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ScottBa
Posts: 3
Registered: ‎04-11-2012
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Impact of starting a dispute on Credit Score

I recently disputed a 90 day late which was showing on a closed BOA credit card so that it should properly read 60 days late. It was nearly 4 years old. I got a score alert that my score had jumped up nearly 50 points but the investigation hasn't been completed yet. How do I know if the score is due to the change on my credit report from a 90 to 60 day late update or could it just be because the account is under investigation and is no longer being factored in the same as before towards my Equifax credit score? Do i just have to wait until next month and check it again or just wait for the completion of the investigation?

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llecs
Posts: 32,869
Registered: ‎08-04-2007
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Re: Impact of starting a dispute on Credit Score


ScottBa wrote:

I recently disputed a 90 day late which was showing on a closed BOA credit card so that it should properly read 60 days late. It was nearly 4 years old. I got a score alert that my score had jumped up nearly 50 points but the investigation hasn't been completed yet. How do I know if the score is due to the change on my credit report from a 90 to 60 day late update or could it just be because the account is under investigation and is no longer being factored in the same as before towards my Equifax credit score? Do i just have to wait until next month and check it again or just wait for the completion of the investigation?


You'd need to pull EQ from somewhere. The SW alerts are non-specific and only grab your latest score for comparison.

 

Certain aspects of OC accounts only are ignored by FICO during a dispute. These include the balance, the CL, and the payment history. So, if the lates are ignored then that can be the source of your increase. Certainly there could be other things at play impacting that increase like util changes, other account changes, etc. If you have a clean report with that 90, then I can see a scenario whereby FICO could increase by that much. You'll get another alert once the dispute clears and that can impact your score again.

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RobertEG
Posts: 18,122
Registered: ‎03-19-2007
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Re: Impact of starting a dispute on Credit Score

Another benefit of using direct disputes as opposed to disputing through a CRA is the possible avoidance of a pending dispute flag.

 

If you dispute through a CRA, in addition to subjecting your dispute to sanitation by use of the CRA e-Oscar process, you are assured of an automatic dispute flag.

The CRAs are notorious for not immediately removing pending dispute flags upon conclusion of their reinvestigation.

Direct disputes have no CRA involvement, and unless the party takes the time to additionally report a pending dispute, no flag is raised.

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AndySoCal
Posts: 1,944
Registered: ‎04-07-2009
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Re: Impact of starting a dispute on Credit Score

If the account is in dispute it remains nuetral for the most part in the FICO scoring process. When the account comes out of dispute it is then fully factored in the score.

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llecs
Posts: 32,869
Registered: ‎08-04-2007
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Re: Impact of starting a dispute on Credit Score


AndySoCal wrote:

If the account is in dispute it remains nuetral for the most part in the FICO scoring process. When the account comes out of dispute it is then fully factored in the score.


For OC accounts only parts are removed from FICO scoring during a dispute. These include the balance, the CL (if a CC) and the payment history. Other aspects to the OC account, like the age of the account, impact to the mix of credit, impact to AAoA, impact to the scoring bucket, etc., are still fully factored during a dispute. All CAs and PRs are fully scored during a dispute.

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AndySoCal
Posts: 1,944
Registered: ‎04-07-2009
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Re: Impact of starting a dispute on Credit Score

Is this a FICO forum belief or do you have something from FICO that states this?  I have never heard this in regards to scores. The reason lenders want all disputes removed from the credit report  is that it can distort the true score.

Equifax My FICO score 815 5/28/2012, 818 on 7/28/2014 . Average of Accounts 12 years and no Installment accounts. MyFICO TU 810 6/26/2012 809 4/21/2013 MyFICO XPN -805. 2/26/2014 Discover TU FICO 813 App free since 9/2011
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Revelate
Posts: 9,640
Registered: ‎12-30-2011
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Re: Impact of starting a dispute on Credit Score

[ Edited ]

AndySoCal wrote:

Is this a FICO forum belief or do you have something from FICO that states this?  I have never heard this in regards to scores. The reason lenders want all disputes removed from the credit report  is that it can distort the true score.


I think that is forum wisdom; however, everything I've read here and elsewhere appears to track with that.  Even what ilecs stated can definitely distort the scoring algorithm.

 

It's pretty easy to test, and I suspect with the number of people who zealously check their scores, likely have confirmed this anecdotally.  I will see with my own tax lien when it falls outside of it's SOL and I wind up disputing it as obsolete after obtaining a lien withdrawal.

 

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llecs
Posts: 32,869
Registered: ‎08-04-2007
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Re: Impact of starting a dispute on Credit Score


AndySoCal wrote:

Is this a FICO forum belief or do you have something from FICO that states this?  I have never heard this in regards to scores. The reason lenders want all disputes removed from the credit report  is that it can distort the true score.


I doubt there's an official FICO statement, but my source of info came from Barry. When he was on here he would publicly and privately slip info on FICO scoring you usually wouldn't find elsewhere. In fact I seem to recall a public mention on here at some point in time stating this.

 

And ditto to Revelate, FICO's ignoring of a CO can result in a bump when disputed. Also util can be a big deal. If a CO'd CC is maxing out individual and overall util, then a dispute can greatly increase a score. Conversely, dispute something minor on a TL that greatly helped util and you can see a significant drop. 

 

You can also prove that a dispute will not impact AAoA, mix, length of history, and scoring bucket. If you dispute a TL you'll notice that the +/- factors will not change at all when a dispute is initiated, with everything else being equal of course. It's these +/- items that can include AAoA, length of history and mix, depending on what's on your report. And during a dispute those items won't change which signal rebucketing. Likewise, when you dispute a PR or CA, these items would stillr emain in the negative items on the FICO report and the red flags would remain.

Valued Member
chally
Posts: 49
Registered: ‎12-15-2011
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Re: Impact of starting a dispute on Credit Score

I just called Equafax - I was unaware of dispute flags being placed on one's account upon direct dispute. They said the credit granter could write in requesting removal of dispute flags. Is this true or beneficial?

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guiness56
Posts: 22,406
Registered: ‎01-17-2008
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Re: Impact of starting a dispute on Credit Score


chally wrote:

I just called Equafax - I was unaware of dispute flags being placed on one's account upon direct dispute. They said the credit granter could write in requesting removal of dispute flags. Is this true or beneficial?


Normally, when a furnisher of information receives a 623 dispute, they don't take the time to dispute with the CRAs but they can.  Yes, it is true and beneficial if you want a mortgage.


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