The Power of the Goodwill Letter

When I inform my clients that I am going to write a letter of goodwill asking their creditor to erase negative items reporting, I get 1 of 2 reactions:

A: I already asked and they said No, or
B. And I’m paying you for this?

The latter is always entertaining. I have had a decent amount of success with goodwill letters; it’s a low risk, high return approach to removing derogatory information from your credit reports. I've had items from Sallie Mae, Chase, Capital One, Barclay and plenty of others on both revolving and installment accounts using this method. As with anything, they are not guaranteed. But do give it a try!

Here are a few tips to write your own.

The most important thing to remember is that you are asking for a favor; thus goodwill letters should be a ‘Please Baby Baby Please!’ type of letter rather than ‘Delete Immediately Or I Will Sue!’ type of letter. They should go out to Collection Agencies and Original Creditors only; credit bureaus and public record officials will laugh at you hysterically if you send them a goodwill letter. Remember to be pleasant, personable, and to state the specific change(s) you would like them to make to their account listed on your credit report. Again, you are asking for a favor.

What type of accounts are best suited for the goodwill method?
Late Payments on Open and Closed Accounts, Paid Collections, Paid Charge-Offs.

If you haven’t brought the account current, settled or paid the account off in full you can forget it. The idea that a company will remove or update an item when they still haven’t gotten their money is pretty much not gonna happen. Has it been done? I've heard it has but I sure haven’t experienced it!

Writing the Letter
The best letters are those that make the person reading it feel good about deleting or updating an item for you. They want to help you succeed in improving your finances, they want to ease your woes by giving you a bit of good news among your sea of bad events; they want to believe that you've learned your lesson and shouldn't suffer for the next 7 years for your past money mishaps.

When forming your letter, be sure to include the account number, your name and the address that you had when the account was open (if you have it) so that they can easily look up your account. Obviously, if the account is still open this is a given. And please do not use a template found on the Internet. How sincere are you being by using the copy and paste functions on your keyboard?

Customize the letter; personalize it; I've even had clients include a picture of their kids and write how they want to purchase a home for them but the negative reporting is hindering them from obtaining a loan. If you need a general idea of how to formalize your letter; do study the template; but nothing else. DO NOT COPY AND PASTE!

Write of how you got into this predicament: Death in the family, divorce, job loss, medical illness (yours or immediate family member), disability, etc. Let them know that you didn’t willfully let the account go into arrears and the steps you took to try and avoid the late payments, charge off, etc. Also detail what steps you are taking now to ensure that it won’t happen again (especially important if the account is still open).

Lastly, inform them of what you want them to do – “remove the late payments”; “remove the charge off”; “delete the collection”, “change the remarks”; etc.

How to send the letter?
The letter should go out regular mail or first class mail; no need for certified mail as it appears too formal and technical; you’re going for a more personal feel. I’ve had a good deal of success doing the following:

1. Calling and ask. The customer service rep on the phone will typically say No, which is why you need to escalate the call to someone who does have the authority to make that decision.

2. If denied, mail a letter personally addressing it to someone higher than the person I originally spoke with (this is usually available on their website or by calling and asking; press releases are very informative as well),

3. Wait 2-4 weeks for a response, follow up with an email (again press releases or planetfeedback.com) or telephone call; fax works as well.

By now I have most certainly gotten my yay or nay; but please believe 30-60 days later I’m asking again.

Who to address the letter to?
With the initial letter, I’ve addressed the letter to a specific person (president, customer service manager, CFO, etc) and with a general “Dear Sir/Madam” salutation. Both work, neither sticks out as having more success than the other so whatever works for you

The only time I’ve addressed the letter to a specific person is when I was denied by a supervisor and/or manager and needed to escalate my request to a higher executive. Now, that works more than Dear Sir/Madam.

NOTE: If you are starting with a letter rather than a phone call, then you definitely want to do some research on who the Senior Agents, Supervisors, or Managers are over the department. If your account is closed, the regular customer service department may no longer have your account. The easiest way to do this is to call. Your other options include looking on their website, their company directory, or researching via Google.

Typical Response?
I will usually get a letter of response with either an acceptance or denial. In some cases I don’t get a response at all, the deletion or update will just show up on the credit monitoring service.

One denial that’s pretty common is “It is illegal for us to report untrue information to the credit bureaus”. I completely ignore this, any information furnished to the bureaus are completely voluntary; there is no law stating a company has to report anything to the credit bureaus about us. So, if they decide to remove negative information early they are completely within their legal rights to do so, and we are within our legal right to make the request.

