I wrote a blog entry here about dispute letters being used in an attempt to repair your credit and wanted to elaborate a bit more on it.

It seems no matter what you read on the internet about credit repair services, it all says the same thing.

“Send the credit bureaus a dispute letter. They have 30 days to verify the debt in dispute, or it must be removed from your credit report”.

Haven’t seen one? Feel like getting really disillusioned with people who call themselves experts?  Go here and navigate to the third page of their article

Sure, there was a time (a long time ago) when dispute letters worked. That was then, this is now and these letters are a waste of time.

If you rely on nothing more then these letters to repair your credit, you’re going to get marginal results at best. More realistically, you’re going to get sued and I’ll tell you why.

While it’s true, the credit bureaus do have 30 days to respond to your letters; do you really think it could be that simple? I’ve just shown you the letter. Do you think Visa, American Express and Discover would let their financial well being hinge on that stupid letter?

Of course not! Credit bureaus and credit card companies have some of the most sophisticated systems available - For Example.

The only truth about dispute letters is that the only contact you should make is in writing so you have a paper trail. Other then that, blindly firing off dispute letters is a dangerous game.

If you’re going to use a dispute letter, I’m going to tell you three vital factors you’d be well advised to consider.

1) Time 2) Dollar Amount 3) Assets

Time: Each state has a statute of limitations. For the most part this dictates whether or not a creditor can sue you, garnish your wages, or give you wedgies & Toilet paper your house (you never know).

Within the statutes, they can. Outside the statute they cannot.

Dollar Amount: This one kind of comes down to dollars and cents. If a debt is worth their time and money to pursue, then sending a dispute letter could put their collection attempts in high gear. I use a rule of thumb of $2000.00

Assets: Again…some common sense comes in to play here. If you owe Visa 10,000 and a collector pulls your credit report and sees you own a home – chances are they’re going after a lien.

I want to go back to the time factor again. Aside from the Statute of Limitations, there’s another time factor to consider.

A debt that is 3, 4 or 5 years old is probably doing minimal damage to your credit report. If you’re not being hassled by the creditor, it may be worth leaving alone. Sometimes it’s better to let things be.

To summarize, here is a general guideline we use at the office.

Consider a Challenge:
Debts under $2,000
Debts past the Statute of limitations
You do not own a home

Tread carefully:
Debts over $2,000
Debts within your states statutes
You own a home or other assets

Here is my point. A Good Credit repair company can help, but it requires a solid plan with several considerations.

I’ve only scratched the surface in this post, but hopefully it was enough for you to realize firing off dispute letters blindly, can make matters much worse.

Now that you understand that – you know what to do when you see a credit repair company saying.

“Send us your credit reports, sit back and let us do the rest.” RUN!