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PSYCHDOC'S CREDIT REPAIR SCHOOL FOR BEGINNERS
by Randy Padawer (PsychDoc)...
CREDIT 101: The Ethics of Credit Repair, 9/8/2005
CREDIT 102: A Consumer Law Overview, 9/22/2005
CREDIT 103: Credit Reports & Credit Scores, 10/6/2005
CREDIT 104: Triaging Your Reports, 10/20, 2005
CREDIT 105: FCRA Street Fighting, 11/3/2005
CREDIT 106: FCBA Street Fighting, 11/17/2005
CREDIT 107: FDCPA Street Fighting, 12/1/2005
CREDIT 108: Small Claims Lawsuits, 12/15/2005
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LESSON ONE TRANSCRIPT
CREDIT 101: The Ethics of Credit Repair, 9/8/2005
First, when we talk about credit repair we're talking about a number of things
really. Is credit repair about making your credit report more accurate? Is credit
repair about "fixing" your credit report? What's credit repair? Is credit repair
about getting better rates on loans? Getting credit cards? Buying a car? Is credit
repair about debt negotiation? Debt reduction? Debt elimination? Learning tricks
to improve your credit score? When you talk about getting your life back in order,
I'm guessing that (like me at one time) bad credit has caused some heartache for
you!? I remember when I couldn't buy a car... We'll touch on all of these during
the next few weeks, but the emphasis will be upon removing negatives from your
credit report. When negatives peel away, your credit score typically improves.
And when that happens, you'll get better rates on loans. Moreover, as a happy
consequence of confronting what's on your credit report, you may find that
alleged (I'll explain that adjective in Lesson 7) creditors may forgive alleged
debts. But debt forgiveness is a possible symptom. My emphasis is about your
credit reports. Everyone has to define their own emphasis though. I've done
some writing and seminar facilitation for The Motley Fool (Fool.com), and I got
into a bit of trouble as a result of that involvement one fine autumn day a couple
of years ago. Equifax was (and maybe continues to be) an advertiser with their
website, and they didn't much like it when I wrote stuff like this... to quote...
"There are a few hardball tactics which you can use with the bureaus and
creditors that will compel them to remove negative tradelines, irrespective of
accuracy, from your credit reports." Basically, Equifax contended that I was
breaking the law when I made that statement, and my Foolish colleagues agreed.
So we watered down my statements a bit. We gave in. We caved. We sold out.
QUESTION for discussion... Does anybody know how my statements may have
constituted lawbreaking? anybody know why Equifax thought I'd broken the law?
all of us who tell another human being is defined as a CRO by federal law...
crazy huh Section 404 ("Prohibited Practices") of the Credit Repair Organizations
Act (CROA) reads, "No person may..."Now before I say another word, note that
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CROA doesn't say, "No credit repair organization may..." or even "No
organization may..." Rather it says, "No person may..." and continues "make any
statement, or counsel or advise any consumer to make any statement, which is
untrue or misleading... with respect to any consumer's credit worthiness, credit
standing, or credit capacity to... any [credit bureau]... or any creditor." it almost
seems to violate the First Amendment! Nobody's ever challenged that incourt. I
think it would fall flat. But... As I sit here tonight I am a CRO of one person.
Equifax basically said that the phrase "irrespective of accuracy" meant that I was
advising people to disregard the truth when making statements about
themselves, that this violated federal law, and that if I didn't revise my tune they
might not be interested in advertising with The Motley Fool anymore. Guess
what? Equifax was wrong. There ARE some things which may compel a credit
bureau or creditor to remove items from a credit report IRRESPECTIVE OF
ACCURACY... and YOU DON'T HAVE TO TELL LIES in order for that to happen.
In fact, let me say it more plainly...I call these PSYCHDOC'S FIVE BASIC
CREDIT REPAIR PRINCIPLES...
1) You should always TELL THE TRUTH when communicating with credit
bureaus and those companies which report to them.
2) Telling the truth is usually more INTIMIDATING to those entities.
3) Telling the truth is almost always more EFFECTIVE vis-a-vis your goals.
4) Credit repair involves INTERVENTIONS which invoke one of three
TRUTHFUL communication tactics: a) polite requests, b} requests for
information, and c) legal demands. and the last one...
5) Credit repair involves leveraging your FEDERAL CIVIL RIGHTS in the service
of improving your credit rating.
Another quick definition... I use the word INTERVENTION a lot. Basically a credit
repair intervention is anything you do to intervene against the current credit
status quo. Interventions include credit bureau disputes, goodwill requests,
escalated information requests (which include creditor-directed communications
like the "Nutcase" series and other effective tactics), formal requests for
validation, and more. Such interventions usually take the form of things like hard-
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copy letters [best], internet-based communications [sometimes ok, depending],
phone calls [iffy], smoke signals [forget it], etc. I've been asked... Well, gee whiz,
how can one dispute a negative that is accurate with a credit bureau without
telling a lie? As an aside right now, though, does anybody have any ideas how
one can dispute an accurate negative listing without lying? Discussion
question...we'll definitely have a hard copy discussion ... how can one dispute an
accurate negative without lying? any old-timers care to chime in? well... smile.gif
well, what if it's yours? What if something is yours on your report, and it is
reported as late because it was truly late...We'll explore ETHICAL DISPUTING
examples more fully in the fifth lesson (CREDIT 105: FCRA Street Fighting) For
now, consider this: In the case of credit bureau disputes, it's the difference
between saying, "The Sears tradeline (account 12345) is not mine" versus
"Provide documentation that the Sears tradeline (account 12345) belongs on my
credit report and that my rights have not been abrogated. Otherwise please
delete this damaging data." When you say, "It's not mine" (and it's yours), you're
treading some really rough territory. The bureaus don't want to get a
letter from somebody who knows their rights and who can spell out what it is
they need to do. Now, many people have achieved great results saying, "not
mine. The problem comes later... if indeed you wanted to take the bureau to
court. You want your documentation with them to be 100% honest and on the
mark. I sued all three CRAs in small claims court a few years ago. It wasn't as
tough as that sounds, ha. But that's not where this lesson is heading. We'll talk
about small claims in Lesson 8. Will provide some letters, templates, etc. With
inquiries... I would say "Please show documentation that the creditor gave
evidence of their permissible purpose when requesting access to my report.
Otherwise you are bound by federal law to remove this inquiry now. I have
ALWAYS contended that truthful words are more intimidating than a simple lie.
The CRAs read lies all the time. But a carefully written letter that reveals the
writer to be educated to their rights...is far worse for them potentially. The same
logic applies to creditors as with CRAs. You're presenting yourself as someone I
like to term "a litigious nutcase"... but you're not shouting...you're not being
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impolite... you're not making accusations... and you're not telling lies. In fact...
The truth is in the asking If you look back over this transcript in the chat window
to where I talked about the types of interventions (my fourth basic law...)
4) Credit repair involves INTERVENTIONS which invoke one of three
TRUTHFUL communication tactics: a) polite requests, b} requests for
information, and c) legal demands. Polite requests may be goodwill requests...
Or it may just be you begging Lowe's credit to remove that 30 day late from 3
years ago (which they may do). b} "requests for information" ... those types of
interventions include original creditor "validation" (so-called... we'll open that bag
of worms in Lesson 7 oops... Lesson 6 or debt validation (Lesson 7) where
basically you're asking the CRA (in the case of the HONEST AND ETHICAL
dispute I mentioned before) or the creditor for more information that they simply
don't want to take the time to provide necessariliy. They don't know where you're
coming from, and that's better. When you say, "This wasn't mine" and they
basically know different, the line is drawn in the sand. When you say, "Pursuant
to my rights under the Fair Credit Billing Act, please provide documentation
regarding every transaction ever associated with this account." Then their heads
spin (you hope,and they often do, lol) Much more powerful. Some creditors in
that situation-- especially if the stakes are low -- will simply delete the negs rather
than fool with it. That's the desired outcome for FDCPA validation... and for
FCBA escalated information requests... and for CRA disputes as well CRAs don't
provide account information like that but they are compelled to provide the
information that federal law spells out in the FDCPA in the FCRA. FCRA compels
credit bureaus. FCBA compels original creditors. FDCPA compels third party
collectors. That's a very over-simplified way to "map" it out in your mind. I used to
teach child psych at the University of Tennessee, and I was famous for repeating
myself... ha but I want to repeat one thing that was a cut and paste from
earlier...with respect to CRAs. In the case of credit bureau disputes, it's the
difference between saying, "The Sears tradeline (account 12345) is not mine"
versus "Provide documentation that the Sears tradeline (account 12345) belongs
on my credit report and that my rights have not been abrogated. Otherwise
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please delete this damaging data. "As you read the statute... and interact with
others on Creditboards... and become more familiar with the law and become
more comfortable with the material... You'll find yourself creating variations on
those kinds of interventions, and you'll likely share them with others! Then, a few
years later, you'll lead a class like this, LOL. (If you still find the material
interesting, ha.) In other words... that sample CRA dispute I just provided...