It is important for me to say that you be very specific on what you want them to do. I have heard of creditors deleting information that needed to be updated, resulting in scores lowering due to the age of the account and a drop in credit utilization.

Overall, the worst thing that could happen is a big fat NO. But don’t fret, be patient, and just keep trying!.

Hope this helps!

Think Before You Open That New Credit Card Account

December marked the spark of thousands of new store credit cards opening up in addition to Bank Credit Cards as all types of temporary incentives were given to woo consumers - from 10% off; 0% interest to cash back rewards. Did you fall victim to this as well?  

It's often said that you should not open credit accounts unless you need them; don't do it just to build a credit score.

I disagree with that. You can't get the credit accounts you 'need' if you fail to open up credit accounts for the sole purpose of just building credit. Can you buy a house without some form of credit already established? A car? At what interest rate/terms? I DO agree that you should not open credit unless you need it and that includes building credit. I DO agree that you should not open new credit just to get a discount.

However.... before you open up that new credit account, weigh the benefits/consequences:

10% of your score is based on New Credit - that's mostly negatively, not positive. FICO weighs:

• How many new accounts you've opened in the past 6-12mths; 
• How many new accounts of the same type you have opened (so if you have too many new credit card accounts, for example, this can be viewed negatively); 
• How many inquiries you've had in the past 12mths; and how long it's been since you've opened up any new accounts. 
• Payments made on an account bringing it out of a negative status to positive (This positively impacts this section of your score) 

So, when you apply for a new credit account; the first thing that happens is a hard inquiry - that's negative. If approved, you'll have a new account on your report that will affect the first bullet above, New accounts opened in the past 6-12 months - that's negative. If you already have too many accounts of the same type - that's a negative. Another negative is something called the Average Age of Accounts; this is apart of the 15% calculation of your score called Length of Credit History. One of the major things it takes into consideration is the average of older accounts and newer accounts; so if you have a pretty long history; when new accounts are opened the Age of your Accounts are shortened.

So, what's positive about opening new credit?

Well, your Debt Utilization is increased. Debt utilization is apart of the Amount Owed section of your score, which makes up 30% of your score. When you have more available credit than you have used (amount you have spent) credit; that is a positive. Just looking at the percentages, 30% is much higher than 10%, right? So, obviously if you can benefit from having more available credit, then it's worth the temporary ding in your credit score. To add; once you start paying on time over the next 6-12 months you'll see a sizable boost in the Payment History section of your score as well; which makes up 35% of your overall score.

Therefore, if you open up new credit the negative impact will be short lived as you keep your balances low and pay on time over the next 6-12 months. If, however, you open a new account and spend over 30% of the available credit and make late payments; your score will tank significantly. Credit is based primarily on our habits - 65% of our score takes into consideration our paying habits and how much we owe nn our credit; revolving accounts (credit cards) in particular.

Hope this helps!

If A Debt Is Written Off, Do I Still Have To Pay It?

The term ‘written off’ can be misleading, especially if both the terms ‘charged off’ and ‘written off’ appear in the same credit trade line on your credit report. So, it’s good to know the difference, as the two are often used interchangeably.

A charged off account means that the creditor has removed the debt from their accounts receivables and charged it off as a loss due to lack of payment; this usually happens between 90-180 days of non-payment depending on the type of account. A charge off reduces a creditor’s earnings and their tax liability, which is the point of reclassifying the debt so that the income the lender gets taxed on is exclusive of uncollectable debt. The account is closed for future charges, however the debt still remains due. Charging off the account doesn’t mean the creditor doesn’t expect to ever get paid, it just means they haven’t been able to collect payment as of the date of the charge off. This is why the balance owed on the account will still reflect on your credit report.

After the account has been charged off the creditor has a few options:

· Transfer the account over to their internal collections department, if applicable

· Assign it to an outside collection agency, but keep ownership of the debt

· Sell the debt to a debt buyer/collection agency

A debt that has been written off can mean one of 3 things; A) it has been forgiven, B) the value has been reduced, C) the profits have been reduced.

The only way to truly know if a debt has been forgiven is if you receive a 1099, if you haven’t received one don’t be afraid to ask for it. You’ll have to potentially pay taxes on the debt, but it’s a heck of a lot cheaper than having to pay the debt in full or having to go through litigation for a money judgment proceeding.

