topic Re: Impact of starting a dispute on Credit Score in Understanding FICO® Scoring

Impact of starting a dispute on Credit Score

Anonymous — Fri, 15 Feb 2013 19:25:24 GMT

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?

Re: Impact of starting a dispute on Credit Score

llecs — Fri, 15 Feb 2013 20:16:09 GMT

@Anonymous 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.

Re: Impact of starting a dispute on Credit Score

RobertEG — Sat, 16 Feb 2013 17:53:12 GMT

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.

Re: Impact of starting a dispute on Credit Score

AndySoCal — Mon, 18 Feb 2013 23:07:16 GMT

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.

Re: Impact of starting a dispute on Credit Score

llecs — Tue, 19 Feb 2013 02:37:25 GMT

@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.

Re: Impact of starting a dispute on Credit Score

AndySoCal — Tue, 19 Feb 2013 03:58:33 GMT

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.

Re: Impact of starting a dispute on Credit Score

Revelate — Tue, 19 Feb 2013 07:46:36 GMT

@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.

Re: Impact of starting a dispute on Credit Score

llecs — Tue, 19 Feb 2013 15:40:42 GMT

@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.

Re: Impact of starting a dispute on Credit Score

chally — Tue, 19 Feb 2013 17:44:32 GMT

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?

Re: Impact of starting a dispute on Credit Score

Anonymous — Tue, 19 Feb 2013 17:59:17 GMT

@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.

Re: Impact of starting a dispute on Credit Score

RobertEG — Tue, 19 Feb 2013 18:06:14 GMT

When one files a direct dispute with the furnisher, the CRA is totally unaware of the dispute unless the furnisher reports it or any update to the CRA.

Furnishers have dispute codes under which they can report the filing of a dispute under either the FCRA or FCBA.

If the furnisher reports the fact of a pending direct dispute, again, the CRA is not part of the process, and has no way to determine that a direct dispute has been terminated unless notified by the furnisher.

Re: Impact of starting a dispute on Credit Score

AndySoCal — Wed, 20 Feb 2013 02:44:59 GMT

I sent a query to FICO technical support earlier today on this subject. I am waiting for a response. The reason I question it is because of the FICO requirement to get a score. The account cannot be in dispute. For example a consumer has one account a collection reported by a collection agency reported for the last two years.. By what you have said this consumer would get a FICO score. I have hard time believing that.

Re: Impact of starting a dispute on Credit Score

llecs — Wed, 20 Feb 2013 02:59:16 GMT

@AndySoCal wrote:
....For example a consumer has one account a collection reported by a collection agency reported for the last two years.. By what you have said this consumer would get a FICO score. I have hard time believing that.

But a collection agency wouldn't be viewed by FICO as an open account, only closed. Since a requirement [for a FICO] is that you have to have an open and actively reporting TL, that alone won't generate a FICO.

Re: Impact of starting a dispute on Credit Score

Anonymous — Wed, 20 Feb 2013 03:17:58 GMT

You can go to the FICO simulator and put in only collection accounts and it won't generate a score for a collection. It says you have to have an account for 6 months to get a FICO.

Re: Impact of starting a dispute on Credit Score

mabile — Wed, 20 Feb 2013 04:18:39 GMT

This is correct. The consumer can also issue a letter to the repository stating the dispute is closed in which the repository will remove the dispute.

Re: Impact of starting a dispute on Credit Score

Anonymous — Wed, 20 Feb 2013 20:17:12 GMT

Be aware here, placing something in dispute can screw up your chances for a mortgage, right or wrong, they are not easy to remove in case you want to go for a mortgage, best advise is to go direct to the person reporting the account to the CR and see if you can get it fixed that way, your score will go up during a dispute but will nose dive when it is removed and in the case of getting a mortgage all disputes must be removed so leave yourself some room on the numbers...

Re: Impact of starting a dispute on Credit Score

AndySoCal — Thu, 21 Feb 2013 02:40:01 GMT

It would be considered open unless the CA is reporting it as closed.

Re: Impact of starting a dispute on Credit Score

Anonymous — Thu, 21 Feb 2013 03:05:51 GMT

@AndySoCal wrote:
It would be considered open unless the CA is reporting it as closed.

FICO does not look at collections as open accounts for scoring.

Go to the FICO simulator and just put in the only thing on your report is a collections. You will not have a score generated.

Re: Impact of starting a dispute on Credit Score

Anonymous — Fri, 22 Feb 2013 05:05:40 GMT

I recently disputed an account with the OC. Upon initiating the dispute, my score dropped 14 points. When the account was completely deleted, I gained 16 points.