Piggybacking–does it still work post FICO 08?

Several years ago I was on another one of my bad-credit-induced searches for ways to improve my FICO score. It was then when I first discovered the concept  known as “piggybacking.”

Technorati Tags: piggybacking,authorized user accounts,fico 08

Credit Piggybacking is essentially a matching service that connects people with a strong credit history, called “credit-lenders” to customers with poor credit scores who are willing to pay a price to boost their FICO score. The key to the piggybacking business is how authorized user accounts are incorporated into the FICO score calculation.

One company who sells these credit trade lines explains the method like this: “When one person is listed as an authorized user on someone else’s credit card- someone with a healthy credit rating. The authorized user does not typically use the card, know the account number, nor have access to any information about the primary user, but the credit history of that card appears on their credit report. When the new history appears in the authorized user’s credit reports, their credit score is immediately recalculated to show an increase as a result of the new card’s presence in the report.

While the authorized user does not receive the physical card or account number, they do receive the benefit of having that particular credit card’s entire credit history – limit, balance, payments – in essence “copied and pasted” onto their credit report, looking as though it were there the entire time. Having a higher FICO credit score means lower interest rates, easier loan approvals, higher credit limits and better terms for consumers.”

Being a critical thinker, I thought there must be a catch. So I started doing research on this phenomenon and soon found out that it was indeed a legitimate way of drastically increasing a person’s FICO score in very short period of time. I also found that this method had been around for awhile. In fact, by the time I found out about it the Fair Isaac Company- the company who created the FICO scoring system - was already in the process of changing their credit scoring algorithm to do away with piggybacking entirely. By the summer of 2007 the word was all over the Web that piggybacking would be a thing of the past by the end of the year.

Well, the end of ’07 came and went and credit repair companies were still advertising the use of authorized trade lines as a way to increase your credit score. I started checking credit repair blogs to see what people were saying and I got a mixed bag: some were saying au accounts were dead, others were saying they were still selling them successfully. This presented a major problem because I had no way of finding out who was right and who was wrong. And since purchasing a trade line or au account costs on average around 1500-2500 dollars I wasn’t about the take the risk without knowing the truth. With so much at stake, I was determined to get to the bottom of piggybacking so I started doing more research.

And a quick word about reading blogs to find information - please be aware that some of the opinions you read on a blog posted by an "average Joe" or even someone who might appear to know what they are talking about might be an "industry plant" getting paid by a large company in that particular industry to push public opinion in a direction that serves that company's best interest. Politics are everywhere - especially on blogs so don't believe everything you read. Do your own homework!

I soon found out that FICO 08 did not affect authorized user trade lines because the new Fair Isaac algorithm violated a section of the Equal Credit Opportunity Act. Fair Isaac’s president admitted this at a congressional hearing in July of 2008. But instead of revealing to this publicly, the Fair Isaac Company issued a press release indicating the exact opposite, thus starting all the internet rumors that piggybacking was no longer useful in increasing the FICO score.

Moreover, because of all the confusion regarding the new FICO algorithm, Experian, Equifax and Transunion decided to create their own credit scoring system to replace the embattled FICO. The new scoring system, “Vantage Score” was on its way to industry-wide acceptance until Fair Isaac brought a law suit against “the big three” for monopolizing their market share. 

 

More recently, I found a 2012 report from the Federal Trade Commission that stated unequivocally that purchasing trade lines is legal. According to Fair Isaac, they claim to have come up with a system that can distinguish authentic authorized users from those “gaming the system” – purchasing au accounts simply to boost their credit score.

Piggybacking is, as of this writing, still a viable, legitimate and legal method of increasing your FICO score, however, be aware that Fair Isaac has released it’s updated algorithm and many companies already are using it to determine a person’s credit worthiness. That being said, I have found no information on the Internet that indicates the new algorithm has had any significant effect upon credit repair companies that claim to sell au accounts.

Do you know your Credit Score?

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Let’s face it; times are tough on just about everyone these days. Housing prices may be down, but it takes stellar credit to purchase one because of the recent housing foreclosure crisis. The national unemployment rate is the highest it’s been in 30 years, millions of people can’t afford health care. The list goes on and on. We live in a buy now pay later society and it has finally started to catch up to most Americans. We are definitely in an economic recession, but that doesn’t mean we have to sit back and let it happen as if we were absolutely powerless. There are things we as consumers can do to manage our finances so this recession doesn’t have such a negative impact on our lives. Effectively managing one’s finances is more important than ever under this current economic recession. Knowing how to manage your money can make the difference between coming through the current economic storm unscathed, or loosing everything, or even worse, having to file for bankruptcy.




