Credit card chargeback dispute negatively affects credit score?

Finance
#1

So, today I noticed my credit score decreased by three points across the board. I pull my Equifax/TU credit scores weekly on CK (and an Experian version via Chase), and all three scores dropped by three points.

The only change in my credit reports over the last week is that Barclays reported my most recent statement. The balance of $0 was the same as last month, but this month, since I have a chargeback being processed, they added a note to the account under remarks - “Account information disputed by consumer, meets FCRA requirements”.

There were no other changes to the report during this time - AAoA is the same, balances are all the same. Obviously a 3pt hit is nothing, but I found it interesting nonetheless and figured I’d document it and see if anyone else has seen this.

#2

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#3

This is really interesting. In my mind, disputing a charge on a credit card account and disputing credit report information are entirely separate things that really have no effect on one another.

However, the card issuer reports your balance and if part of that balance is in dispute, then the bank’s report of your balance might be inaccurate and the bank would be obligated under the Fair Credit Reporting Act (FCRA) to note that. I wonder if the authors of the FCRA intended that to be the case (it’s certainly not the central goal of the FCRA).

#4

“When an account is disputed, it is masked from consideration in the FICO scoring of your credit file. If the disputed account has negative information, the masking may increase your FICO score. But the disputed account may also have a positive score value; and, therefore, unmasking the the account by removing the dispute wording would increase your FICO score.”

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#5

That is very interesting. So, had I not opened the account, my score would be 3 points lower…

1 Like
#6

A more logical way for this to work would be to have a distinction between “billing” dispute and “account” dispute. The former would only remove the month(s)/balance(s) under dispute while leaving the account history (positive or negative) in place, which I think would be more accurate for both consumers and potential creditors.

#7

Sounds like it. Another way to think about it is an aged account with a $0 balance increases AAoA and reduces utilization, so if the explanation above is correct, those factors are worth 3 points in your case.

1 Like
#8

Those are Vantage Scores.

#9

what’s the typical time limit for disputes? (Amex )