THREE LAWS OF CREDIT REPAIR
There is more to credit than the Fair Credit Reporting Act.
Legal basis: the FCRA.
Legal basis: the FDCPA.
Legal basis: the FCBA.
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There is more to credit than the Fair Credit Reporting Act.
Most people believe that credit repair begins and ends with the Fair Credit Reporting Act. In fact, there are thick pamphlets and even whole books directed toward consumers whose entire contents dwell upon that singular Federal statute. Amazingly, in many cases, authors simply reprint the entire text of the law verbatim, presumably just to fill half their pages.
And, for that, you pay money.
Well, unlike your experience with those life-wasters, the time you devote to reading these pithy words will be well spent indeed. Even better, by the time you finish this brief article, your credit rating should be set for real improvement.
Reader alert: a personal plug, albeit a roundly enthusiastic and indelibly true one, will follow in the next paragraph before we resume our regularly scheduled lesson.
Just get it done. Despite the author's best efforts; there are those who don't want a master's degree in consumer credit. They don't desire to expand their intellectual horizons today. They're just seeking an extra hundred points added to their credit score so that mortgage brokers, car dealers, and credit card companies won't pillage their financial accounts. If that's your position as well, then consider telephoning the lovable attorneys and paralegals of Lexington Law (1-800-756-9689) or visiting their site at CRU. Perhaps the largest such firm devoted to helping consumers with credit report issues, Lexington elects not to ignore any of the Federal statutes discussed here when confronting its noble task. (Toward that end, inquire about CRU service.)
Beware lawbreakers. Unfortunately, the credit landscape is littered with lawless debris. Such tactics include booklets and consultants who may suggest identifying someone near your age who died as a child and attempting to establish credit in their name. Others advise simply making up a Social Security number in accordance with some geographically-based numbering scheme, and applying for credit with that. Still others teach how to acquire an IRS Taxpayer Information Number (TIN), which looks like a Social Security Number, and using that. Needless to say, every one of these methods risks loss of freedom, income, and community standing. Anytime you see a seductive advertisement on the net or elsewhere for "NEW CREDIT FILE OVERNIGHT," steer clear.
Fortunately, you won't find that type of credit repair espoused in this document. Instead, Federal statutes should be leveraged in the service of improving your credit standing. Laws must be chased and embraced rather than shunned and avoided.
The truth is that truly legal credit repair is a gradual process that takes time to complete.
Acronym soup. The fact is that any solid credit repair campaign should pay tribute to three, rather than just one, Federal statutes. In addition to the oft-chewed but rarely digested Fair Credit Reporting Act (FCRA), one must also consider the Fair Credit Billing Act (FCBA) as well as the Fair Debt Collections Practices Act (FDCPA). Together, these three consumer protection statutes define your civil rights as a consumer. Understanding -- and even better, exercising and enforcing -- those federally guaranteed protections are the absolute best way to transform a poor credit score into a really good one.
Now, make no mistake. Any solid credit repair campaign should begin with the FCRA. However, despite the prevalent groupthink found practically everywhere on the internet and in bookstores, it needn't end there.
Legal basis: the FCRA.
Legal basis: the FCRA. The Fair Credit Reporting Act is where credit report repair begins. Unfortunately, as I suggested before, some so-called credit repair organizations believe this is where it ends as well.
Overly quoted but equally underutilized, the FCRA regulates how credit reporting agencies (in plain talk, the "credit bureaus") treat consumers. Before this law was enacted and fully implemented in the early 1970s, such bureaus were essentially unregulated and could do just about whatever they wanted.
During the pre-FCRA days, for example, one of the nation's oldest credit bureaus routinely contracted with commercial "greeters," whose representatives would knock on a new neighbor's door, make careful notes about their ethnicity, whether anyone smelled of alcohol, whether the family appeared sufficiently employed, subjective notes about perceived stability, and other such things. Following a hearty welcome, a quicker goodbye, and a basket of coupons, such greeters would then write up a little report and send it back to the grand old company.