In regards to options B and C; a credit card debt, auto loan, mortgage are examples of assets to a creditor. So if you are in arrears and the creditor feels they won’t be able to collect on the entire debt, they’ll write off all or a portion of it in order to reduce the value of both the company and the profits so that they can get a tax reduction, or because they have paid taxes on the profit already and want to get their money back.

Now, looking at the two definitions they look the same right? Both are for accounting purposes only. The difference is that when an account is charged off it means ‘not collected/uncollectable’ and a write off means ‘reduction/loss of value/profit’.

And interestingly enough, if you have not gotten a 1099, a written off debt can still be collected and sold. It does not matter if a debt is written off or charged off you are still liable for payment of the debt. If the debt has been canceled (1099) after it has been written off or charged off, you may be liable for taxes for the unpaid amount.                                   
                       
There are things to consider prior to deciding if you’re going to pay a debt or not and a ‘written off’ or ‘charged off’ status is not one of them.

State law mandates how long a consumer can be held liable to pay a debt. Each state sets their own time limit that a creditor has to sue a consumer for a judgment for repayment. Once that time limit has expired, a consumer can use the expiration of their state’s statute of limitations (SOL) as a defense against most collection activities.

It’s important that you do not do anything to restart this time frame. Most activities include making a payment or agreeing in writing or verbally that you are responsible for the debt. So, if a charged/written off debt is close to being expired due to statute of limitations, I’d suggest not making a payment.

Something else you want to look at are the remarks/status. Is it still with the original creditor? Has it been transferred? Sold? Is a collection agency listing the same debt? The last thing you want to do is make a payment to the wrong entity.

And finally, please take into consideration that paying a debt that is written off, charged off, or in collections will do absolutely nothing for your credit score. The damage of the status (charge/written off; collections) has already been done. Having ‘Paid’ in front of the negative status will do absolutely nothing to improve your credit score.

Hope this helps!

If I Know I Owe The Original Creditor, Why Ask The Collection Agency For Validation?

January 1st marks a fresh start to new beginnings. Financial goals are often made of improving our credit and improving our financial health. So... we embark on an action plan to get our credit together! 

Funny thing is; we're not the only ones making strides to increase our bottom line; our creditors are too. The beginning of the year is the time we'll start to receive all types of phone calls, and dunning letters demanding payment, offering 50% or more off settlements and requests to call in to discuss payment arrangements. Most of these communications will come from collection agencies, and with tax time coming up; being able to just pay them off and be done with them seems sooooo appealing, right? You call, pay them and feel so accomplished! Good credit in no time!

WRONG!  This way of thinking is so common and so wrong! But if you feel this way, this is not an attempt to poke fun because; I felt the same way too! Gosh, I can't imagine the amount of money I've lost paying creditors - collection agencies - when I didn't have to!

I say it all the time; Financial Illiteracy is EX-PEN-SIVE! So, let's take a moment to break this down and educate ourselves.

When you receive any communication for a debt the first thing you should do is check your state's statute of limitations. Each state has a specific amount of time a creditor has to enforce a debt through the court system. This basically means suing you for a judgment. They can still attempt to collect but if someone can't MAKE you pay; why pay them? That money can be applied towards more current debts.

The next thing you want to do is look up the company that sent the letter. I do this for 2 reasons. A. I want to see who I'm dealing with. Are they legit, are they local, are they 'sue happy'; are they known to give steep reductions on debt; B. To see if there have been any cases brought against them for violations of the Fair Debt Collection Practices Act already, this lets me know what to look out for in case I can sue them as well. If your debt is NOT outside of your state's statute of limitations it's good to know how 'wolf-like' the company you're dealing with are.

Then, you write a Debt Validation Letter. This is where I get the most hesitation. "I know I owe the debt; I know the amount is right, why do I need to validate; can't I just get it over with and pay already?!" No you can't (I say this with love).

Asking a collection agency to validate (prove) the debt is your legal right. Look right here on the FTC's website for the Fair Debt Collection Practices Act and click on 809: Validation of debts. It's all there! Exercise your right.