"Provide documentation that the Sears tradeline (account 12345) belongs on my
credit report and that my rights have not been abrogated. Otherwise please
delete this damaging data."would probably get OLD fast...think of your own
words but the point is the same ask them to prove it and don't you lie
To risk moving away from psychology and entering the realm of the preacher... I
just never understood those consumer advocates who believed that they needed
to advise others to tell lies. The CROA notwithstanding... lies just don't work as
well. You could send them separate... you could group a couple together, etc.
"Demonstrate that this material appears correctly on my reports. Request ample
documentation from these two alleged creditors." "If these items appear in error, I
have a cause for action because my rights may have been abrogated in that
case." See what you can do, ha?! Now, in real life... those words will have the
same impact as a "not mine" -- except more powerful because they don't know
where you're going next (EVEN THOUGH YOU DIDN'T THREATEN A LAWSUIT
EITHER) brevity is good Ok... So this brings us to the next item on tonight's
syllabus What are your credit repair goals? We did cover this a bit at the
beginning... It's helpful in credit repair...as with just about any worthwhile
endeavor in life...to know your goals before you embark. I think it was Missbee
who said she wanted a house you just have to know what you want fantastic.
Once you know...You'll be more focused. It's hard for me to get away from my
background in psychology... Finally, the last portion of tonight's syllabus... A note
about attitude. In this regard, a few suggestions have worked for me...
1) Be serious.
2) Learn about the various laws discussed on Creditboards... and I'll interject
from my prepared notes...those laws include... minimally...
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FCRA
FCBA
FDCPA
and even the Truth in Lending Act (which is a superset of the FCBA and a few
other civil rights)
HIPPA those are the ones you should get to know if you can if reading law
outright bores ya... (I love it but I'm weird) then there's a wonderful other way to
get it
READ THE BOARDS these people make it so interesting "search" is good
oops... getting back to my suggestions
3) Embrace your community. (In this case, embrace your friends on
Creditboards.com. They're your best allies.)
4) Retain all written correspondence, credit reports, and any other written
materials.
5) Make notes as if you're headed to court, even though you probably aren't.
Such documentation will likely become very helpful during your journey.
6) Don't scream, yell, threaten, or make an ass of yourself.
Those six things will keep you in good stead. (Ah yes, that, Blue) one bit of
controversy...I was browsing the internet last week and listened to some
recorded phone calls between a credit consultant and a few alleged creditors. I'm
not going to tell you whose calls these were, because I have much respect for
this particular person (even when some others sometimes don't). I've learned
much from this individual. Regardless, I disagreed with the consultant's attitude...
In every case, the phone call descended into a crescendo of conflict. The
consultant was SCREAMING AND YELLING..."IF YOU DON'T PROVIDE
VALIDATION, THEN I WON'T PAYYYYYYYYYYYYYYYY!" the consultant
wailed. "DON'T YOU UNDERSTAND, YOU IDIOT!!!!!???????????" And on and
on and ON AND ON AND ON. This ultimately gets you nothing that couldn't have
been achieved without risking an aneurysm. Similarly, threatening letters can be
shelved in favor of ones which -- through ethical but escalated requests for
information to which you are entitled -- simply irritate the other party into
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submission. I once wrote an essay on another discussion board which included
this suggestion: "Don't be a sonofabitch." I'd like to quote myself here...
"Some people think that embracing a litigious mindset requires acting like a
sonofabitch. (Can we say that on this board, lol?) Nothing is farther from the
truth. Whatever you do, DON'T act like a sonofabitch. Here's why."
"Sonofabitches aren't satisfied with the tradeline deletion. Sonofabitches
REQUIRE the tradeline deletion AND a monetary award of $10,000 AND a
formal apology AND admission of wrongdoing AND a brand new credit card AND
self-mutilation, etc. You don't want your adversary to believe that you are a
"crank" who could NEVER be satisfied." "Instead, you want your demands to
be VERY clear right from the start -- whatever those demands are. And you
should state those demands politely. Potential consequences should be stated
politely as well." "Picture the stance most often drawn by lawyers in a courtroom.
They are matter-of-fact to a deadly degree. They don't beg. They don't threaten.
They don't scream at adversaries unless they want to be admonished by the
judge. They simply state their case, as strongly and as seriously as possible.
END CREDIT 101
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LESSON TWO TRANSCRIPT
CREDIT 102: A Consumer Law Overview, 9/22/2005
PSYCHDOC'S CREDIT REPAIR SCHOOL FOR BEGINNERS
For those who have just joined us, I should mention that the 8 lessons are
divided into two sections...the first three lessons (where credit repair is framed as
an ETHICAL enterprise in opposition to the many UNETHICAL business
practices which comprise the consumer credit industry)...and the last five
sessions (where we discuss the nitty-gritty of credit repair -- interventions which
leverage your RIGHTS as a citizen). Like last session, I hope we'll all learn
something new, but I especially hope that those who are new to their credit repair
campaigns come away from these sessions with something that will contribute to
their eventual success.
Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the last session
-3-- "Three Musts" for beginners
-4-- The laws we reference
-5-- How to invent credit repair interventions
Basically... the first message... Credit repair involves INTERVENTIONS which
invoke one of three TRUTHFUL communication tactics: a) polite requests, b}
requests for information, and c) legal demands. dubzero... just a quick note for
those who weren't here before being polite doesn't necessarily mean being
solicitous or kissing someone's behind
essentially it means that a calm legal-based approach can be far more effective
than a bunch of screaming and yelling someone who calmly demands that the
other party comply with federal law is going to be far more of a threat than
someone who thinks they're going to get great results by trying to intimidate the
other side very true, dub and rich. Well, enough about last session... there is a
transcript for those newcomers here who would like to review that. That transcript
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can be found on the main credit repair board attached to a sticky message at the
top. Since this is primarily a course for beginners, and since it's likely that many
other beginners will read these transcripts later, I want to mention my "Three
Musts" for beginners.
1. You must be willing to learn. Actually, this is really about attitude. I once spent
an awful lot of time in another credit-related community preaching the virtues of
"BE WILLING TO BE A NEWBIE FOR AWHILE BEFORE PROCLAIMING YOUR
EXPERTISE." What I was trying to do with that is help people to understand that
they would indeed be accepted even if they didn't know anything at all. I had
seen plenty of newcomers, time and again, either not post because they thought
they didn't know enough to participate. Or they didn't post because they were
afraid that someone would think they're stupid. Or, worse, they would try to
present themselves as knowing more than they actually did know because they
thought that was the clear path to acceptance. (I think that irritates everybody the
most, lol.) The truth is far better than some newcomers might expect.
Creditboards.com is frequented by a whole bunch of folks who want nothing
more than to help somebody get through what they once got through.
For that reason, you simply must feel free to identify yourself as somebody who's
seeking help! And, for goodness sakes, feel free to do it without apology. Just get
in there and say, "Hey, I'm new here, this is my situation, and I want to learn and
would appreciate anybody's help." The Creditboards swimming pool is warm.
2. You must participate. You've not only got to be willing to learn, you've got to
participate. Some people introduce themselves, and then wait for the ambulance
to come to take them away to the Credit Repair Emergency Room where the
experts will do all their work for them. Then when it doesn't happen, we never
from them again. Creditboards isn't an emergency room. Rather, it's a
community, so after you introduce yourself and state your problem, you may not
get an instant answer. Rest assured, though, people are already getting to know
you, and they may well be thinking about what you've posted. After that, you've
got to "keep coming back" as I once heard elsewhere, continue interacting, and
always ask more questions. Staying with the community and participating fully is
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the key to your ultimate success. Over the long haul, you'll probably find you're
answering more questions than you're asking. But even when others think you're
an old grizzled expert, you should still feel free to ask even basic questions. Even
the old-timers are still learning.
3. You must read more than this. Homework is not fun. But you've got to do it if
you don't want to fail. Now, I'm not necessarily suggesting that you venture onto
the Internet right now and find the laws we'll mention tonight and read them fully.
