Add a Statement to Your Credit Report

CreditCards.com, November 2008

Want to buy a house? Get a better credit card rate? Score a decent car loan? When it comes to telling your financial story, your credit report -- and the credit score determined by it -- always seems to have the last word. But you can write some of those words yourself.

A provision of the Fair Credit Reporting Act allows you to add comments to your credit report that can cover "any number of items or topics they wish," according to Steven Katz, a spokesman for credit bureau TransUnion. Whether you use it to explain a dispute, a mistake or your own personal money apocalypse, the statement theoretically gives you more of a voice in your financial future.

There's a lot of flexibility in the Act. For example, it allows, but doesn't require, credit bureaus to limit the consumer statement to just 100 words, and the Big Three -- Experian, TransUnion and Equifax -- do just that. It also doesn't specify how many statements an individual can add to their report, and the credit bureaus differ on this. Experian allows multiple statements -- one general statement that applies to the report as a whole, and then one specific statement per item on your credit report -- while TransUnion and Equifax allow only one statement on your credit report at a time, period.

Still, regardless of how much you're able to write, a larger question remains: Do the statements actually work to a consumer's advantage?

Know when to speak up

As a credit counselor and representative of Clearpoint Financial Services, in Richmond, Va., Bruce McClary knew all the right moves to make when he noticed a fraudulent cell phone account on his credit report -- the result of identity theft. He immediately contacted the cell phone company's fraud department, filed an affidavit with local authorities and sent copies of the documentation to the three major credit reporting agencies.

Despite his precautions, McClary knew that on his credit report, the situation could raise curiosity, maybe even red flags. "There was a fraud alert on my report, but I knew that if anyone pulled my credit report, they might be hungry for a little more detail as to what was going on and why it was happening." McClary whipped up a personal statement to explain the situation and the ongoing investigation. Even after the credit reporting agencies all removed the charges, McClary left the statement on his report, "just in case."

Identity theft isn't the only credit crisis that a consumer statement may help clear up. A statement can say anything from "I'm currently disputing this charge with the lender" to "I fell behind on payments after I had a stroke." In the case of a genuine error on your credit report, the statement allows you to document the steps you took to correct the mistake, whether or not you were successful in the end.

[Read the rest of the article at CreditCards.com.]