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How to dispute a bill without hurting your credit

Jerry Kronenberg
  • Credit
  • 5 minute read

If a handyman does bad work for you, a plumber charges way more than expected or a utility company adds late fees to a bill you swear you mailed on time, can you refuse to pay without ruining your credit?

“It depends on the creditor, how much you value your credit (score) and if the creditor is going to report you to the credit bureaus,” says attorney Dan Hedges of Mountain State Justice, a Charleston, West Virginia, nonprofit legal firm that represents low-income clients.


Hedges and other experts say you can’t just reject a bill and assume nothing bad will happen to your credit score. Wondering what to do?

Try the ‘nice guy’ approach

Your best bet is to simply get the vendor to waive some or all of the bill long before credit bureaus or collection agencies get involved.

If you’re dealing with a small local company, Hedges recommends calling and explaining your objections by phone. Use a letter if you’re disputing a bill with a large, out-of-town firm.

Propose paying whatever you consider reasonable if the vendor will agree in writing to drop the rest.

“If you hired someone for a $500 job and you feel you got $200 of value out of the work and have to pay someone else $300 to finish it, offer to send $200 and hope that takes care of things,” Hedges says.

Consider paying anyway

Assuming you can’t cut a deal with the vendor, you might decide to pay up anyway just to avoid the possible collection calls and credit-score damage.


Anthony Sprauve, FICO senior consumer credit specialist, recommends paying disputed bills and fighting with the vendor later to get your money back.

“You’ve got to think about the long game rather than the short game — and the long game is to preserve your credit,” he says.

But Hedges says it’s far easier to get vendors to drop disputed charges than refund money you’ve paid them, so you should only relent if you need a loan in the near future.

“If you’re buying a house next month and the dispute is going to make your mortgage(approval) go away or increase your interest rate by two points, that’s not good,” he says. “But if you’re 70 years old and aren’t planning on buying anything significant on credit any time soon, you’re probably much better off trying to (fight).”

Give an explanation

State and federal laws allow you to add a 100-word response (200 words if you live in Maine) explaining any negative item in your credit report.

“Your statement will become part of your credit file and will be included each time (the report) is accessed,” says Meredith Griffanti of Equifax, one of the three major U.S. credit bureaus.

Of course, it’s unclear in this era of computerized lending whether anyone will really read your explanation, but it doesn’t hurt to add one.

File suit

If all else fails, you can always take the vendor to court.

Consumers can sue with or without hiring their own lawyers, but don’t expect an attorney to take your case on a contingency-fee basis. Plan on paying an hourly rate, although some courts will require the vendor to cover your legal expenses if you win.

Settle of out court

Sometimes you can get a vendor to settle out of court — perhaps right before trial — if your opponent sees you won’t back down.

Hedges recommends making sure any settlement includes a line stating that the creditor will correct or delete any negative information from your credit file.

Forward a copy of the agreement to the national credit bureaus (Equifax, Experian and TransUnion). Then, get copies of your credit report from all three in a few weeks to make sure they referenced the settlement or completely dropped the matter from your file. (Under federal law, you can get a free credit report once a year from each of the three credit bureaus.)

Win in court

Although it might take months, your case will eventually go before a judge or jury for trial. That will give you a chance to present evidence in your favor, from receipts of payments that you made to testimony from another contractor that you hired to finish a job.

The major credit bureaus monitor courts and should know if you win, but Hedges recommends sending them copies of a favorable decision anyway via e-mail or certified letter. Pull your credit report from all three a few weeks later to make sure they’ve recorded your victory. You can also check your credit score for free by clicking here.