(Of course that wouldn't be a bad idea, frankly, and many of the most successful
among us have done just that.). On the other hand, get ready to at least READ
ABOUT them. One way to do that is to spend at least an hour a day reading
Creditboards.com for one full week. Just get in there, and start reading. You'll
definitely come across stuff that makes no sense to you at all, but keep reading
anyway. If you do that for a significant amount of time, the material will begin to
congeal, and you will find yourself understanding more and more. Make a
commitment to yourself to read the daylights out of this board for a brief period of
time before you do anything else. Consider it your Master's Degree in Credit
Repair. Just as a bit of discussion Who here has actually read the FCRA? wow
lots of yeses, ok, who's read the FCBA (if you don't know what that is, I'll detail
that in a minute) FDCPA? FDCPA is one I would encourage you to read. well,
they're tough to read but if you can't make yourself read 'em as I said at least
read ABOUT them as much as you can on the board here are a few links
FCRA: http://www.ftc.gov/os/statutes/fcra.htm
FDCPA: http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm
FCBA: http://www.ftc.gov/os/statutes/fcb/fcb.pdf That's a pdf file (Adobe Acrobat)
I would encourage you to at least look over them look at the subsection titles and
dip in it will help as we move forward through the course. For those who are
interested in HIPAA (more later) regarding medical accounts Here's a great link
http://www.hipaacomply.com/
Very good stuff. Now, while we begin to talk about the legal basis for all of this it's
bears mentioning for a moment that there are other tactics. I'm keeping in mind
that there will be newcomers reading the transcript of this in the future so... You
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http://www.ftc.gov/os/statutes/fcra.htmhttp://www.ftc.gov/os/statutes/fcb/fcb.pdfhttp://www.hipaacomply.com/
may have come across credit repair methods which are strictly illegal. These
range from booklets and consultants who will advise you to do everything from
identifying someone near your age who died as a child and attempting to
establish credit in their name, to simply making up a Social Security number in
accordance with some geographically-based insider information regarding the
numbering scheme, to acquiring an IRS Taxpayer Information Number (TIN),
which looks like a Social Security Number, and establishing credit with that, to
you-name-it. Needless to say, all such methods risk loss of freedom, income, and
community standing. Anytime you see an advertisement for "NEW CREDIT FILE
OVERNIGHT," steer clear. Truly legal credit repair is a gradual process that
takes time to complete. In fact, what is advocated here is putting Federal statutes
to work in the service of improving your credit standing. Here, laws are chased
and embraced -- rather than shunned and avoided. Sometimes members of this
community use those laws to actually file lawsuits against abusive original
creditors ("OCs" for short), collection agencies ("CAs"), and credit bureaus
(officially "consumer reporting agencies" or "CRAs") to meet their goals.The laws
we most commonly reference are: The Fair Credit Reporting Act (FCRA), which
basically tells the bureaus what they can and can't do. The Fair Credit Billing Act
(FCBA), which is a subset of the more comprehensive Truth in Lending Act,
which essentially tells original creditors how they should behave. As an aside... I
really like this second one (FCBA) It's not one we commonly use in this
community... but it forms the basis of most so-called "OC validation" interventions
like the Nutcase Series and other good ones you'll see from time to time. More
shortly. The Fair Debt Collections Practices Act (FDCPA), which regulates debt
collectors. Health Insurance Portability and Accountability Act of 1996 (HIPAA),
which regulates health providers. Here's a very very brief way to think about
these...
The FCRA... Ensures access to credit reports. Regulates who has "permissable
purpose" to acquire a consumer's report Limits how long information can be
reported. Details how a CRA must handle disputes. And of course... the credit
repair intervention commonly associated with this statute is of course the credit
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bureau dispute. We'll delve into the FCRA in more detail in the fifth lesson
November 3 (CREDIT 105: FCRA Street Fighting)
FCBA: The FCBA requires creditors to bill correctly and completely, and it's the
FTC's job to make sure that the statute is universally applied. (But it can be your
job to ask that your creditors comply as well, LOL.) 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."
As you read the list of requirements the FCBA stipulates, just think about the
credit repair possibilities. Consider something like this: "In accordance with my
Federal civil rights as stipulated by the Fair Credit Billing Act, you are obligated to
comply with this lawful request for elaborated documentation for billing, including
charges and interest, as well as a full accounting of where each bill was mailed,
for the life of the account, or rescind these reports from every consumer reporting
agency to which you have reported same. Your expeditious handling of this
matter is expected." That's something that no original creditor wants to fool with.
This constitutes a truthful request for information.
Call this example FCBA Nutcase, or call it chopped liver, or -- even better --
invent your own creative approach using the statute. Keep in mind that the FCBA
is actually intended to assist consumers with CURRENT charges in dispute,
however creditors do not welcome the idea that they may have broken the law
with your account even several years before. And of course even though you
WON'T accuse them of that (because perhaps they broke no laws), they almost
always seem to get spooked when asked for such information. We'll cover the
FCBA more fully in the sixth lesson November 17 (CREDIT 106: FCBA Street
Fighting) FDCPA: What a goodie. Who here has ever sent a validation letter?
Great, ok, so I may be telling you what you already know... but a validation letter
13
is an FDCPA intervention a quick mind-map of the FDCPA. Provides behavioral
standards for acceptible third-party collections behavior. Specifies that CAs must
always include several legal caveats in their dealings with debtors. (Before, CAs
would employ all kinds of shenanigans to mislead consumers regarding who they
were.) Allows the debtor to formally request (i.e., by letter -- hopefully certified
and sent with return-receipt requested) that the CA "cease and desist" from
communicating with the debtor further. Specifically details a consumer's right to
request further information regarding an alleged debt. Such procedures are
termed debt validation (as so many here know) and are so POWERFUL that we'll
devote an entire lesson to the matter on December 1 (CREDIT 107: FDCPA
Street Fighting). You'll sometimes see the credit repair mavens...the titans. LOL,
argue about what constitutes true validation or which legal cases require what
item, etc. Most of that is interesting if you're way into it... but the wonderful thing
is that validation requests often just work. For the same reason that FCRA
interventions (aka credit bureau disputes) and FCBA interventions (pestering
OCs) work. They simply don't want to fool with your lawful request for
information. CAs in particular would rather just move along to the next person
who'll roll over. They cost less and pay more. Again, we'll get more into the detail
of all of that in the FDCPA session. But I want to talk more here at the start about
the PHILOSOPHY of creating interventions. Here's why when you use somebody
else's intervention letter, that's fine but when 25,000 people use the same letter,
it may be flagged, if you begin to create your own interventions... or even if more
people begin to create unique ones... we'll all be better off collectively and it's
pretty darned easy! well, it cuts even deeper than just using your own words
(although I agree with that wholeheartedly). Pretend for a moment that there was
something called the FAIR CREDIT REPORT REQUIREMENT RAZZMATAZZ
ACT (FCRRRA). And let's further pretend that that law requires these things:
First, let's say that the FCRRRA says that CRAs must send thank you notes to
creditors every time they report new information to them. Second, let's say that
the FCRRRA stipulates that they must print their consumer credit reports with ink
bought only from Cartier New York. Finally, let's say that the FCRRRA requires
14
credit bureaus to mail their reports to consumers only on Thursdays. Now,
remember that citizens (including you and me as well as corporate citizens) can't
pick and choose which parts of a statute deserve compliance. They must comply
with the whole act. And if they don't comply with every bit of it, then they've
broken the law. If corporate citizens like Equifax or Citibank or NCO violate a
statute, they've likely injured a real person, and there are serious penalties for
doing so. So, back to our silly fictional federal statute. A good credit repair
intervention wouldn't directly accuse the recipient of malfeasance (unless you are
sure that they ABSOLUTELY did commit the malfeasance). Rather, the credit
repair intervention would simply ask the other party to DOCUMENT THEIR
COMPLIANCE with the law. So, in this case, it would look something like...Dear
Equifax: Pursuant to the Fair Credit Report requirement Razzmatazz Act, please
demonstrate that you sent the required thank you notes to Citibank every time
they forwarded new information related to my account (number 12345).
Moreover, show that such information was printed with ink requisitioned from
Cartier New York. Finally, prove that you mailed the report in question to me on a
Thursday. If such documentation cannot be provided, please remove the item
from my report immediately. Sincerely, Joe Consumer
Essentially you're asking them to document their compliance. In other words, the
best way to create a unique credit repair intervention is to take a close look at the
federal statute in question (whether that's FCRA, FCBA, FDCPA, HIPAA, or
another state or federal law which you believe is relevant), and then ask the other
party to show that they aren't behaving criminally. When you approach the matter
this way, you aren't crafting lies. You're simply asking a company for information
related to your account, especially with respect to how that account has been
reported to the credit bureaus. Sometimes companies don't want to take the time
to address your lawful request in that manner, and some of those sometimes
simply delete the offending tradeline rather than fool with it (or you) anymore.