The number one reason you want to ask for validation is to see if the collection agency is legit. Go ahead and Google Fake, Phony, Scam AND Collection Agency. You will see a ton of cases pop up of consumers who've been duped, companies that have been fined and individuals who have been prosecuted. You cannot take the phone call or letter at face value. You may wonder "Well if they were a phony collector how would they know my name, my debts and the exact amount I owe?"  Well, considering the number of private companies, financial institutions and government entities that have been hacked in the past 5 years it's really not that difficult. To generate a fraudulent letter using a legit company's name and logo, directing you to another 'customer service' center, using data they either illegally purchased from a hacked database, or that they have personally hacked themselves is pretty easy. Validation Protects You.

Another reason you want to validate is to see if the collection agency truly represents the original creditor. Just because some random stranger calls you up claiming to represent a company and now wants you to pay them, doesn't mean they're telling the truth. This is not to say that collection agencies lie (although a lot of them do), but that debt can transfer to many hands, especially a bad debt, you want to ensure the collection agency has legally been assigned your debt. How do you do this? Ask for proof. Request a copy of an agreement or a statement from an officer from the original company, notarized and on company letter heard; again, protect yourself. If the debt has been purchased you want proof of that too.

Another item you want to validate is the amount due. Just because the amount 'looks' right does not mean it is right. Ask how they got to that amount, even if it matches the final bill issued by the original creditor; heck how did they get to that amount? Remember validation doesn't just ask for proof of who owns the debt but also how much is truly owed. This is because fees and interest have been added and it's good to know how much. Think about it, if you are going to offer a settlement; wouldn't you want to know how much of that amount due is principal, interest and fees? I negotiate off of principal all day long. Your added fees are irrelevant to me. Also, if the debt was purchased they bought it for significantly lower than what they're asking you for; YES this includes the settlement offer as well. If they are offering you 50% off how much do you think they purchased it for? Further, I can't tell you how many times my clients have gone to the original creditor on assigned debts and have gotten a better deal once the collection agency's fee, creditor's added fees/interest were deducted. So, ask for a full accounting of how your account arrived at the balance that is showing.

Hopefully this is reason enough for you to request a debt validation rather than just paying a debt.  I go so much deeper than this in my workshops because collection agencies are so crafty these days!  Attorneys will try to sue you when they receive this letter, knowing they are legally required to validate the debt prior to seeking any further collection activity.  They will sell the invalidated debt to another collection agency to avoid providing you with information that they more than likely do not have.  They will give you partial documents such as original statements from the original creditor without giving you proof that they were assigned or own the debt and you are required to pay them.  

Here's something I do per the FCDPA.  I say I am DISPUTING the debt and require validation rather than just saying I want to validate the debt.  Why?  Because if I am disputing the validity of the debt they have to provide me with documents proving otherwise.  I have so many of my spiritual clients that feel badly about this, but you are NOT lying.  You entered into an agreement with the original creditor right?  Did you make an agreement with ABYZ Collection Company?  NO.  So, ask that they prove they have the legal right to collect form you.  

Now, I'll be lying if I stated that many professionals in my industry don't send these letters to send collection agencies scrambling away with their tails between their legs.  This is because when debt transfers hand documentation gets lost and they are often not able to validate.  That works to your advantage.  Per the FDCPA (remember I asked you to read it?) it states all collection activity must STOP until they are able to validate.  So, you just got away from paying this invalidated debt and can put that money towards other efforts that will help you meet your goals this year :).

Many representatives in the debt collection industry HATE validation letters and state they are stupid, they are a trick to avoid your responsibilities, or they single you out for more aggressive collection activity.  That's bull.  Consumers are the protected class, not the debt collection agency, so it is their responsibility to ensure they have all the legal documentation that proves we should be paying them.  As far as more aggressive collection activities, if you don't respond, that's far more worst than asking for validation; either way you can get sued. So what would they recommend?  That you just pay any ole body?  That's even more stupid. There's already case law that has found that a collector cannot sue without providing the basic information I described above.  So, if they are not able to validate and you still want to pay, can you?  Absolutely, it's your personal choice. If it is within your state's statute of limitations, yes; if it's past NO!  If they are offering a real deal and agree to remove it from your credit report, YES.  

Hope this helps!

And if you're in the Chicago area and would love to be financially empowered by learning more about your legal RIGHTS, contact me about our Credit Power Workshops starting February 6, 2015. It is NOT to be missed :).  See you there!

Bonus:  Sample Validation Dispute Letter

Date

Your Name
Your Address

Collection Agency
Collection Agency Address

Re: Acct # XXXX-XXXX-XXXX-XXXX

To Whom It May Concern,

I am sending this letter to you in response to a notice I received from you on (date of letter), (adjust if you found out about them by reviewing your credit report). Be advised this is not a refusal to pay, but a notice that your claim is disputed and validation is requested.

