The 100 Word Statement Will Not Help Your Credit Score

Negative listings on credit reports make some of the largest hits to your credit score.  A few late payments can be the difference between getting a good interest rate on a loan and having to make a large down payment just to qualify for financing.  Major blemishes like charge-offs, repossessions, and foreclosures have the potential to drop your credit score so much that you will have difficulty getting approved for credit at all.

So what do you do if you have negative listings on your credit reports that should not be there?  Credit reporting errors do happen and negative information gets incorrectly added to people's credit reports all the time.  And what about negative listings that are accurate but there was a perfectly good reason for why they exist?  Is it really fair to have to deal with a bad credit score for up to a decade or more when the negative items on your credit reports were completely out of your control?

The Fair Credit Reporting Act provides consumers with a few options for dealing with bad credit, and enforcing their right to a fair and accurate credit score.  This includes the right to order free copies of your credit reports so you can see what information is being reported about you as well as the right to dispute items on your credit reports that you feel may be inaccurate, untimely, misleading, incomplete, ambiguous, unverifiable, biased or unclear.

Another antiquated option you have as a result of the Fair Credit Reporting Act is the ability to add a one hundred word statement to your credit reports explaining to creditors the circumstances behind negative items on your credit reports.  The idea is that when looking at your credit reports, lenders will be able to consider the reasons behind these negative listings when considering a loan application.

What makes this statement antiquated is that lenders rarely consider the individual items in your credit reports.  In fact, they may never see your reports at all so your carefully crafted one hundred work statements would never even be read.

On top of that, lenders are most interested in your credit score, which does not take the one hundred word statement into account.  No matter how good your justification is for having a negative listing on your credit report, your credit score will remain unchanged.

The only way to prevent negative items from lowering your credit score is to have them removed from your credit report.  One option people have for attempting to do this is the credit bureau dispute described in the Fair Credit Reporting Act.  Additional credit repair options are made available through a number of other consumer protection acts targeted towards creditors and collections agencies.