This approach is the essence of the credit bureau dispute (HEY BUREAU --
SHOW ME YOU'RE COMPLIANT WITH THE FCRA), the original creditor
interventions like the "Nutcase Series" (HEY ORIGINAL CREDITOR – PROVIDE
15
ALL THIS INFORMATION ABOUT MY ACCOUNT PURSUANT TO FCBA), debt
validation (HEY COLLECTOR -- SHOW ME THE HISTORY AND
PROVENANCE OF THE DEBT PER THE FDCPA), and HIPAA interventions
(HEY DOC -- SHOW ME YOU HANDLED MY ACCOUNT IN WAYS THAT
PROTECT MY PRIVACY). Ok, I'll stay away from inventing anymore silly
statutes because we've got too many real ones to discuss as we move forward.
Still, I hope this example illustrates the similarities among the real credit repair
interventions we commonly use. This approach... requesting information
basically... is one that lawyers commonly use (what they sometimes term
"discovery"). Asking for information is your right as a consumer. Lawyers love
discovery simply because of the nuisance factor. And that same principle works
for you. Lawyers don't say to their opponent during discovery anything like...
"TELL ME WHY YOU BEAT YOUR WIFE (OR HUSBAND)." Instead they'll say...
"GIVE AN ACCOUNTING OF YOUR RELATIONSHIP FROM THE BEGINNING
UNTIL THE PRESENT." And then they look for discrepancies. If you really do
head toward court eventually with some matter, you'll probably collect a few
discrepancies vis-a-vis some CRA's behavior... or an OC... or a CA. Does any of
this resonate with anybody? (Hope so, lol.) This is basically the core method for
how these crazy credit repair interventions get started. You know, I was looking
over the transcript for the last lesson... and I received some accolades for a
couple of interventions I created... and I thought, "wow, what nice people" and
then I thought "wow, I have to UN-snow them" "I have to show them that there's
no magic to this" I mean, there's a choice point here for me...continue to indulge
the guru thing or just convince others that they are the gurus the second is best,
because I'm no guru (LKH will confirm that, LOL!) rich, how do you think I ended
up being a shrink? biggrin.gif Once you get the hang of this...essentially that it's
about demanding compliance and demanding information then you'll not only be
in a terrific position to radically increase your credit rating (i.e., your credit score...
the rates you're offered... etc.) but you'll be in a fantastic position to help others...
and if you're in this room and I see that even as we near the end of this lesson,
we have 37 people still here...then you're probably VERY interested in the topic
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and will likely be among those people who'll help the NEXT group of beginners,
this is a terrific community and those of us who care about helping others who've
been through what we've been through (like you) want to make sure that it
continues to grow... and that new credit repair interventions based upon law are
developed well, that's it for this time.
I hope something here was useful next time we'll delve into credit bureaus and
credit reports ... and credit scores and we'll talk about how to improve your score
EVEN WITHOUT these intervention letters then we'll get into the street fighting
Court records are tough... tougher than creditor tradelines. There's no harm in
asking the court to verify their procedures for reporting to credit bureaus You may
see some success. Most people simply dispute and re-dispute with the CRAs
until they're gone. You can ALWAYS ask your opponent -- in this case, the court
-- for information. Asking for information violates no laws. No, they're not required
to delete. Ask them to demonstrate that they abided by all laws. Very interesting.
Agreed or do it by letter, certified letter, ok... this strikes me as something that
you should also post on the board about being worried re fooling with courts...
YOU DON'T OWE ANY MORE MONEY, THE CASE WAS SETTLED biggrin.gif
You are now just a nuisance. You're not threatening anybody. You're simply
demanding some information. Don't be nervous, lol. THE JOY OF PESTERING
that's the key! Ok, see you in two weeks.
END CREDIT 102
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LESSON THREE TRANSCRIPT
CREDIT 103: Credit Reports & Credit Scores, 10/6/2005
Tonight's seminar, the third of eight, will focus upon credit bureaus and credit
scores. It's nice to see some new faces and some returning ones too. And, let me
do something we couldn't have done before the internet: I'd like to welcome
those who have discovered these transcripts in future weeks, months, and years.
I hope something here proves helpful as you approach your own credit repair.
This site, Creditboards.com, is made possible by its owners (you know who you
are, LOL), and I would like to express my appreciation once again for their
invitation. Ok, in case you don't know who you are... breeze, Pam, LKH, and
radi8... I've interacted with each of them through the years, all of whom have
poured a lot of care and sweat (and have endured heaping helpings of what we
call in Yiddish "mishegoss" in return)...QUICK ASIDE... "mishegoss" is your word
of the week. You are all now honorary Jewish people. Ahem. But they have put
up with a fair amount of mishegoss...just to benefit others. Their commitment to
consumer advocacy is astounding. I'll endeavor not to be a meshugana tonight.
Now I'll turn away from such comments with a much browner nose and focus
upon our task here.
Like last session, I hope we'll all learn something new, but I especially hope that
those who are new to their credit repair campaigns come away from these
sessions with something which may contribute to their eventual success.
Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the previous sessions
-3-- Approaches to debt
-4-- Two credit bureau myths
-5-- Credit scores
Tonight's session could easily have been the first one... except that I didn't want
to set the wrong tone for this. First, credit repair isn't primarily about the credit
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bureaus or about credit scores. Rather, it's about conducting ethical and lawful
interventions in order to further your personal consumer credit goals --whatever
they may be. Second, so many credit repair interventions (and their co-curricular
consumer protection statutes) aren't directed toward the credit bureaus at all.
Rather, they're directed toward original creditors, debt collectors, health
professionals, and others. ("Others" may include the Better Business Bureau, the
Federal Trade Commission, the consumer advocacy site PlanetFeedback.com,
etc. We'll begin to talk about these ancillary intervention opportunities in a few
weeks, as they can interlace nicely with FCRA, FCBA, and FDCPA based
interventions.) Still, it doesn't make much sense to conduct a credit repair course
for beginners without at least wearing out the usual yawn-inducing introduction
you see just about everywhere, which goes something like this: "There are three
major consumer reporting agencies, Equifax, Experian, and TransUnion, and
they maintain consumer records on hundreds of millions of Americans. It's their
legal responsibility to maintain accurate records, and it's your right as a
consumer to ensure that they follow through in that regard." Argh... I said it. I'd
like to back up a bit from that, though, and cut through to something more
essential, and that has to do with DEBT. Generally, the credit bureaus maintain
records (or, perhaps more accurately stated, LISTS OF UNPROVEN
ALLEGATIONS, lol) regarding how you as a consumer have behaved when
borrowing and repaying money. Even most court records that appear on such
reports often have to do with debt. Critically, your GOALS regarding debt will
dictate how you go about tackling what appears on those reports. Moreover,
HOW YOU BORROW and HOW YOU REPAY debt are perhaps the two greatest
influencers of credit scores. Manipulating ones borrowing and repayment
patterns is perhaps the quickest way to raising a credit score -- even, in some
cases, irrespective of what actually appears on the credit report. More about that
in a minute. For those reasons, it's important to step back a bit from the credit
repair task, especially at the beginning, and take stock of one’s own approach to
DEBT. That's really what this is about. Suffice to say, this isn't what some folks
want to hear. Nobody wants to be reminded to floss after brushing. For that
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reason, I won't spend too much time on this, but I would be completely remiss if I
didn't at least acknowledge the obvious: DEBT is what caused so many of our
problems which necessitate credit repair in the first place, so perhaps 5 or 10
minutes of this will be appreciated by someone out there at some point. As an
aside, I really like an article which appears on Creditboards (LINK) called "The
Problem with Debt Settlement Companies" written by radi8. He discusses a
widely advertised -- by a seemingly limitless number of companies -- method for
dealing with debt. It's a must read. There are many approaches to debt, but here
are two wide categories:
1) Wealth accumulation.
2) Eternal indebtedness.
Expanding these...
1) Is your long term goal to accumulate wealth? It almost goes without saying
that the wealthiest people (and the wealthiest corporations, for that matter) have
little debt and lots of money. If becoming more financially stable is your goal, then
reducing outstanding balances low should be an objective. Interestingly, this
approach has a credit repair benefit: your credit scores will rise. Most importantly,
you'll be less susceptible to fiscal disaster if you have an emergency fund of real
cash in case something unexpected happens.OR...