Under the Fair Debt collection Practices Act (FDCPA), I have the right to request validation of the debt you say I owe you. I am requesting proof that I am indeed the party you are asking to pay this debt, and there is some contractual obligation that is binding on me to pay this debt.

This is NOT a request for “verification” or proof of my mailing address, but a request for VALIDATION made pursuant to 15 USC 1692g Sec. 809 (b) of the FDCPA. I respectfully request that your offices provide me with competent evidence that I have any legal obligation to pay you.

At this time I will also inform you that if your offices have or continue to report invalidated information to any of the three major credit bureaus (Equifax, Experian, TransUnion), this action might constitute fraud under both federal and state laws. Due to this fact, if any negative mark is found or continues to report on any of my credit reports by your company or the company you represent, I will not hesitate in bringing legal action against you and your client for the following:


Violation of the Fair Debt Collection Practices Act
Defamation of Character

I am sure your legal staff will agree that non-compliance with this request could put your company in serious legal trouble with the FTC and other state or federal agencies.

If your offices are able to provide the proper documentation as requested in the following declaration, I will require 30 days to investigate this information and during such time all collection activity must cease and desist. Also, during this validation period, if any action is taken which could be considered detrimental to any of my credit reports, I will consult with legal counsel for suit. This includes any listing of any information to a credit-reporting repository that could be inaccurate or invalidated. If your offices fail to respond to this validation request within 30 days from the date of your receipt, all references to this account must be deleted and completely removed from my credit file and a copy of such deletion request shall be sent to me immediately.

It would be advisable that you and your client assure that your records are in order before I am forced to take legal action.
CREDITOR/DEBT COLLECTOR DECLARATION

Please provide the following:

• Agreement with your client that grants you the authority to collect on this alleged debt.
• Agreement that bears the signature of the alleged debtor wherein he/she agreed to pay the creditor.
• Any insurance claims been made by any creditor regarding this account.
• Any Judgments obtained by any creditor regarding this account.
• Name and address of alleged creditor.
• Name on file of alleged debtor.
• Alleged account number.
• Address on file for alleged debtor.
• Amount of alleged debt.
• Date this alleged debt became payable.
• Date of original charge off or delinquency.
• Verification that this debt was assigned or sold to collector.
• Complete accounting of alleged debt.
• Commission for debt collector if collection efforts are successful.

Please provide the name and address of the bonding agent for «COLLECTIONAGENCY» in case legal action becomes necessary.

Your claim cannot and WILL NOT be considered if any portion of the above is not completed and returned with copies of all requested documents. This is a request for validation made pursuant to the Fair Debt Collection Practices Act. Please allow 30 days for processing after receive this information back.
Best Regards


[Your Signature]


cc Federal Trade Commission

Repairing Your Credit? START HERE!

I've been asked several times about where to get started in the credit repair process.  It’s really about organization prior to getting started really, and knowing your consumer rights so that you can know what you’re asking for and what you should expect to receive in return. 

So, let’s get organized!  Develop a filing system for each credit bureau. Label each one (Equifax/Experian/Transunion). 

Each credit bureau folder will have a copy of your credit report inside of it as well as a copy of each dispute letter you've sent to that bureau & the certified return receipt/green card (if applicable).  Each folder should have a tracking sheet stapled to it that tracks:

Type of Letter	Date Sent	Items Disputed	Response	Notes
EX: Verification	11/30/14	Walmart, Cap One, Midland Funding	Walmart – Deleted Cap One- Verified Midland - Updated	Send Method of Verification for Cap One, send Midland a Validation letter

If you are disputing anything directly with an original creditor or a collection agency; you can designate a separate folder for them as well.

It’s also important to KNOW YOUR RIGHTS!  You are using consumer rights laws to dispute information in your credit file to ensure that every single credit trade line is 100% accurate, 100% verifiable, and 100% timely.

Here are the links to review the rights/laws used the most throughout the process: 

Fair Credit Reporting Act (FCRA): http://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-credit-reporting-act

Fair Debt Collection Practices Act (FDCPA)
http://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text

Wage Garnishment Laws by State
http://www.small-claims-courts.com/Wage-Garnishment-Laws.html

Before you even begin selecting a debt to dispute; know what to send to whom.  We hear ‘verification letters’ and ‘validation letters’ and they often get misconstrued so let’s clear that up.