Needless to say, such methods were outlawed by the FCRA, and race, religion, and subjective personal observations could no longer be included within ones credit bureau file. Moreover, consumers were finally allowed access to their credit reports, which up until the FCRA was enacted were practically never disclosed to ordinary citizens who might otherwise suffer financial consequences for decades due to incorrect and unfair information within those secret files.
FCRA overview:
• Ensures that consumers can acquire their consumer credit reports at a reasonable price (or for free under certain circumstances), and severely restricts "investigative consumer reports" (i.e., friendly ladies bearing coupons and checklists, for example).
• Regulates who has "permissible purpose" to acquire a consumer's report. (You'll hear credit mavens refer to "permissible purpose" when discussing INQUIRIES. An inquiry, put simply, is the notation made in a credit file when a potential creditor, employer, or insurer sneaks a peek at it. Successful small claims court lawsuits have been brought by consumers against those who acquire credit files without a permissible purpose.
• Delineates the running reporting periods for information on credit reports -- generally 7 years for most items except for bankruptcy related notations which can remain for 10 years. Keep in mind that these are MAXIMUM LIMITS. The FCRA does not stipulate a MINIMUM amount of time something must remain on a consumer's credit file. In this respect, the FCRA exists to protect you against something remaining on your report forever, but no law requires that private companies tattletale on you for any minimum length of time at all. To this end, it's worth remembering that credit reports are certainly not official government documents, and credit bureaus are not officially sanctioned agencies.
• Details how a credit bureau must handle consumer complaints. The hypersimplified version: When a consumer disputes a credit file item, the bureau must note within the file that the item is disputed and begin an investigation which must be completed within a "reasonable" amount of time, a community standard which has been almost universally held to be 30 days. The bureau must then inform the consumer of the action that was taken -- either verified (the item remains as is), modified (certain aspects of the tradeline have been revised), deleted (the item is removed from the file), or deemed "frivolous" (an awful provision that allows the bureau to basically say you're not being serious). The consumer may then exercise other rights if desired.
If some of this is beginning to seem complicated, don't despair. There are experts who can assist. Moreover, a quick Google search (yes, I do enjoy uncompensated commercial plugs) will reveal several discussion boards where consumer law junkies stand ready to answer questions. Unfortunately, this is only a pamphlet, and other Federal statutes beckon.
Legal basis: the FDCPA.
Legal basis: the FDCPA. Historically, so many collection agencies proved to be such scoundrels (and of course there were exceptions) that the Fair Debt Collection Practices Act was enacted to protect ordinary people from their wiles. Collectors were so cunning that they would sometimes disguise themselves as old friends, or they would take an opposite tack and threaten debtor's jail, thankfully only an imaginary purgatory for alleged deadbeats. For those reasons and worse, the FDCPA details how collection agencies can and can't ply their trade.
If it wasn't for this Federal statute, debt collectors could harass you day and night. They could awaken you by morn, and they could tuck you in at night. They could speak with your neighbors, your boss, your mother, or anybody else. They could lie and insinuate pending legal action. They could even pretend to be some official agency acting on behalf of your creditors.
Hey, wait a minute -- they do those things anyway sometimes! So isn't the FDCPA just a farce? Are we just helplessly held hostage to the whims of these abusive collectors? Unfortunately, too many consumers have resigned themselves to that attitude. Fortunately, the FDCPA allows you to carefully document such abuses and then turn table and take control of such situations. Perhaps even better than that, the FDCPA allows you to demand proof that a collector even owns an alleged debt.
Here we'll briefly review your federally-guaranteed civil rights as delineated by the FDCPA.
In a nutshell, the statute:
• Provides behavioral standards for acceptable third-party collections behavior. For example, collection agencies are prohibited from contacting consumers at "unusual" times, generally considered to be between 9 p.m. and 8 a.m. the following morning. They are prohibited from telephoning or writing to debtors at their place of employment if asked to cease such contacts. If a consumer is known to be represented by an attorney, then all communication must be conducted with such counsel.
