Although most people are not aware of it, by federal law all Americans have the right to add a consumer statement to their credit reports. The basic idea is to provide additional information or context to people reviewing your credit report. Most institutions base their decisions solely on your credit score, but providing an explanation or the context for negative entries may influence the person reviewing your credit report to take this additional information into account.
Consumer statements are most commonly used to explain factors in the credit report that negatively impact it, especially late payments, defaults, and disputes. If you were laid off from your job, found yourself physically incapacitated, or had some other problem that resulted in a series of late payments or defaults; including this information in your credit report can help to explain the negative entries. Similarly, if you were in a dispute with a company and refused to pay and this was added to your credit report, a consumer statement can help explain why you refused to pay the amount owed.
Consumer Reports
Consumer statements have also been employed by people that have fallen victim to identity theft. Including a statement in your credit report explaining the situation and requesting that no credit accounts be opened in your name without verbal or in-person authorization can help prevent further fraud. The consumer statement can also indicate that some of the debts on your record were the result of identity theft and that the cleanup process is currently underway. Removing fraudulent debts can be time consuming, often taking months, so a consumer statement pointing this out might be a good temporary measure to take until the process is complete.
Adding a consumer statement can be a helpful device for explaining your current credit score, especially among landlords and other non-institutional people that review your credit report. However, it should be noted that many experts say that adding a consumer statement may, in of itself, negatively impact your credit score. Therefore, this method should not be employed unless efforts to remove negative entries have already failed and you lack alternative options. Generally speaking, it is not always the best decision.
If you decide that adding a statement is appropriate for you, all you have to do is send a letter to each credit reporting agency requesting that your one paragraph consumer statement be inserted into your report. Be sure to make reference to "section 611(b) of the Fair Credit Reporting Act" as this is the legal basis of your right to add such a statement to your report. Also request a copy of your credit report be sent to you once the statement has been added, just to confirm that your statement is there and correct.
Your Credit Report - Adding a Consumer Statement Consumer Reports
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