Over 82 million Americans live with poor credit scores. According to Office of Government Accountability, many consumers are aware of the basics of credit scores, but are not aware of the factors that can lead to a low or high score. Further, statistics show that most people with high FICO scores tend to know what’s contained their credit report, and they also tend to know what their FICO score actually is. The opposite is true for people with low credit scores. They tend not to know what’s in their credit report and generally do not know their FICO score. I do not claim to know why it is that way, and I am not here to judge anyone. I am writing this article to let people know how important, and easy it is to find out what’s contained in their credit reports and how to remove any information that might be inaccurate, incomplete or just plain wrong.



According to a study conducted by the research firm, US PIRG, almost 80 percent of Americans have mistakes on their credit reports. You read it right, almost 80 percent! Even further, one in every four credit reports contain erroneous information severe enough to cause the denial of credit or employment, not to mention having to pay higher insurance premiums, higher rental costs, and higher percentage rates for items such as automobile loans. For example, on a $300,000 mortgage loan, the difference in payments between a 620 FICO score and a 720 FICO score is over $70,000 over the life of a 30 year loan. These facts, taken together show a grim picture of the credit industry and clearly reveal the importance of knowing what the “big three” credit bureaus are “telling” business about your financial habits and history. What is most disturbing here is that some of the information they have on record in our consumer credit files is outright false!

What you can do?

As consumers, we have several weapons that can help us defend ourselves against the credit industry and the machinations of the “big three” credit bureaus. It is called the Fair Credit Reporting Act (FCRA). The Fair Credit Reporting Act is a United States federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information. Along with the Fair Debt Collection Practices Act (FDCPA), it forms the base of consumer credit rights in the United States. It was originally passed in 1970, and is enforced by the US Federal Trade Commission and private litigants. Knowing the pertinent sections of these laws is critical to anyone trying to repair their credit and must be referenced when dealing with the credit bureaus, collection agencies, and original creditors.

Add Seasoned Trade Lines to Improve Your Credit Score

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The 2007 recession created the housing crisis, historical levels of unemployment, and the stock-market crash on Wall Street. On Main Street, most people could not even relate to concepts like the Troubled Asset Recovery Program (TARP), or the National Economic Stabilization Act, but we could relate to not being able to pay our mortgage, or our car payment. For most people, losing a job usually has catastrophic effects upon their lives. There can be some severe results of losing a job; losing your home, losing your car, drastic change in lifestyle. Those material things can be replaced over a relatively short time period once a person finds work. However, what cannot be remedied in the short term by finding work is the damage done to a person’s credit rating. Once that damage is done, it can take years and years of work to regain your previous credit standing. And there are no guarantees that you won’t encounter difficulties repairing your credit as you will have to deal with greedy collection agencies, original creditors, and of course, “the big three” credit reporting agencies – Equifax, Exprerian, and TransUnion. We all know it’s a lot easier to lower your
FICO score than it is to raise it.

From a socio-economic perspective, it seems quite unfair that wrong-headed politics can drive the world’s strongest economy into the worst recession since the Great Depression, cause hundreds of thousands to lose their jobs, then hold them individually responsible for repairing their own credit when they weren’t responsible for what caused their credit score to tank in the first place.

If you are one of the many people who need to improve their credit score or repair their already bad credit, tapping seasoned trade lines is one of the strategies available in the market. A Trade line is any account included in your credit report; a mortgage, credit card, car loan, computer, and even furniture payments. Any account with a balance and perfect payment history over a long period of time is called seasoned trade line. This concept is also known as piggybacking. Historically, this practice was conducted by business investors to improve their credit scores. Now this tool is being offered to the public.

Using seasoned trade lines to boost credit score has been subject to numerous controversies. Although it is a considered technically legal, many financial experts consider this credit repair trick very unethical. Recently, several cities across United States and the Federal Trade Commission are scrutinizing this unconventional method. Following the normal procedures, it will take them at least 3 to 5 years to improve their scores.


Here’s exactly how it works:

When a borrower opens a line of credit, such as a credit card, car loan, or a home mortgage, these accounts are called trade lines. The number, history and status of these credit trade lines comprise a large part of a person's credit score. The higher a person's credit score, the greater the likelihood of obtaining credit and of qualifying for more favorable interest rates and terms.

Credit bureaus such as Experian, TransUnion, and Equifax look at the amount of open trade lines, the payment history on the accounts, how long the account has been open and how long since the last activity on an account to determine an individual's credit score. To build positive credit history a person generally should strive to have approximately 3-5 active trade lines that are "seasoned," meaning the accounts have been open for around 2 years, have positive payment history on all accounts and the accounts should be current and in good standing.