• Specifies that debt collectors must always include several legal caveats in their dealings with debtors, including such disclaimers as "This correspondence is an attempt to collect a debt." Before the FDCPA, collectors might try to weasel and ingratiate themselves into families for days and weeks at a time -- for apparently completely unrelated reasons like soliciting for the Boy Scouts and the like -- without stating the true purpose of their attempts to forge such relationships. The history of debt collection during the 19th and first two-thirds of the 20th centuries are rife with now-humorous (but not so funny at the time) anecdotes regarding outrageously misleading collection tactics. Such shenanigans are now expressly forbidden. If a CA doesn't state their purpose right away when communicating with a debtor, whether that communication is written or verbal, then they are violating that consumer's Federal civil rights.
• Prohibits CAs from screaming, threatening or actually employing violence, using profanity, misrepresenting their identity, or hintig at possible imprisonment. Neither can CAs specifically threaten legal action unless they fully intend to follow suit expeditiously and then actually do so! As for identity misrepresentation, this includes sending letters that look like official government correspondence, even if the letter doesn't specifically spell out "Office of the Sheriff" for example. The FDCPA seeks to protect you against such nefarious tactics.
• Allows any consumer to formally request that the CA "cease and desist" from communicating with them. Then the collector is legally obligated to follow suit! Of course, the collector is still free to engage the legal system (lawsuits, judgments, liens, etc.) in order to collect any outstanding debt, and they may advise the alleged debtor of the steps they intend to take along those lines.
• Obligates debt collectors to behave in a certain manner when communicating with others. Specifically, they must identify themselves by name but are prohibited from identifying their employer or the reason for their call. So, for example, they may say, "Hi, my name is Joe Collector, and I am trying to locate someone named PsychDoc. May I please speak with him? . . . No, I'm sorry, I can't say specifically the reason for the call as it is confidential, but do you know where or when he might be reached?" However they cannot say, "Hi, I'm with ABC Collections, and I'm trying to reach PsychDoc because he owes Sears twenty-five thousand dollars and nine cents." Incidentally, collectors call such investigative activity "skip-tracing," which really provides a glimpse into their demonstrated mentality regarding consumers: People who owe money are, in their world view, trying to "skip" out of paying their debts and are often treated disrespectfully as a result. Ugh.
• Specifically details a consumer's right to request further information regarding an alleged debt. Such procedures are termed debt validation and are so POWERFUL that we could devote an entire book to the matter. For now, it's important to simply understand that every consumer has the right to challenge the veracity of any debt; a collector must then respond in a certain way, otherwise the collection activity must CEASE and all related consumer reporting must be RESCINDED. Validation, in fact, can become the central tool in a consumer's arsenal when confronting aggressive collectors. You can find additional information regarding validation on a number of consumer law discussion boards. And, as I previously mentioned, Lexington Law utilizes FDCPA validation as part of the array of services they offer.
Legal basis: the FCBA.
Legal basis: the FCBA. The Fair Credit Billing Act requires creditors to bill correctly and completely, and it's the FTC's job to make sure that the statute is universally applied. As you read the list of requirements the FCBA stipulates, just consider the credit repair possibilities.
The FTC summarizes the statute's prohibitions as follows: "unauthorized charges; charges that list the wrong date or amount; charges for goods and services you didn't accept or weren't delivered as agreed; math errors; failure to post payments and other credits, such as returns; failure to send bills to your current address -- provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends; and charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification."
Even better, while original creditors aren't bound by the FDCPA (which, to review, applies to collection agencies), they are similarly bound by the FCBA. Case law (example: Nelson v. Chase Manhattan) obligates original creditors to assume responsibility for incorrect reporting and for the illegal activities of affiliated third-party debt collectors.
If that isn't a credit report repair bonanza, then I don't know what is. Again, further explication is beyond this introductory article's horizon, but additional information and assistance is available on internet discussion boards frequented by credit addicts, from your local attorney, or from affordable consumer law firms
