Impact of starting a dispute on Credit Score

[RobertEG]

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.

[AndySoCal]

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.

[llecs]

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@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.

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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.

[Anonymous]

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.

[mabile]

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.

[Anonymous]

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...

[AndySoCal]

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

[Anonymous]

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@AndySoCal wrote:

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

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 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.

[Anonymous]

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.