Lines of credit that are in the name of the primary account user are called primary trade lines. For example, if Borrower A opens a credit card in his name, Borrower A is considered the primary account user and the credit card account is considered a primary trade line. If Borrower A added Borrower B onto the credit card account as an authorized user, Borrower B would be considered a secondary account user and this would be considered a secondary trade line for Borrower B. Authorized users on accounts are generally not responsible for re-paying any debt incurred on the account as the primary and/or joint account holder would.
Due to the importance of trade lines in credit scoring, there are now businesses that sell access to positive trade lines to customers who are looking to improve their credit score. These businesses find and pay people with good credit who are willing to add other authorized users onto their seasoned and positive credit accounts. Customers looking to build their credit pay these businesses for the ability to be added as secondary authorized users on these established accounts. This practice is often known as "piggybacking."

In theory, the positive history of these trade lines help increase the credit score of the borrower with negative credit history, since these trade lines are reflected on both the credit history of the primary holder and on the secondary holder as well. This was generally done with parents adding their children as secondary users on their accounts to help their children build credit. However the practice of selling seasoned trade lines, while legal, is considered controversial and can be a risky endeavor


This method is plagued by legal controversies. Privacy laws and the Fair Credit Report Act make it impossible for lenders to identify fraud from legitimate use. Financial experts admit this is technically legal but can be fraudulent in most cases. Credit score companies are taking some steps to halt the growing usage of this method. In fact, FICO already changed their scoring method by not considering "authorized users" to come up with the credit score. Eliminating this will have outright impact on many striving students who are using their parents' credit cards and for unemployed spouses relying on their partners.     
For those who extend their good credit through seasoned trade lines, there is a possible downside. The other party might actually use the credit and refuse to pay for it. For this reason, it is important to carefully consider if you are interested to be a "donor" in this transaction


WHAT THE FTC SAYS:
The “seasoned” part simply implies that the account is aged or that it has an established history. There is no cut and dry answer regarding the many questions surrounding the legality of piggybacking; however, there are many sources that tend to indicate perhaps a general answer, such as:

FTC spokesman Frank Dorman said: “What I’ve gathered from attorneys here is that it is legal, however, the agency is not saying that it is legal technically.” Other law enforcement agencies, like the Florida Attorney General’s Office, are reviewing whether such activities are legal.

A report published by the Federal Reserve Board reported “This is possible because creditors generally have followed a practice of furnishing to credit bureaus information about all authorized users, whether or not the authorized user is a spouse, without indicating which authorized users are spouses and which are not. This practice does not violate Reg. B”

In a written statement from Fair Isaac Corporation on credit scoring models and credit score before the U.S. House of Representatives Committee on Financial Services, Subcommittee on Oversight and Investigations, Tom Quinn, Vice President of Global Scoring Solutions for Fair Isaac Corporation, stated: “After consulting with the Federal Reserve Board and the Federal Trade Commission earlier this year, Fair Isaac has decided to include consideration of authorized user trade lines present on the credit report…”

What's in it for people with good credit? They are paid $100 to $150 for every account they authorize as users. Some seasoned trade lines companies lure many people with good credit by promising that they can earn more than $10,000 per month without doing anything. This method has existed for many years but did not gain much popularity until now. Most of the time it is used by many students who piggyback with their parent's credit cards. Of course, this is free! The subject of controversy is whether it is unethical to let other people use your good credit so they can convince lending companies to approve their loans or mortgages.     
A simple Internet search will reveal numerous online businesses like seasonedtradelines.com, offering this service to the public. While there are some legit seasoned trade lines groups, the number of scammers is significantly growing. One common aspect among these companies is the promise to improve credit scores literally overnight. Although some are subtle on this matter, they let people with bad credit believe in miracles like raising your credit score by 200 points with no effort at all or 30 days seasoned trade lines.      
It is very understandable why many people with bad or low credit scores are drawn in to participate in seasoned trade lines and pay high fees ranging from $700 to $2000. A good credit score means many things to many people. It can lower your interest rates, allow you to buy new homes or take vacation to your dream island, and to be considered for some high-paying jobs.      
On the side of cardholders with good credit reputation, there are some big risks involve in venturing with this business. Overall, it can hurt your reputation or be demoted to bad credit once financial institutions learn your participation. However, that is very difficult to prove because we are protected by many privacy laws and Fair Credit Report Act.
Another downside of seasoned trade lines is when your so-called authorized users use your credit to settle their debts and refuse to pay you in the end. All trade line companies promise they never share the full credit card number to their customers. In spite of this, they are many ways to get this information for these newly authorized users are empowered to make some transactions on your behalf.

Corporations too big to fail...Also too big to sue.

