Posts Tagged ‘OCR’

OCR: How Three Seemingly Harmless Letters May Hurt Your Credit

If you haven’t already heard the news, here’s the sum of it: the bureaus are now using “OCR” (Optical Character Recognition) technology to “read” disputes via computer and, if possible, automatically categorize them and even possibly flag them as frivolous.

For the credit bureaus, OCR is an attempt to automate more of their process.  By reducing the need for human labor and categorizing and cataloging disputes via computer software as they are received, the credit bureaus can accomplish several things:

  1. Reduce the likelihood of human error
  2. Reduce staffing costs
  3. Automatically “fingerprint” disputes and store in a database
  4. Detect if similar disputes have been received before
  5. If the dispute can be automatically categorized (with a numerical e-Oscar code), the dispute can be forwarded to the creditor via e-Oscar with no human intervention whatsoever.  At the very least, the computer can do all the work and a human can just review the results and click a button to approve it.

Where the problem really gets kicked into high gear is starting at item #3.

Here’s the problem:

  • 100% of credit repair companies use form letters of some kind.
  • 99% of credit repair books tell you to do the same
  • If the bureaus can tell you are using a letter that they’ve seen before (such as a template from a credit repair product), they may flag your dispute as frivolous “right out of the box”.

So let’s say you buy some “Dummy Credit Repair” book and do what it says.  You use their templates (the ones that match your problems) to send to the bureaus.  Maybe you have been a victim of identity theft and have several accounts that are genuinely “NOT YOURS”.  So you pick the appropriate template, and send them away.

Then the bureaus receive your letters and their computers say “Hey, we’ve already gotten hundreds of letters that look just like this… this is obviously frivolous.”  And before you can say “OCR”, your dispute is rejected (or in many cases seemingly ignored).

Here’s the thing you really need to know about OCR: The only way it will hurt you is if you aren’t prepared for it.

If you are aware of it, and will take steps to protect yourself, the letters O C and R will remain mostly harmless for you.

What steps can you take? We’re still working on what we believe will be the best answer for this, but for now, the following will have to suffice:

- Don’t use a credit repair company.
- Hand write your disputes, or use strange fonts with unusual colors. This makes it difficult for the “OCR” scanner to read your dispute, requiring (hopefully) an actual human being to take a look at it.
- Make sure your disputes are HUMAN READABLE… use standard letter formats that make sense.  The delicate balance is to thwart the computer without totally screwing up your chances when your dispute reaches a live person.

We are working on methods to help consumers better deal with the potentially negative effects of those three innocent letters. I’ll be sure to keep you posted as we further develop those methods.