Since 2011, consumers have the right to add a 100-word consumer statement to their credit report. These statements can explain derogatory marks on a credit report left by a creditor. While this may sound like a good idea, consumer statements may do more harm than good.
It sounds like a good idea. You’ve disputed a negative mark like a missed payment on your credit report, but the dispute was resolved in favor of the creditor. You want to get the last word. A consumer statement allows you to do just that. It may, however, do more harm than good. It’s also likely to be completely ignored.
What is a Consumer Statement
A consumer statement is a 100-word (200 words in Maine) explanation you can add to your credit report. It originates from the Fair Credit Report Act, which requires credit bureaus to give some recourse to consumers following an unsuccessful dispute.
The statute reads in part:
If the reinvestigation does not resolve the dispute, the consumer may file a brief statement setting forth the nature of the dispute. The consumer reporting agency may limit such statements to not more than one hundred words if it provides the consumer with assistance in writing a clear summary of the dispute.https://www.law.cornell.edu/uscode/text/15/1681i
There are two types of consumer statements that you can add to your report. One is specific to a particular account. The other is a general statement not tied to a particular creditor.
Consumers can add a 100-word statement to a specific account on their credit report. These statements can explain, for example, a charge-off or late payment.
Consumers can also add a 100-word statement to their credit report in general. These are not connected to a specific creditor. For example, a consumer might explain how a job loss affected multiple accounts.
How They Affect Credit
Consumer statements have no affect on credit scores. A credit score uses an algorithm to calculated a 3-digit score based on data in a credit report. Credit scoring formulas do not consider statements added by consumers.
In contrast, statements do appear on a person’s credit report. In fact, they can remain on a report for up to ten years. A consumer can ask a credit reporting agency to remove a statement at any time.
Do Statements Help?
The short answer is no, and they may even cause problems. I’ve researched and written about credit for nearly 15 years. During that time I’ve yet to uncover an example of an individual obtaining credit thanks to a consumer statement. Many say that lenders largely ignore the statements.
Further, 100-word statements can remain on a credit report longer than negative items. For example, a late payment can remain on a credit report for up to seven years. Adding a statement to the late payment won’t change this. Moreover, unless you remove the statement, it will remain on the report even after the late payment is removed. The consumer statement has the affect of keeping a reference to the late payment on the report longer than if no statement were added in the first place.
How to Add a Consumer Statement to a Credit Report
Each of the three major credit bureaus permit you to add a consumer statement to your report. There are several steps to the process. Here are the steps to add an account-specific statement:
Step 1: File a dispute: An account-specific consumer statement is permitted if a dispute you’ve filed is denied. As a result, step one is to a file a dispute.
Step 2: Sign-in to your account: Many disputes today can be initiated online. As part of that process, you probably already created an account with each of the credit bureaus. If not, create an account and then log into it. A consumer can add a statement online.
Step 3: Select the account and add the statement: Once signed into your account, you’ll be able to select the creditor on your report and add the statement.
You can also add a general consumer statement to your report to explain accurate negative references.
Here are links to the three major credit bureaus with additional information:
Next step: Get access to your credit score for free.