Verification letters are sent to credit bureaus only.  This is based off of the FCRA section 611 Section a(1)(A).  Validation letters are sent to collection agencies pursuant to the FDCPA section 809.  Investigative letters are sent to original creditors AFTER the credit bureaus have verified the debt as valid based off of Section 623(a)(8) of the FCRA.  You would send a letter to the original credit asking them to conduct an investigation to ensure that the item being reported on your credit is accurate.

Now, we decide what to dispute. If the item is truly reporting inaccurately, then it’s fair game.  If you’re disputing your negative info to determine if it is verifiable, please realize that not every negative item is worth going after.  Check your statute of limitations for your state. This is the time frame that your state allows a creditor to sue you to enforce a debt via a judgment for wage garnishment, bank levy etc.  You still owe the debt; but they are not able to enforce payment on the debt via a lawsuit.  Here are statute of limitations by state:

State	Oral	Written		Promissory		Open-ended Accounts		State Statute: Open Accounts
AL	6		6		6		3	§6.2.37
AR	5		5		5		3	§4-3-118
AK	6		6		3		3	§09.10.053
AZ	3		6		6		3	HB 2412
CA	2		4		4		4	§337
CO	6		6		6		3	§13-80-103.5
CT	3		6		6		6	Chapter 926 Sec. 52-576
DE	3		3		3		4	Title 10 Sec.8106
DC	3		3		3		3	§12-301
FL	4		5		5		4	§95.11
GA	4		6		6		4**	§9-3-25
HI	6		6		6		6	HRS 657-1(4)
IA	5		10		5		5	§614.1.5
ID	4		5		5		4	§5-216
IL	5		10		10		5 or 10 #	735 ILCS 5/13-206
IN	6		10		10		6	§34-11-2-9
KS	3		5		5		3	§60-512
KY	5		15		15		5	§413.120 & 413.090
LA	10		10		10		3	§2-3494-4
ME	6		6		6		6	§14-205-752
MD	3		3		6		3	§5-101
MA	6		6		6		6	§260-2
MI	6		6		6		6	§600.5807.8
MN	6		6		6		6	§541.05
MO	5		10		10		5	§516.120
MS	3		3		3		3	§15-1-29
MT	3		8		8		5	22-2-207
NC	3		3		5		4	§1-52.1
ND	6		6		6		6	28-01-16
NE	4		5		5		4	§25-206
NH	3		3		6		3	382-A:3-118
NJ	6		6		6		6	2A:14-1
NM	4		6		6		4	§37-1-4
NV	4		6		3		4	NRS 11.190
NY	6		6		6		6	§2-213
OH	6		15		15		6	§2305.07
OK	3		5		5		3	§12-95A(1), (2)
OR	6		6		6		6	§12.08
PA	4		6		4		6	42 Pa. C.S.5525(a)
RI	10		10		6		4	§6A-2-725
SC	3		3		3		3	SEC 15-3-530
SD	6		6		6		6	15-2-13
TN	6		4		6		6	28-3-109
TX	4		4		4		4	§16.004
UT	4		6		6		4	78-12-25
VA	3		6		6		3	8.01-246
VT	6		6		5		4	§9A-3-118
WA	3		6		6		3	4.16.040
WI	6		6		10		6	893.43
WV	5		15		6		4	§55-2-6
WY	8		10		10		8	§1-3-105

**In GA credit cards have a 6yrs SOL                                 #In IL, 5yrs if Oral; 10yrs if Written

(For more info visit: http://protectingconsumerrights.com/debt-collection-problems/statute-of-limitations-by-state/)

So, now that you have your rights; let’s get to analyzing those reports. I have another post on how to obtain and read your credit report here: http://mnhcreditsolutions.blogspot.com/2014/08/how-to-get-read-understand-your-credit.html

Step 1: Opt out of prescreened offers; no sense in giving access to your report without your permission.  Go to www.optoutprescreen.com

Step 2:  Review all of your personal information to ensure it’s all reporting accurately.  Your name addresses, etc.  Although this has no impact on your score; all of this info was reported by the creditor when they supplied your information to the bureaus.  If you see anything wrong; have it updated.  NOTE:  If my clients have moved often, I always have them remove older addresses for purposes of identity theft, so I often suggest this as the first letter that goes out to the bureaus; asking for older addresses to be removed.

