Adding Explanatory Statements to Credit Reports

You can add a brief statement to your credit report explaining a disputed item.

Although you have a right to dispute incorrect, outdated, or incomplete information in your credit report, sometimes the credit reporting agency’s investigation doesn’t resolve the dispute to your satisfaction. If this happens, you have the right to file a brief statement about the dispute. This is often referred to as an “explanatory statement.”

(For more articles on getting rid of errors in credit reports, see our Cleaning Up Your Credit Report topic area.)

The CRA’s Obligations Regarding Explanatory Statements

Credit reporting agencies are only required to include a statement in your file if you are disputing the completeness or accuracy of a particular item. The agency does not have to include a statement if you are only explaining extenuating circumstances or other reasons why you haven’t been able to pay your debts. If the agency does allow you to add such a statement, it can charge you a fee.

The credit reporting agency (CRA) must include your statement, or a summary of it, in any report that includes the disputed information. If the reporting agency assists you in writing the explanation, it may limit your statement to 100 words. Otherwise, there is no specific word limit, but it is a good idea to keep the statement very brief.

The credit reporting agency is required to provide only a summary of your statement (not your actual statement) to anyone who requests your file. If your statement is short, the credit reporting agency is more likely to pass on your statement unedited. If your statement is long, the credit reporting agency will probably condense your explanation to just a few sentences or codes. To avoid this problem, keep your statement clear and concise.

If you request it, the credit reporting agency must also give the statement or summary to anyone you identify who received a copy of your file within the past six months—or two years if your file was given out for employment purposes. This service is free if you request it within 30 days after the agency gave you notice of the results of the reinvestigation. Otherwise, you will have to pay the same amount as the agency would normally charge for a credit report (up to about $11.50).

Are Explanatory Statements Useful?

Don’t assume that adding a brief statement is the best way to deal with this issue. Quite frankly, few creditors who receive credit files read these statements, and credit scoring programs largely ignore them.

Instead, it’s a good idea to explain the negative mark to subsequent creditors directly. Although even then, remember that in any David (consumer) vs. Goliath (credit reporting agency) dispute, creditors tend to believe Goliath. However, if you have supporting documentation for your dispute, that might help the creditor believe your story. For example, if you did not pay a bill because of the business’ improper conduct and can provide evidence that other consumers had similar problems with the same business (such as press reports that a government agency is investigating the business), the prospective creditor is more likely to believe your story.

And make sure you’ve exhausted your other options for getting the negative information off your report. To find out what else you can do, see If the Credit Reporting Agency Does Not Correct Your Report: What to Do.

Read more articles and Q&As on Repairing and Rebuilding Your Credit.

This is an excerpt from Credit Repair, by Margaret Reiter and Robin Leonard (Nolo).

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