2) Do you regard a brand new credit card as INCOME? In other words, when the
shiny new MasterCard arrives with a $10,000 limit, are you already thinking
about that home theater system you can buy now? If so, then you may find
yourself overextended (and for most of us here, I should add the word "AGAIN" --
me included), unable to repay everything in a timely manner, and perhaps right
back where you started. Obviously, I would encourage anyone in the second
category to at least begin to think about how they've embraced and accumulated
debt. Ok, let's assume that accumulating wealth (the first category) -- and so, in
other words, reducing debt -- isyour financial goal. How will you do it? There are
three general approaches:
1) Reducing debt as quickly as possible.
2) Reducing debt the least expensive way.
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3) Reducing debt in a way that will maximize your credit scores.
While all three of these are worthy objectives, they are very different. And by the
way... If your goal is to reduce debt as quickly as possible, then you may not be
able to do it the least expensive way... Likewise, if you goal is either of the first
two, then you may not be able to do it in ways that will maximize your scores...So
this is about making choices...The first approach – reducing debt as quickly as
possible -- usually involves what Dave Ramsey and other authors have termed
the "debt snowball" approach. By the way, does anybody here ever listen to
Dave Ramsey? He's an anti-debt fanatic. That isn't my approach. But he
represents a viewpoint. His is an extremely compelling argument. Plus he's
entertaining. I recommend at least listening to what he has to say even if you
(like me) aren't an anti-debt nut. (With apologies to "nutty" here, ahem.)
Dave Ramsey's debt snowball approach involves repaying the smallest debt first,
then when that's taken care of, taking that payment and applying it to the next
largest one, and so on until everything's paid for. This approach affords
psychological advantages relatively quickly because it's encouraging to repay
something entirely and then move to the next one in turn. The disadvantages of
this first approach are...
a) Even if it's the most encouraging way to tackle debt (which is perhaps the
most critical factor for some people), it's not the least expensive way since
you're focusing on repaying the SMALLEST DEBT first -- and not the one
with the highest interest rate...and
b) It's not the most efficient way to raise your credit score, since it may well
be that the larger debts are ones which involve maxed-out revolving credit
lines (a score killer).
The second approach – reducing debt the least expensive way -- is the approach
favored by people like Suze Orman. Now Suze doesn't know much about credit
repair... LOL yep... ha... but she does offer an approach to debt reduction... Hers
involves prioritizing debt according to the actual cost of the money -- in other
words, the interest rate – and paying off the most "expensive" debt first. The
advantage of this approach is obviously the cost savings. This is different from
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the first obviously. The disadvantage is that you can easily feel like less progress
is being made especially if the most expensive debts are also your largest ones.
Also, like the first "debt snowball" approach, the focus isn't on your credit score.
two very different approaches The third approach – reducing debt in ways that
improve your credit score -- involves equalizing balances so that no debt's
"utilization ratio" (the amount owed divided by the overall line of credit) is high
and then paying down the various debts equally so that all the ratios lower
together. Again, this approach can result in DRAMATIC differences to a credit
score, but doesn't afford the psychological advantage of Dave Ramsey's "debt
snowball" nor the cost savings of Orman's approach. So it all depends upon your
goals once again. By the way... the use of the term "utilization ratio" brings us
squarely into the realm of credit bureaus and credit scores... Does anybody now
know what I mean by that? Just in case...Your utilization ratio is the amount you
owe on a debt divided by that debt's line of credit. For those who are new to all of
this information... Keep in mind this heuristic...LOWER UTILIZATION RATIOS =
HIGHER CREDIT SCORES That's true whether we're considering an individual
debt...and it's true when we're considering all debt...will give an example... but
You apply for revolving credit and keep a low balance. :) That's the irritating thing
about credit. You've got to struggle to improve your rating (your reports, your
score)... and then you'll qualify for more that will help further. interestingly, DTI
(debt to income ratio) doesn't really matter much unless you're buying a house
no problem I'll give an example... and then tackle cred's question
example...You've got a Chase MasterCard with a $10,000 line of credit And
you've only spent $1,000 of it. That card has a 10% utilization ratio. That an
example of a tradeline-specific utilization ratio. Now, overall...Let's say you have
three revolving lines of credit...And the overall credit available to you is, let's
say... $20,000... If you've spent, say, $5,000 of that then what's your overall
utilization ratio? (simple math) Credit scores take into consideration BOTH types
of utilization ratios. SO... Any consideration of improving your credit scores will
ALWAYS factor in HOW your borrow and repay your debt. Interestingly, some
people (me included) believe that this is the LARGEST factor in credit scoring
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(aside from having a bunch of negatives, LOL... but all things being equal...) Debt
is never a fun topic when raised in a milieu of people who love credit cards (like
me, ha) but it's a necessary topic... not only in terms of fiscal health...but also
with regard to your CREDIT SCORE which DOES interest everyone here I think.
OPEN accounts contribute to the score. CLOSED ACCOUNTS don't help... and
can hurt IF there's an outstanding balance. That's why the most common advice
you'll hear is... "Don't start closing accounts willy-nilly." Even the erudite Suze
Orman says so, LOL. And she's right. Ok, so long as we've established what
we're really talking about here -- i.e., DEBT -- let's turn to busting two common
credit bureau myths. First, let me ask a trick question...Which federal law
establishes the credit bureaus as official quasi-governmental entities?
MYTH 1: Credit bureaus are officially recognized entities. WRONG. Credit
bureaus are private companies (at least one is publicly traded, but it's still owned
by its shareholders) which are in the business of buying and selling financial
gossip about you. And what's gossip? Gossip is, at best, a list of unproven
allegations, and that's all a credit report is. By the way, that's WHY the Fair Credit
ReportingAct became law in the early 1970s... in order to regulate what they
CAN'T do. (More about that two sessions from now.) A credit report doesn't even
enjoy the official legal status of, say, your driving record maintained at your local
statehouse. It is unfortunate, then, that these unofficial credit reports sometimes
impact our lives far more than most any official document which exists.
Well, that's the way the lending industry has evolved. In the old days... like in our
grandparents' time... You'd go visit the banker. Who you probably went to church
with. And he (and in those days, it was always a he) he knew you. There were
credit bureaus. But that wasn't the primary consideration. Unfortunately, other
considerations that AREN'T helpful intruded. Like, for example, a banker's social
preconceptions... whether he thought women were creditworthy... or racial
prejudice, etc. So life wasn't rosy for everyone. Incidentally, that's the stated
rationale for credit scoring as well. On to myth two
MYTH 2: Items on your credit report are required to remain for 7 years (in most
states), except for bankruptcy related items which are required to remain for 10
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years. myth... WRONG. When you speak with the nice customer service person
at Sears, and they say something like, "Oh I'm sorry, Miss Jones, there's nothing
we can do because those things are supposed to stay on your report for seven
years," you should know that-- their niceness notwithstanding -- you're either
speaking to someone who is terribly misinformed (at best) or someone who is
deliberately lying to you (at worst). That may be a company's policy and the
credit bureau's policy, but it's not the law. The FCRA simply places LIMITS upon
what can be reported. It doesn't MANDATE reporting though! This is one of the
most insidious lies related to credit reports which we have embraced as a society
for whatever reason. There is no requirement, legal or otherwise, that private
companies must buy and sell information about you to others. Confronting what
appears on your credit reports, especially if done using ethical means, is simply
your way of saying: "Hey, I don't appreciate corporate titans who choose to
violate my privacy." Keep these two myths in mind as you go about the task of
confronting what appears on your credit reports, someone should bring a class
action lawsuit against any consumer reporting agency that says something like:
"Negative items must remain on your credit report for 7 years in your state." That
is an oft-told lie, and I can't wait for someone to challenge that kind of misleading
information. Of course, as long as we sheep believe, LOL...their business is
safeguarded. Which brings us to credit scoring... LOL,Here's what you see
everywhere...and it bears repeating for those who are new to the material...35%
of your score is influenced by account history (how timely you've paid), 30% to
current account usage (how much of your credit is being used, with greater
amounts being negative) which is the "utilization ratio" we discussed before, 15%
to length of credit history (the longer the better), 10% to new credit inquiries and
accounts (with fewer being better), and 10% to the "credit mix" or variety of credit
types present. Scores range from 350 to 850, with the mean value score being
right at 725. In real life, the most favorable credit rates are typically extended to
those with scores of 720 or above. That's what Fair Isaac Corporation (the FICO
company) wants us to know. They DON'T tell us something else, though. And
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perhaps someone in this room will one day sue their pants off, LOL... and it's
this...QUOTING MYSELF from another venue: "Your credit score isn't just
about you. If it was, providing it along with the rest of your credit report might not
violate federal law, which stipulates that your consumer file must only (and
obviously) be about you. Rather, it's about you and others. More specifically, Fair
Isaac makes use of what they call "Score Cards," which groups consumers
according to whatever criteria they choose. Then, they run what we statisticians
call Pearson correlations between credit report items and subsequent late-pays
for each consumer grouping. Through that continuous process, Fair Isaac stays
on top of the variables du jour which may diagnose bad future news. The final
step happens when your credit report is pulled and is analyzed through the use
of those comparative algorithms, and a credit score is then reported which
purports to predict the possibility that you are the type of person who may one
day become seriously delinquent." Now, I'm a statistics wonk... But what that
boils down to (for those who hate stats)...is that basically a credit score indicates
the PROBABILITY that a consumer will Credit scores are about helping lenders
PREDICT who will default. It's all about helping banks determine who is in the
group of people who may not repay them. The problem is...In any grouping like
that... There are the false positives... i.e., those people who will NEVER default.
