Original Creditor Disputes and Credit Repair
Disputing Issues With Creditors
Many people that visit credit repair forums read about Section 623 of the Fair Credit Reporting Act (FCRA), which outlines the so-called rights of a consumer to dispute questionable information directly with the OC (original creditor). Although often touted as a useful credit repair tool that imposes responsibilities on the OC comparable to those imposed on the credit bureaus under Section 611, Section 623 is not what is seems.
No Incentive – No Penalty
Creditors are not in the business of processing disputes, nor are they especially altruistic. Do you imagine that they would voluntarily spend any time managing investigation requests if they did not have to? This is precisely problem with Section 623. The OC simply has no incentive to invest any time on disputes sent to them by consumers. Section 623 gives the OC an all encompassing list of escape clauses allowing them to disregard consumer disputes. And then to seal the deal the FCRA removes any legal liability they have in the case they fail to comply.
Frivolous Dispute Determination
Section 623 (F) allows an employee of an OC to subjectively decide if a dispute is frivolous and disregard it. The list of reasons allowing the OC to reject a dispute include failure of the consumer to include complete documentation, and submission of a dispute that is substantially the same as a dispute submitted to one or more of the credit bureaus.
§ 623. (a)(8) ABILITY OF CONSUMER TO DISPUTE INFORMATION DIRECTLY WITH FURNISHER
(D) SUBMITTING A NOTICE OF DISPUTE- A consumer who seeks to dispute the accuracy of information shall provide a dispute notice directly to such person at the address specified by the person for such notices that–
(i) identifies the specific information that is being disputed;
(ii) explains the basis for the dispute; and
(iii) includes all supporting documentation required by the furnisher to substantiate the basis of the dispute.(F) FRIVOLOUS OR IRRELEVANT DISPUTE-
(i) IN GENERAL- This paragraph shall not apply if the person receiving a notice of a dispute from a consumer reasonably determines that the dispute is frivolous or irrelevant, including–
(I) by reason of the failure of a consumer to provide sufficient information to investigate the disputed information; or
(II) the submission by a consumer of a dispute that is substantially the same as a dispute previously submitted by or for the consumer, either directly to the person or through a consumer reporting agency under subsection (b), with respect to which the person has already performed the person’s duties under this paragraph or subsection (b), as applicable.
Getting Credit Repair Results
Your credit repair effort is best focused on the actions that are most likely to produce results. Your real leverage is with the credit bureaus, which are fully equipped to process disputes. And in spite of the occasional lapse of responsiveness, the bureaus are actually very compliant!
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6 Responses
I’ve seen references to 623 in the FICO forum and wondered about it. I suppose that if you had concrete documentation you could get an OC to take a 623 dispute, BUT I have to ask, if you have concrete documentation why would you ever need to go to such lengths? All of the time I have spent at FICO.com and sites like this I have never come across anyone with documentation in hand that was asking how to get their problem fixed. Thanks for the practical, down to earth perspective on Section 623.
I’m onboard with this as well. I’ve been working on my own credit for years and have never gotten an original creditor to do a thing.
OCs seem to have 3 ways of dealing with direct disputes. 1) they ignore it (most popular option!) 2) they send you a form to fill out for fraudulent use of your identity 3) they send a letter saying that they have already responded to this dispute and they will not do it again.
Anyone who is interested, forget about the OC unless you actually want to sue them.
This is very true and very frustrating. I had reams of documentation showing that three late payments on my car loan with GMAC were NOT LATE. I had set up auto-debit and GMAC failed to do the debit properly. I had everything that a reasonable person would accept. But no one at GMAC would fix the reporting error.
Anyway, the story has a happy ending
I signed up with you guys and the late payments were gone in the first month by disputing it with the credit bureau. I understand from Chris in your office that you didn’t even send the documents with the dispute.
I’m relieved and happy, but I have to say that there is something crazy wrong when you can’t get something fixed with the actual creditor.
Hi Michael, You are correct, the system is frustrating. But I’m glad that were were able to help!
Does the Fair Credit Billing Act provide any leverage when disputing with a creditor?
Hi Willie, The Fair Credit Billing Act (FCBA) provides a remedy for consumers that have a problem with specific charges on their credit cards. The FCBA applies to open-ended revolving charge accounts such as credit cards and store cards. The type of problems that can be addressed include cases where you did not receive goods ordered, were charged (or even refunded) the wrong amount, etc. You may even use your FCBA rights to dispute a charge you don’t recognize. It is not really a useful credit repair tool for a few reasons. The big one is that FCBA disputes must be done within 60 days of getting the credit card statement that includes the questionable charge. This time-frame means that FCBA disputes will never have any bearing on information on your credit report. By the way, if you do have a FCBA dispute you must address it to the “billing inquiries” address provided on your statement – and it must be done via regular mail.