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Can you dispute an honest credit mistake?

Summary

Lack of interest payments on a deferred payment deal tanks husband’s credit score

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QuestionDear Your Business Credit,
 Is there any way to quickly dispute an error on your credit report? My husband and I have multiple businesses. Recently, we purchased a condominium in Florida. Our residency was in New York. We paid cash for the condo. We also bought a place on Keuka Lake in New York and paid cash for that, as well.

The reason I tell you that is because of our financial status and how good his credit is. I do not work. Therefore everything is in or recorded on his credit score.

Recently, I went to Ashley Furniture to purchase new furniture for our condo. The furniture was financed under 0 percent interest for 60 months. That was in December 2015. Once the remodeling was completed, I returned to New York for the summer. I immediately paid off the Ashley Furniture account, which was $10,100.

My husband went to obtain financial statements and updated financial records and a credit score, in connection with real estate purchases we are currently working on in North Carolina. In October 2016, the bank reported to him that his credit score had dropped 100 points due to late payments on the Ashley Furniture account.

After much research, we found out that the interest payments were to be made monthly. The monthly payment notices were going to an email account that was rarely utilized. This was an oversight on our part, specifically mine.

Money was not an issue, and I would have never let those payments become past due. Our credit is critically important to us.

I have power of attorney for him while making purchases in Florida. Therefore, I am taking full responsibility for this error. We are responsible consumers and have never had this happen before. How do we have this removed? Is there any way for this to happen immediately? We are now on hold with the bank in North Carolina due to this error. Please advise. My husband is beyond furious with me. IRATE!! Please help!!

Anxiously waiting – Jackie 

 

AnswerDear Jackie,
I can understand why you’re frustrated. You were perfectly willing and able to pay your bills on time but didn’t have an opportunity to do so, because you weren’t receiving them.

Unfortunately, filing a dispute won’t help you here. The late payment is a negative but accurate mark on your husband’s credit report. A dispute won’t remove an accurate record from a report. The late payment will, sad to say, be there for the next seven years.

There is a process called rapid rescoring, in which credit bureaus will, for a fee, let mortgage brokers and lenders ask for a rapid update of a borrower’s credit report. At the moment, it doesn’t seem like it would work for you. You would need to supply proof of an error that needs fixing, or of a change in your credit profile that will result in a better score. However, if you scoured your credit report and found an actual error that needs fixing – or took an action, like paying off your credit cards, that would change your score – you could potentially use rapid rescoring. For more on rapid rescoring, see our story on how it can help you update your credit score in a hurry.

What you can do is add a 100-word statement of explanation to your credit report to tell lenders what happened. Lenders aren’t required to take these statements into account, but yours may. It would also be a good idea to be upfront with your lender about the circumstances and ask for confirmation on whether the lender will move forward and on what terms, with a 100-point drop.

You might also ask what the lender’s policy is toward underwriting when a credit report dispute is in progress, in case you do uncover an error on your credit report and consider rapid rescoring. Lenders generally don’t like to see unresolved disputes on a credit report and may refuse to make a loan to borrowers when they see one, so you need to find out before moving forward.

To avoid a problem like this happening in the future, Leslie Tayne, an attorney in Melville, New York, with expertise in credit issues that affect small business, recommends monitoring your credit report and your husband’s to catch these things early. “When paying off a balance, [you] should contact the creditor to make sure all was paid in full and reported correctly,” she said. This may require some extra work on your part, but given that your credit scores are critically important to your business, the time you spend will be well worth it.

See related: 5 mistakes people make when disputing credit report errors, How rapid rescore works when you apply for a mortgage

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