Hi, I just have a really quick (hence the username) and hopefully easy question. I plan on applying for a car loan in the next couple of weeks and in preparation I checked my credit reports. TransUnion has an account listed on my report as an open collection account when in reality I paid the amount in full back in June. The "Date Open" on the report is listed as 10/17/2003 and there is no activity reported on the account. My question is, should I dispute this information before applying for the loan, or should I leave it be? I'm afraid that disputing it now would show activity for the account and possible adversly affect my score? Obviously, I'll get it corrected at some point, but I'm not sure if I should wait until after I apply for the loan or do it beforehand. Thanks in advance!
My recent experience has been that if you dispute something, it's not going to count against you or your score while it's under dispute. However, if they quickly respond to the dispute, and correct the item to indicate "paid", this could temporarily drop your score. Although it's now paid, the date of last activity gets updated and it's now a derogatory item with recent activity. Possibly wait until a few days before you're doing the auto loan, then dispute with the CRAs via their online forms. That should make it a non-factor while you're doing your auto loan; afterward, there is a slew of information here about demanding validation, "nutcase letter" etc. I deal with similar situations as a mortgage consultant...the difference is that it's a more drawn-out process over a period of several weeks, during which credit can get pulled several times, first by me and then by the end lender or lenders. Thus I usually coach clients to not mess with things like this while we're in process....if a collection must be settled, it can be arranged to be paid in the closing.
Thanks for your quick response! So, it looks like I should leave it along until about the same time I go to apply for the car loan. My credit score only varies 5 points between the agencies (even the ones that have correct information about the account) so I'm guessing it may be a non-issue as far as what interest rate I'll qualify for anyway.
Also, I don't know if auto finance companies read the scores the same way as mortgage lenders, but if so, we look at the middle credit score and usually disregard the other two. A derog showing up only on your TU might not make all that much difference. Some safe things to do at this point would be: 1. Dispute all of your credit inquiries to the bureaus within the past year. 2. Pay down balances on some of your credit accounts if possible...this will lower your debt ratio and could help your score.
Thanks again! I haven't had any inquiries in the past year and the only outstanding debt I have is from student loans. I ran into some credit issues in the past, but that was quite some time ago. Aparently, not having any major credit cards is a negative on my report, but I'm really not interested in having a credit card at this point in time. My credit score right now is between 655 and 660 depending on which report you go by, so while not great, it could be worse.
