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If you have ever tried to dispute items on your credit report, you may have received a response from the credit bureaus stating they performed their “investigation.” The bureaus may also tell you that they “verified” whatever item you disputed. This means that negative item will remain on your credit report.

The Fair Credit Reporting Act (FCRA) allows you to attach a 100-word essay to your credit report. This is the opportunity to explain the negative information and argue that you deserve new credit.

It is surely tempting to tell your side of the story by way of the “consumer statement.” It appears as your opportunity to explain why you have negative items on your credit report. There probably is a good reason why you were late on that payment. Perhaps you were sick or got laid off from your job.

Do not fall into the trap of adding a consumer statement to your credit. It is almost never a good thing.

It may look like the credit bureaus are doing you a favor by adding your consumer statement. However, it is really just another technique the credit bureaus use against you.

Let’s assume that you were to attach a statement like this: “I was only late on my credit cards because I was laid off from work. Once I found another job I caught up on all my bills and have never been late since.”

The unexpected loss of employment may sound like a reasonable explanation to be late once or twice on a credit card bill. Plus, I would give that person credit for catching up on her bills and staying current since the bad financial spell.

Credit bureaus interpret a late payment one way. They interpret it as an indication of a bad credit risk.

Instead, the credit bureaus see somebody who isn’t smart enough to have an emergency fund to cover basic minimum payments should something go wrong financially.

The 100-word statement also has additional hidden dangers. For instance, adding such a statement confirms your guilt. It is direct proof that you were late on those payments. Moreover, you put yourself on perilous footing should you decide to hire a credit correction law firm in the future. The credit bureaus will ignore any future disputes on your behalf because you have already admitted guilt.

As you can see, attaching a 100-word written statement to your credit report could possibly be the worst step you can take. In fact, it is only an option because it was part of the original Fair Credit Reporting Act enacted in the 1970’s. Thirty years ago bankers actually manually reviewed credit applications and read those statements personally.

Nowadays applications for new credit such as a credit card or car loan are based upon your score - not your statement. Therefore, the statement is only a weapon that the bureaus can use to ignore your credit report disputes.

To summarize, the 100-word statement is out dated and dangerous. Avoid the temptation to explain bad credit. Instead, use the formal channels to challenge misleading credit information such as dispute letters and creditor interventions.