And, interestingly, those people are in the majority... even among those who
have relatively low credit scores. So... we all pay for the mistakes of the few.To
quote myself one last time:"So does this sound kosher? Are prediction and
speculation and comparisons with other consumers fair items to include in a
credit report alongside the stuff that otherwise really is about a single consumer?
undoubtedly, the judiciary will eventually decide." This is why someone needs to
challenge the legitimacy of the credit reporting and scoring industry generally. I
don't believe that they are honorable enterprises. Ok... to cled's question, Try not
to confuse the credit score number with what I was talking about when I
mentioned "utilization ratio" The actual FICO score is just an INDEX OF
PROBABLE DEFAULT That's not to say you didn't ask a great question... People
often ask things like..."If I apply for credit, how many points will an inquiry take
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off." Now, even though the answer to that is usually "2 or 3 or 4" LOL... (I
shouldn't fall victim to answering, LOL)... The real answer is this... People who
apply for LOTS of credit are among that statistical grouping of people who are
MORE likely to default...So the more inquiries you have, the more you resemble
that group of probable defaulters. Similarly... people who have defaulted in the
past are statistically MORE LIKELY to default again than people who never have,
so... the presence of R9's are poison. (R9 is Equifax's designation for a charged-
off or collection revolving account.) Well... people who have 60 day lates
STATISTICALLY RESEMBLE probable defaulters MORE than say those people
who have only 30 day lates (or no lates) Again, it's about comparing you to
others. And I (and some lawyers I've spoken with) believe that when a credit
bureau includes a credit score, they may be breaking the law. Consumer credit
reports cannot include information about other consumers, and the credit score
essentially does that. But that's for tomorrow's litigation, LOL. Some people say
that an ideal utilization ratio is 10%. Others say 5%. Still others say, "keep it
below 30%." I think everyone agrees that anything above 50% is hellish on a
credit score. (Not to mention that it's hellish on your fiscal health. But there I go
talking about flossing again.) ;) The truth is this...People with LOW utilization
scream "responsibility" to them. Ok... Now... A few words about raising your
credit score. What follows is conventional wisdom you'll see elsewhere, but I
agree with it wholly.
1) Eliminate negatives, but do so using ethical means.
2) Pay down revolving credit.
3) Stop taking advantage of installment loans (other than a mortgage and car
payment)
4) Don't close accounts. And, yes, I mean open revolving lines.
That's advice for beginners. When you become more comfortable with your
GOOD credit (after your credit repair succeeds)... then you'll tweak things...You'll
apply for a super premium MBNA card and close your Capital One card, etc. But
a good rule of thumb here at the beginning is... Don't start closing accounts here,
there, and everywhere. And when it doubt, post to the boards here and get
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advice. Well, that's it for tonight! In two weeks, we'll discuss some overall
strategies for taking a credit report, triaging it, and devising your best game plan.
Then we'll delve more deeply into the down-and-dirty credit repair tactics we love
the most. I hope something here was useful for somebody tonight! :) LOL!
student loans are ok when you need them... but interestingly, those student loans
will depress a score. Doesn't that suck? How do I know? I've seen it myself. Now,
interestingly...Now don't just go and dispute something like that off just because...
they may be your only positive items! In which case...they'll add more than they
take away. Credit scoring is a dance. I would never advise people to lie. But...
There's no harm in using the approach we discussed in the first two sessions...
which is..."Please demonstrate that this inquiry was included on my report as a
result of the company's permissible purpose... in accordance with my federal
rights." You can still ask the bureau to demonstrate that. It will be much tougher
to remove, for sure. Inquiries that DON'T have an attached active tradeline are
termed "orphaned inquiries" by some attorneys I associate with, and those are
much easier to remove...Still, inquiries are tough period as you know. One risks
having the report (and the account) flagged. That's true of almost all credit repair
interventions though. Flagged = noted as being an identity theft victim... makes it
tougher to get new credit,once again it's about your goals (reference the section
of tonight's session regarding the three types of debt repayment) If your goal is to
improve your scores... then definitely pay down your revolving credit. If it's about
other things (ref. earlier paragraphs) then pay the student loans.
END CREDIT 103
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LESSON FOUR TRANSCRIPT
Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the previous sessions
-3-- The purpose of "triage"
-4-- Credit repair rules of thumb
-5-- YOU are your guru
Each session builds upon the previous ones. Now on to "credit report triage"... As
an aside, you gotta love the internet. For those who enjoy sound effects, here's
Merriam-Webster's Stepford Person pronouncing the word for all of us...
Link: http://tinyurl.com/dze2z
I know, I know... that was so pedantic of me I can't help it. Anyway, as you know,
the term "triage" is borrowed from war battlefields where medical personnel deal
with groups of injured soldiers. Generally speaking, the wounded are divided into
three groups (hence "triage") --
1) the most seriously injured who require immediate attention in order to prevent
death,
2) those with serious injuries who aren't life-endangered,
3) the walking wounded who will still require first aid but who can assist the
EMTs with the other two groups but we'll pretend nothing's "dead"on a credit
report, lol Actually I borrowed my definition this afternoon from Wikipedia so
there I feel like a giant cane is about to enter stage left and pull me away now :)
Simply having a plan for what must otherwise be terrifying circumstances helps
first responders cope. Similarly, knowing that there is an organized way to
proceed (with any endeavor) helps one get past the fear of starting any sizable
task. Was anybody here (who's already begun their credit repair program) ever
intimidated by the task when they first got started? Well I felt the same way at
one point. Sometimes credit report issues are so plentiful that it's easy to feel
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http://tinyurl.com/dze2z
like one is about to fight a war (of sorts). My goals in adopting the metaphor are
threefold:
1) Impress upon you my belief (shared by many in this community) that
practically no bad credit rating is beyond repair.
2) Empower you to approach each of your three credit reports with optimism and
a sense of fun as you delineate your plan of attack.
3) Provide some concrete rules of thumb for matching tradelines with
appropriate credit repair interventions.
So... whether it's gossipy bureaus... or petty creditors... or ruthless and unethical
debt collectors... there's a systematic approach for each. For those who haven't
begun, here's "PsychDoc's Plan of Attack" (licensed to you only for your own
individual personal use under the "GNU General Public License" but not for use
in any commercial setting). :) Let me emphasize before I delve
in, though, that this is simply my approach. I don't want to represent this
as the "correct" way, or the "right" way, or the "only sensible" way, or
anything of that sort. That said, I'll proceed...
PRELIMINARY STEP: Go to Kinko's
(or your office copy machine, or wherever) and make COPIES of your latest
credit reports. Keep a set of "clean" originals in a file somewhere, though,
just in case you ever need them as evidence in a court proceeding. I
realize that eventuality is unlikely, but that's still a good idea.
As for the COPIES, you're about to take a nasty red marker and mark them up
as if they're a graffiti wall somewhere. Spare no mercy. Those reports are the
work of the devil. (And if not the devil, then at least the work product of corporate
drones who probably care less about your personal welfare.)
STEP ONE: Keeping our second session in mind (CREDIT 102: A Consumer
Law Overview), you're going to assess each item on your report and assign it an
appropriate credit repair intervention. First, comb through your reports and look
for those tradelines (credit industry jargon meaning "an item on your report")
where you were never more than 30 days late. And, by the way, don't cheat...
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we're NOT going to include anything with 60 day lates or work during this
pass... Now, you're going to write the word "GOODWILL" next to each of those
tradelines. By the way, if you're completely new to all of this, then don't worry
what that means right now. Just do it. You're triaging. :)
STEP TWO: Now, you're going to make a second pass through your reports.
This time you're hunting for any tradeline whose worst notations are 60 days late.
