Bursting the Credit Card Myths: Putting a Statement In Your Credit File Can Help Your Score

Some people think they can fix a credit score problem by putting a statement in their credit file. You can't and it's probably a waste of time. While the law does require that credit reporting agencies allow you to submit a statement of explanation when you dispute a negative mark on your credit report, these letters are not coded and used to calculate your credit score.

Lenders who request your credit report will get your statement when they ask for your credit score, but many make a decision based purely on your score so it doesn't help. If you've been battling it out with a creditor and don't want to pay the bill, you could end up severely damaging your credit score. While credit scoring companies must investigate any credit information you challenge, they tend to agree with the vendor in ongoing disputes and will only take the negative mark off your credit report temporarily while investigating a complaint.

If the amount in question is small enough that you can pay it off without financial distress, you may be better off paying the bill and taking the vendor to small claims court for a refund. Why hurt your credit score over a $30 or $50 dispute with a small vendor?

If the amount in question is much larger and you want to continue fighting the dispute, be sure you tell a potential creditor to expect the negative report and explain why you won't pay the bill. In some instances it may help, but don't be surprised if you can't get the best interest rates.

Lita Epstein has written more than 20 books including the Complete Idiot's Guide to Improving Your Score.