anything that’s harmful to your credit score. That can include late payments, missed payments, collection accounts, and judgments. A high credit utilization ratio can also negatively affect your credit scores.
What are 3 ways to decrease your credit score?
Three things that can hurt your credit score are paying late, not paying at all, and running up high balances on credit cards relative to your credit limits. Letting accounts slip into collections, being sued by creditors for debt, and filing bankruptcy can also cost you major credit score points.
Photo credit: iStock/Daniel de la Hoz
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