For these you'll mark "GOODWILL OR FCBA." More in a few minutes about that.
STEP THREE: Now, on the next pass, you're going to label those items whose
worst notations are 90 to 150 days late and which NEVER entered collection or
charge-off status. Mark those as "FCBA OR NUTCASE." More about what that is
in a few minutes also. Ok, ok, ok, technically we're going past "triage" now...
Perhaps we'll have to coin a new word..."quattrage" or even "pentage" or
"sextage" (because, YES, there's going to be fourth, fifth, and sixth steps, ahem).
Those of us who appreciate 12 Step Programs are welcome to say the Serenity
Prayer now. (Actually, that may help with this task, but, alas, I digress.) And, NO,
"sextage" doesn't guarantee any additional fun when you're through. (Although,
actually, that may help too, but now I'm way off topic. Cough, cough.)
STEP FOUR: Next look for items that have entered collection or charge-off
status. By the way, Equifax includes their handy "R9" or "I9" designations, which
will help make short work of this task with that bureau's reports. If the tradeline
was placed there by a third-party debt collector (in other words by "XYZ
Collection Company" as opposed to "MBNA"), then mark those tradelines with
the phrase "VALIDATION." If the chargeoff was put there by an original creditor,
mark it "OC VALIDATION." Don't worry about the wizened souls who proclaim
that there's no such thing as "OC VALIDATION" at this point. They're right, but
those of us who advocate differently are right too. Kindly sit with the tension for a
moment, and I'll get back to it in a few minutes. (Suffice to say, groups of us have
been debating this for years. Meanwhile, consumers are netting credit report
deletions, irrespective of the technicalities.)
STEP FIVE: Up to now, no tradeline has received more than one mark. That may
change with this step. Mark it VALIDATION if a CA and OC VALIDATION if an
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OC to Step 5... This step requires you to work through your reports and locate
any MEDICAL tradelines. If the item was placed there by a doctor, a hospital, a
testing lab, or someone collecting money for any of those, mark this one with the
acronym "HIPAA." Note again that you may be writing "HIPAA" next to something
which was already labeled "GOODWILL," "GOODWILL OR FCBA," "FCBA OR
NUTCASE" or "VALIDATION." a tradeline may have more than one notation
STEP SIX: Anything left is probably there as the result of some legal action -- a
lien, a bankruptcy notation, a judgment, etc. Go back and mark those
COURTHOUSE."
Now you have the rough outlines of a plan... with plenty of flexibility. Each of
those notations reflects a particular credit repair procedure. Your "GOODWILL"
tradelines are due a Goodwill Letter. This is where you need to do your
homework – search the board for the basic template. The "Goodwill Letter" saw
its origins in a letter penned by "marci" (an occasional participant on these
boards) which she called her "Sample Nice Letter for Paid Chargeoffs." I
borrowed marci's letter (lifting a couple of her brilliant key phrases), reworked it
for those tradelines with minor late pays which had never charged-off, and
dubbed it the "Goodwill Letter" after a rep for Sears National Bank told me by
phone that they had an internal phrase for certain nice people who begged
forgiveness --the "Goodwill Adjustment." That sounds like something a
chiropractor would do... :) Regardless, the approach is tried-and-true, and while
nothing works all the time, this one does work some of the time. Has anybody
ever had success with the Goodwill letter? I realize most in here are new...
some no's... some yes's Let me diverge from the prepared remarks for a
minute... I have a philosophy about credit repair interventions... The philosophy is
this... Let's say that a credit bureau dispute will work 5 or 10 percent of the time
or even 20 percent... and let's say that a Goodwill approach will work 5 or 10
percent of the time and let's say that a Nutcase approach will work 5 or 10
percent of the time FCBA same FDCPA validation same, etc. and then you try
again...somewhere down the line you're going to clean it up... persistence and a
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variety of approaches is key I just hate it when I see somebody really punishing
themselves after they try an intervention and it doesn't work. They despair...
OH NO... IT DIDN'T WORK I'M DOOMED It's just horrible because you know
how they feel... which is terrible but if they kept in mind that each intervention has
a chance of working and that interventions can be REPEATED and in some
cases... some tradelines can call for multiple interventions per the triage
approach I just outlined above Your chances of succeeding during the next year
or so... are HUGE. Be encouraged. I should put that in all caps: BE
ENCOURAGED. :)
Ok, for those tradelines marked "GOODWILL OR FCBA" you have a choice. You
might try one or the other. Or you might try one and THEN the other. Refer to the
second session for commentary regarding the FCBA approach, and customize
your own. You approach it as quickly as possible. Those tradelines marked
"FCBA or NUTCASE" also present a choice. Try one, or the other, or do both
(space them apart awhile). The "Nutcase Series" enjoys a good number of
testimonials, and a template and accompanying rationale can be found on the
board Again, nothing works all the time, but taking NO action ensures failure, so
buck up and move forward! The following sentences should not substitute for
your doing just a few minutes of homework and reading the rationale here on the
boards, but here it is anyway in a nutshell Essentially, the Nutcase approach
can be summed up as a polite but escalated set of information requests. Your
questions likely compel the other side to wonder what you plan to do next... Will
you sue? Are you a "litigious nutcase"? Sometimes, creditors would rather just go
ahead and delete a severe late mark than risk (or waste their time) tangling with
you any further. As an aside, has anybody seen success by trying the Nutcase
series yet? Let me say something about "required"... You'll sometimes see one of
us old fools say something like... "Address it in a red pen." "Then fold it twice."
"Three times along the seam." "Then address the envelope in purple ink."
And on and on and on. Sometimes there is a reason for that... Maybe the old-
timer wants you to NOT look like a credit repair organization... Well... lemme tell
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ya what I know about CROs... they break out the purple pens sometimes so I'm
really at the point where I hesitate to get so specific.
Next, those tradelines marked "VALIDATION" should receive a formal request for
validation pursuant to the FDCPA. (Again reference the transcript for seminar
#2.) You'll find a template for the letter, as well as its sequential successor
termed by some the "Estoppel" letter, here on Creditboards. Plus, you'll find no
end of discussion and debate regarding such interventions. Again, I would advise
that you spend some time (a few hours) reading about validation before you fire
these off. Also remember that the larger the amount of an alleged outstanding
debt, the greater the risk that you'll "awaken the giant" (search the board for that
phrase). If in doubt, seek legal counsel, or at least ask for the advice of fellow
travelers on the board. Quick point of discussion... Has anybody succeeded with
Validation? Now, there are in credit repair, as with most areas of interest, topics
which are controversial where perfectly smart and right people see things
differently. In credit repair, one such area involves the notion of "OC
VALIDATION" (i.e., "original creditor validation"). The FDCPA only (well, almost
only, but we'll not get into more advanced and arcane debates in this beginner
session) regulates third-party debt collectors. So, technically, heapings of respect
should be accorded those who maintain that there is no such thing as "original
creditor validation." Incidentally, in this regard, you'll find people on the boards
debating who "verifies" versus who "validates" and similar arcana... So
technically, it's true... original creditors verify and don't validate That said, I've
seen plenty of people net credit report deletions by sending the STOCK
validation letter to original creditors, irrespective of whether or not the OC was
actually required to do anything at all, and arguments about words
notwithstanding. I personally have never enjoyed the verify/validate wars, but I
have enjoyed watching consumers win their credit repair battles. One possible
semantic solution I've recommended... Take a validation letter, substitute the
word "verify" for "validate" and substitute references to the "FDCPA" with
references to the "FCBA" and fire them off. Whichever position appeals to you,
you should know that sending a stock validation letter to an original creditor does
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not abridge your rights as a consumer in any way. So, for example, if you send
the "wrong" letter, perhaps the OC will write you back and say, "The FDCPA
does not pertain to us. Thank you. Now go pay the people to whom we sold the
debt." What they can't do is slap the cuffs on you for daring to ask for information
about the alleged debt. The debates almost get political, and I'll dare not make a
claim regarding "what's best" because many well-informed people I respect
disagree with each other. My goal tonight: at least beginners who read this will
perhaps now better understand what the argument is about generally when they
come across it here or elsewhere.
QUICK CROA DISCLAIMER: I am not an attorney, and this is not legal advice.
Second, never misrepresent your situation when sending letters to anyone for
any purpose.
