Your credit report information is used by banks, credit card companies, auto finance companies, and mortgage lenders to determine if they should lend money to you. A poor history will make your interest rates high or even prevent you from obtaining a loan altogether. Considering the importance of the information contained in your credit report, it is vital that it be complete, correct and up-to-date. Many people know that credit report errors can be challenged with the credit bureaus, but you not be aware that you can make the same challenge with the reporter. Below is how you can effectively file a direct dispute with a past lender or reporter:

What is a direct dispute?

A direct dispute is considered to be legally filed when a consumer challenges information appearing on their credit report, and the challenge is made directly to the original reporter of the information in question. This differs from the more well-known credit report dispute that is filed with the credit bureaus; each credit bureau requires that a dispute be filed with them individually.

Though you have the option of filing either a direct dispute or a credit report dispute, there are a few advantages of filing a direct dispute:

• Only one dispute is filed as opposed to as many as three for the separate credit bureaus.

• You are working with the originator of the challenged information rather than the credit bureaus that act as middlemen.

• You can only file one credit report dispute, and if it is found to be without cause, the originator can summarily dismiss future disputes related to the challenged information.

The process of filing a direct disputes

A direct dispute can be filed with a reporter in a variety of formats; consumers can call, phone, email and write a letter. However, not all methods are equally effective; in fact, a written letter is the best way to make contact that is meaningful. Here is how you can file a direct dispute via letter:

1. Gather your evidence – a direct dispute should contain written evidence that backs up your assertion that an error has been made. For example, if your credit report says you have an open auto loan account, providing a photocopy of a letter showing the loan was paid-off and closed is powerful evidence for your case. Provide as much written evidence as you can, but be sure that there are no contradictions between the individual documents submitted. Also, highlighting key pieces of evidence is helpful; the reviewer may not have much time to look at your dispute, and by making their job easier, the more likely you are to have it resolved in your favor. Finally, be sure to make photocopies of everything you send in the mail in case the letter and documentation are lost.

2. Write your letter – take your time when writing your direct dispute letter. This document should be clear, direct and address the points at hand. Be courteous and non-threatening, but also be assertive and confident in your wording. Use specific words that explain you are filing a direct dispute of information in your credit report; point out exactly what is wrong and why it is wrong. Make references to your included evidence so that the reviewer can connect the letter to the documentation. Finally, include enough information to illustrate the validity of your claim, but don't add extraneous or emotional language in an effort to persuade.

3. Mail the letter – mailing the letter is more than stamping it and dropping it in a box. First, you need to be sure that the address is for the person responsible for direct disputes; a generic address may cause your letter to end-up stuck in a mail room or routed to the wrong office. Call the company, if necessary, to find out who is responsible for credit-related issues. Also, when you mail the letter, send it via certified or registered mail so that you will obtain confirmation of delivery. Keep track of the dates, both when you mail the dispute and when it shows as being received.

4. Wait patiently – the reporter has up to 30 days to investigate and 5 additional days to respond to your direct dispute. By law, they must provide you with their findings, whether they validate your claim or deny it. In addition, reporters must also contact all three credit bureaus should they discover your dispute has merit. If you don't agree with the findings provided to you, you may want to see if you can accumulate additional evidence before attempting to resubmit your dispute. "Frivolous" disputes are dismissed without evaluation, and you don't want your efforts to be in vain.

Because this process can take some time, you may need to take a loan out from payday advance company whose decision to lend to you won't be affected by a faulty credit report.