Step 3:  Make a list of the items reporting negatively on your credit.  Organize them by type:

Credit Inquiries, Late Payments, Past Due Payments, Collections, Court Judgments, Loan default, Repossession, Foreclosure, Bankruptcy, etc

Make sure to notate the date of last activity, recording date, closed date, and date of last payment.

Date of last activity is the last activity on the account; in some bureau reports it’s the date of last payment; in others it’s truly the last date any activity was reported.  The reporting date lets you know the last time the creditor supplied or reported information about that line item to the bureaus.  Closed date is when the account was closed, and date of last payment is self-explanatory. This lets you know what date to start counting from to be removed from both your credit report and when your state’s statute of limitations begin.

Now let’s go over the easier items to remove:  Outdated accounts; Late payments on closed accounts 3+ years old; Paid accounts that used to be late; Settled charged-off accounts; Authorized user accounts; Accounts that don’t belong to you; Verifiable inaccuracies.

Harder to remove accounts:  Public Records, Unpaid Judgments, Unpaid Tax Liens, Child Support, New negative item: New Foreclosures, New Repossessions, New Late Payments, New Bankruptcies.

I will state that focusing on older items will get them removed; but it will not significantly boost your score because… well its old!  Negative debts fall under your Payment History, which is 35% of your score.

If we were to break down how the age of the debt factors into that 35% it would be:

Debts that are 0-12mths old affect 40% of that 35% Payment History

Debts that are 12-24mths old affect 30% of that 35% Payment History

Debts that are 24-36mths old affect 20% of that 35% Payment History

Debts that are 36-48mths old affect 10% of that 35% Payment History

Debts older than 4yrs have very little to no effect on your Payment History.

This is why a lot of financial experts state that negotiating payment for deletion is key for newer debts. It works 40-60% of the time and it does give your score a nice little boost and works primarily for collections.  For original creditors your negotiations would be based on getting the credit trade line updated to ‘Paid As Agreed’ or ‘Paid In Full’ taking off the charge offs and/or late payment statuses, which will give your score a boost.  If that fails; and you want to pay them just to get them out your hair; pay them; take the hit to your credit (paid charge offs and paid collections look better than unpaid to lenders) and then dispute with the credit bureaus for a deletion. If the account is a current creditor but with late payments on it you can rely on your prior positive payment history with them; your current relationship with them, or inform them of what you were going through to cause the last payments and how you have rectified the situation; asking them to delete the late payments as a courtesy – this is called a Goodwill Letter.

What are some common reasons you can use to dispute:

Not mine

I have no record of being late on x/xx/xx date

Wrong Amount (balance, high limit, credit limit, charge off amount, or any other figure)

Wrong Date (Activity, Open, Payment, Filing date (public records))

Account number is wrong

Status is incorrect (not in charge off, not in collections, etc)

Original Creditor is wrong

The charge-off amount is wrong.            

Account is outdated

Past Statute of limitation for reporting

Never contracted with the company (another way of saying not mine)

Inaccurate/Incorrect

Most start out with ‘Not Mine’ and if it comes back as verified they start to attack the other items within the credit trade line.

Key points:

·         Letters to credit bureaus you can send regular mail, I recommend Certified Mail or First Class Mail; no return receipt necessary.

o   Attach a copy of your ID/ Utility Company with current address; SSN Card for Identity Purposes,

·         Letters sent to Collection Agencies/3^rd Party Debt Collectors should ALWAYS be sent Certified Mail Return Receipt, do not sign the letter; do not sign the letter; do not sign the letter!

·         Letters sent to Original Creditors (Investigative Letters, Goodwill Letters) should be sent Certified Mail Return Receipt

·         It can take several rounds of disputes to get an item removed from your credit report.  To re-dispute you have to give bureaus a new/different reason with each dispute. First one can be ‘Not Mine’; Second one can be ‘Wrong Status”; third one can be ‘I was Never Late” etc.  Keep track of the reason you used for each dispute in the notes section of your tracking form along with a copy of the dispute letter.

·         The best disputes are ones that follow the 1-2 PUNCH approach.  Namely you dispute with both the original creditor/collection agencies AND the bureaus.

·         Use your Consumer Rights Laws to your advantage!

·         BE PERSISTENT!

 Good luck! And of course, if you would like assistance, please feel free to email or call me.  I LOVE helping people improve their credit scores.  My letters are customized to the client and bring RESULTS!