Now... on to HIPAA This requires more homework. (Sorry, but there's no way
around it.) Search the board for the term "HIPAA". I especially appreciate all of
WhyChat's comments and advise regarding how to use this statute. In a
nutshell, no medical provider wants to entertain the possibility that their
credit bureau report has violated your federal privacy rights. That simple but
lovely concept defines the approach. :) The irony is that you could try that same
intervention in 4 or 5 months, and it might work. Of course, by that time, a bureau
dispute may have done the job. It's all about persistence. Clouds, speaking as a
shrink, I can confirm your hypothesis. LOL! Now, I don't want to suggest that
every medical tradeline is necessarily appropriate for a HIPAA-based credit
repair intervention, so, again, do some research on the board before proceeding
in this regard. A number of approaches have been detailed regarding courthouse
notations... A detailed discussion of these would absolutely extend well beyond
the parameters of a beginner's seminar, but the boards contain many relevant
discussions worth exploring. At least you've marked your credit reports for those
tradelines which may be appropriate for one of these approaches. Finally, every
single item on a credit report merits FCRA verification by requesting same from a
credit bureau. That means that essentially every item on your reports will be
matched with at least two interventions... one sent to the bureaus... and one sent
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to whoever placed the item on the reports. In the next three sessions, we'll
detail FCRA (bureau-directed), FCBA (OC-directed), and FDCPA (CA-directed)
approaches in more detail. Such discussions will also include at certain
points what some term "the one-two punch"... an approach which leverages
both bureau-directed and creditor-directed interventions in tandem in order
to effect a particular result. Stay tuned.
Finally, let me move to the last section of tonight's syllabus which is really just a
simple reminder... You really are your own guru. Or at least I hope you eventually
will be. The more educated you become to credit repair, the more you'll find
yourself entering into the many excellent debates regarding law, approaches,
philosophy, and even attitude. Perhaps there is a right answer, or perhaps every
wizened old-timer has a piece of the truth. Ultimately, the more you know, the
better you'll be able to decide how YOU feel about any number of controversial
issues. And with that, I hope somebody new here feels MORE EMPOWERED to
dig into their reports in a SYSTEMATIC WAY... and then do some co-curricular
RESEARCH on the boards to learn more about the various interventions you've
designated. Now, on that note, it's time to end... I'll look forward to seeing you in
two weeks when we talk more about FCRA interventions you can employ with
the bureaus. We'll also excerpt actual letters in the next few sessions, but don't
wait for that... Delve into the boards now and wear out that SEARCH button! :)
tell me... well, she can still ask the OC to document that they have crossed every
t and dotted every i you can pester a paid OC like crazy without lying until they
are just sick of you One thing I like to say to folks... NO LAW LIMITS YOUR
NUISANCE (Unless you get violent or threatening... lol) So have at them.
Eventually they'll wonder if it's worth it to report that 60 day late tradeline.
Breeze hit it on the nose. well... See you in two weeks. :) I hope this helps
somebody at some point! Thank you too. :) on to life get those markers!
END CREDIT 104
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LESSON FIVE TRANSCRIPT
CREDIT 105: FCRA Street Fighting, 11/3/2005
Tonight we examine what is obviously a very important component of anybody's
credit repair campaign -- the credit bureau dispute. I didn't want to give the wrong
impression that credit repair was mostly about credit bureau disputes... Lots of
people believe that, but I don't. I'll mention why in a minute for those who are
mystified by that, LOL! For the first four sessions, I mentioned the Creditboards
site owners for all they do to keep this site up and running, but I'm going to do
something different for the second four sessions. Tonight I'm going to thank the
owners of other sites for all they do. Actually, for the next four sessions I'd like to
recognize those hard-working (and heretofore thankless) Creditboards Forum
Leads and Mods... Can we have a rousing round of applause for (in alphabetical
order) cotterpin, CramItCCCAs, fla-tan, HDAlex, MarvBear, rigirl, TeeSharice,
and TxQuiltGirl? (Did I leave anybody out??? ...or include somebody who'd
rather not be included anymore?... If yes, I'll correct that on the transcript, LOL!)
Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the previous sessions
-3-- FCRA overview
-4-- About disputing
-5-- Types of disputes
-6-- About inquiries
-7-- Expectations
Well, on that note we'll dive into tonight's material. In the second session we
began to describe the various components that comprise the FCRA. Now, there
are entire multi-day seminars devoted to the topic. Lawyers pursuing CEUs
attend those... We obviously can only skim the surface... But what I'd like to do is
highlight those things that may be of particular interest (AND HELP) to you. CEU
= continuing education unit... In most states, lawyers and other professionals
have to engage in a certain number of hours of continuing education in order to
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retain their licenses to practice. The Fair Credit Reporting Act of 1971 ...
accorded all of us some basic rights regarding what credit bureaus said about us.
Before that time, credit bureaus engaged in some very questionable activities.
For example... The company that became Equifax began life as the "Retail Credit
Company" in Atlanta, Georgia. That was the old Atlanta credit bureau. Retail
Credit grew and became the primary bureau in the southeast, and they had a
snugly relationship with Welcome Wagon. Does anybody remember the
Welcome Wagon ladies (and they were almost always women)? Well... Some do,
some don't... you'd move into a neighborhood and a couple of very friendly
women would come to the door with a little basket of goodies... coupons, info,
etc. and welcome you to the fair city. They would then make careful notes about
the family. Did it seem upstanding? Did anybody smell of alcohol?
What color was the family? (I kid you not.) This kind of data was then transmitted
back to headquarters... And the good old Retail Credit Company would include
stuff like that on your credit report. Oh... another one...Was there a man in the
house? (Families not headed by a male were considered by some bankers to be
less creditworthy and more risky.) Some of the abuses were essentially erased
by the civil rights legislation of the 1960s. The Civil Rights Act in particular erased
some of that, but some of the abuses continued. By the late 1960s there was an
uproar, and Congress finally passed the FCRA in order to help all of us. For the
first time, consumers are able to actually take a look at their credit reports!
Believe it or not, before that time, ordinary folks couldn't even take a look. There
were no restrictions upon WHO could actually pay the credit bureau to see your
information. And so on... In 1971 the FCRA took effect. And the Retail Credit
Company changed its name, Equifax. It was a nice break from the abusive past.
The smaller bureaus like that... For example, CBK in Knoxville, TN was bought
by Equifax In other parts of the country, other large bureaus consolidated...The
old Chicago bureau... The Credit Bureau of Cook County... became TransUnion
and gobbled up every other bureau in sight. Similarly two other large regional
bureaus combined to create Experian. Nobody crowned these companies with an
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official tag. TRW was one of the two companies that became Experian. Ok,
enough history...
The FCRA...
1) Ensures access to credit reports.
2) Regulates who has "permissable purpose" to acquire a consumer's report.
(in other words, gives YOU certain rights about who puts inquiries on your
reports)
3) Limits how long information can be reported. (generally 7 years for regular
tradelines and 10 years for bankruptcy-related ones)
4) Details how a CRA must handle disputes (more about that in a second)
And the recent amendment to the FCRA... FACTA...even gives us all the right to
free reports from each bureau once a year. Typically... You'll see old-timers give
some initial advice to consumers BEFORE they start disputing with credit
bureaus.
1) Opt-out. (In other words, let the bureaus know you aren't open to promotional
advertisements and offers.) and
2) Dispute multiple names and addresses that may appear on your report.
So you pick one and dispute the others... If your name is Robert Sheldon Poole...
you may have R.S. Poole on the reports as well as Bob Poole and a half dozen
others. Now... does anybody know what the rationale is for OPTING-OUT (other
than offers can be a nuisance)? Well, those may be reasons... But some people
believe this... Since the bureaus are engaged in the business of buying and
selling information about us... those of us whose reports are in OPT-OUT status
are less valuable... and therefore what appears on our reports just doesn't matter
as much... so... (and I'm not sure I subscribe to this, but I'm not sure I don't
either) Disputes from those of us who've opted-out may be easier to accept...
than from those whose reports are juicier. Again, I don't know if that's just a
bunch of crap or not. BUT Some folks I respect here believe that mightily and
seem to have anecdotal evidence in support of that belief. I know some people
here must have wondered, "Why in the hades are they suggesting I opt-out all
the time, lol?" "I like junk mail, after all." Etc. LOL! Well, that's the reason. LOL,
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good enough, Now... About the second reason... Anybody know the credit repair
rationale for disputing multiple names and addresses? Actually yes. Again, some
folks believe that the automated systems in place verify one data point or
another. The fewer bits on the report, PERHAPS the hard to verify. So... Very
smart people on both sides of the discussion sometimes debate this. I'm not
going to take a side...(Not because I'm afraid to take sides, LOL!) Rather, I'm just
not sure. It seems reasonable. But we don't know for sure. Some folks swear by
the advice, and frankly, extra names and addresses are probably the easiest
thing to