Is my score artificially inflated?

[Anonymous]

I recently discovered that a household member had accidentally used one of my credit cards, which I don't typically use, for a small purchase several months ago.  I wasn't aware of the charge and had unsubscribed from paper statements, so I didn't notice the charge until a late payment went up on my credit report.  My score had fallen about 100 points.  I immediately paid off the balance and sent a goodwill letter to the bank to see if they'd remove the deliquency.

The account just reported to the CRAs yesterday and to my delight, all three scores had regained the ~100 points.  However, I now see that although the lates are still listed in the payment history, the comments say that the account is disputed (I guess because of the goodwill letter).

My understanding is that FICO excludes disputed activity from your score until the dispute is resolved, so does this mean that my scores only went back up because there is a dispute pending (which I didn't intend to initiate in the first place)?  Or could the bounce in my scores just have come from getting the account back into good standing by paying it off?  For context, I have a 28+ year credit history with 51 accounts (about half of which are active), and these are my only late payments ever.  My revolving utilization is about 1% (with ~$400k total credit) and AAoA is 3-4 years.  I'm hoping this isn't just an illusory bump that will go back down when the "dispute" is inevitably verified.

[Remedios]

The account is excluded from scoring, so depending on results of dispute, you may lose them again

If dispute goes in your favor, you get to keep them. 

[Anonymous]

It depends how your GW letter was worded as to whether or not a dispute should have been initiated.  If you admitted fault for the debt, stated it was a mistake and that the information reported is indeed accurate, you weren't disputing anything and were merely asking for a GW adjustment.  If you presented your letter as if they were at fault, that the debt wasn't yours or that a mistake was made, it could be perceived as disputing the reported information as being inaccurate.  CSRs are pretty notorious for wrongly initiating disputes, though.  This happened with me many times in my GW requests to Synchrony.  I had to send many letters stating that I wasn't actually disputing anything and they would remove the dispute comments.

[jamie123]

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@Anonymous wrote:

I recently discovered that a household member had accidentally used one of my credit cards, which I don't typically use, for a small purchase several months ago.  I wasn't aware of the charge and had unsubscribed from paper statements, so I didn't notice the charge until a late payment went up on my credit report.  My score had fallen about 100 points.  I immediately paid off the balance and sent a goodwill letter to the bank to see if they'd remove the deliquency.

The account just reported to the CRAs yesterday and to my delight, all three scores had regained the ~100 points.  However, I now see that although the lates are still listed in the payment history, the comments say that the account is disputed (I guess because of the goodwill letter).

My understanding is that FICO excludes disputed activity from your score until the dispute is resolved, so does this mean that my scores only went back up because there is a dispute pending (which I didn't intend to initiate in the first place)?  Or could the bounce in my scores just have come from getting the account back into good standing by paying it off?  For context, I have a 28+ year credit history with 51 accounts (about half of which are active), and these are my only late payments ever.  My revolving utilization is about 1% (with ~$400k total credit) and AAoA is 3-4 years.  I'm hoping this isn't just an illusory bump that will go back down when the "dispute" is inevitably verified.

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This is a perfect example of why everyone should set up automatic minimum monthly payments on their CC accounts. The OP lost a lot of points that he might have to live with for the next 7 years. This could end up costing OP a lot of money and heartache that could have been easily avoided.

If you don't have automatic minimum monthly payments set up on your credit cards do it now! Don't delay!

[Dervrak]

My understanding is that FICO excludes disputed activity from your score until the dispute is resolved, so does this mean that my scores only went back up because there is a dispute pending (which I didn't intend to initiate in the first place)?  

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Wow if that's how it actually works that would appear to be a huge loophole for a less than honest person to game the system.

Picture this scenario:  Your credit is in the toilet because you maxed out your cards and are running a month or two behind on the payments. Just file some frivoulous claim disputing the balances and late payments with all the banks that you know will be tossed as soon as they are reviewed. But during your "dispute period" while your credit shoots back up to 700,  you run out and get a $70,000 auto loan and buy that new Corvette you've had your eyes on (I seriously doubt it would work with a mortgage because they look a LOT closer), but something like a car loan where they just pull a score, it probably would.

Now I'm certainly not advocating trying this as I'm guessing filing knowingly false disputes with banks is some sort of crime and the entire scheme would border on out right fraud. But as a corporate Financial Crimes Investigator/Forensic Auditor by trade the first place my mind goes is how a dishonest person could use a loophole to their advantage.

[Brian_Earl_Spilner]

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@Dervrak wrote:

My understanding is that FICO excludes disputed activity from your score until the dispute is resolved, so does this mean that my scores only went back up because there is a dispute pending (which I didn't intend to initiate in the first place)?  

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Wow if that's how it actually works that would appear to be a huge loophole for a less than honest person to game the system.

Picture this scenario:  Your credit is in the toilet because you maxed out your cards and are running a month or two behind on the payments. Just file some frivoulous claim disputing the balances and late payments with all the banks that you know will be tossed as soon as they are reviewed. But during your "dispute period" while your credit shoots back up to 700,  you run out and get a $70,000 auto loan and buy that new Corvette you've had your eyes on (I seriously doubt it would work with a mortgage because they look a LOT closer), but something like a car loan where they just pull a score, it probably would.

Now I'm certainly not advocating trying this as I'm guessing filing knowingly false disputes with banks is some sort of crime and the entire scheme would border on out right fraud. But as an Forensic Investigator/Auditor by trade the first place my mind goes is how a dishonest person could use a loophole to their advantage.

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There are safeguards in place at the bureaus because people have done this.

[NRB525]

If you think you’ve got an innovative way to beat the system, it is quite likely someone else, or multiple people, already have done it.

[Anonymous]

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@Dervrak wrote:

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Wow if that's how it actually works that would appear to be a huge loophole for a less than honest person to game the system.

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An ongoing dispute can cause an app to be denied.