Supreme Court biased toward big corporations

Technorati Tags: consumer protection,too big to fail,supreme court,social justice

Anyone paying attention to the Supreme Court over the last decade would have noticed a trend toward more conservative decisions in general but more specifically with regard to matters involving big-business and corporations.  The current Supreme Court has 5 justices who regularly decide cases based upon conservative ideology, and 4 who are arguably liberal, but considerably less liberal than the most liberal justice (Sandra Day O'Connor" in recent times.
Liberal organization, Alliance for Justice called the current court, “the court for the 1%.”  They have released the above video that features several cases that showcase unfair treatment of the “little guy” by big corporations such as Wal-Mart, and other cases where the Supreme court sided against the individual. The Court is lead by openly conservative Chief Justice John G. Roberts. Many liberals think that the current conservative Court is turning back the clock on decades of progressive jurisprudence with it’s 5-4 majority decisions on nearly every controversial issues involving civil rights, voting rights, regulating big business practices, and the 1%.

The United States Supreme Court, the highest court in the United States, in 2010. Top row (left to right): Associate Justice Sonia Sotomayor, Associate Justice Stephen G. Breyer, Associate Justice Samuel A. Alito, and Associate Justice Elena Kagan. Bottom row (left to right): Associate Justice Clarence Thomas, Associate Justice Antonin Scalia, Chief Justice John G. Roberts, Associate Justice Anthony Kennedy, and Associate Justice Ruth Bader Ginsburg. (Photo credit: Wikipedia)

The video is hosted by editor and publisher of The Nation Magazine, Katrina vanden Heuvel.

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FRCA – Time Limitations related to charged-off accounts reported to credit bureaus

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 This is an actual letter I found while doing some research on time limitations rules based upon the FCRA. Clarke W. Brinkerhoff is a Federal Trade Commission attorney charged with responding to consumer complaints and questions regarding FCRA issues. It’s a little complicated, so put on your thinking cap and read CAREFULLY. Division of Financial Practices Clarke W. Brinckerhoff Attorney 202-326-3224 UNITED STATES OF AMERICA FEDERAL TRADE COMMISSION WASHINGTON, D.C. 20580 February 15, 2000 Ms. Alaina K. Amason 14155 Shire Oak San Antonio, TX 78247 Dear Ms. Amason: This responds to your letter concerning the time limitations imposed by the Fair Credit Reporting Act (“FCRA”) on the reporting of chargeoff accounts by a consumer reporting agency (“CRA,” usually a credit bureau). We list your inquiries on this topic below in italics, with our replies immediately following each item. 1. What reporting limits does the FCRA provide with respect to chargeoffs, and how long have they been in effect? Section 605(a)(4), which has been in effect since the FCRA became effective in April 1971, has always prohibited CRAs from reporting chargeoffs that are more than seven years old.(1) Section 623(a)(5), which became law in September 1997, requires a creditor that reports a chargeoff to a CRA to notify the agency (within 90 days of reporting the account) of “the month and year of the commencement of the delinquency that immediately preceded” the chargeoff. Section 605(c)(1) provides that the seven year period begins 180 days from that date. Both provisions were part of the major revision to the FCRA that were enacted in 1996.(2) 2. Is the reporting period extended if (A) the original creditor sells or transfers the account to another creditor, (B) the consumer responds to post-chargeoff collection efforts by making a payment on the debt, or (C) the consumer disputes the account with a CRA? Does it matter whether the 7-year period has expired when any of these events occurs? No. In enacting the new provisions discussed above, Congress intended to establish a date certain — 180 days after the start of the delinquency that led to the chargeoff — to begin the obsolescence period. It did so to correct the often lengthy extension of the period that resulted from later events under the original FCRA. Enclosed are two staff opinion letters (Kosmerl, 06/04/99; Johnson, 08/31/98) that discuss the impact of these provisions, and the legislative history relating to their enactment, in more detail. Because the commencement of the seven year period is now described with some precision by the statute, it is our opinion that none of the subsequent events you listed — sale of the charged off account by the creditor, or a payment on or dispute about the account by the consumer — changes the allowable period for a CRA to report a chargeoff. 3. Since Sections 623(a)(5) and 605(c)(1) provide new rules for calculating the 7-year period that became effective in 1997, do chargeoff accounts now have different obsolescence periods depending on when the chargeoff occurred? Yes. Section 605(c)(2) states that the section “shall apply only to items of information added to the (CRA) file of a consumer on or after” 455 days after enactment, or December 29, 1997. Therefore, a chargeoff reported to a CRA on or after that date is subject to the new commencement-of-the-delinquency method of calculating the obsolescence period set forth in Sections 623(a)(5) and 605(c)(1). On the other hand, a chargeoff reported to a CRA before December 29, 1997, is not covered by the new provisions, as discussed in one of the enclosed letters (Kosmerl, 06/04/99). If a credit account was reported as a chargeoff before that date, the Commission’s view has been that it can be reported for seven years from the date the creditor actually charged it off.(3) The opinions set forth in this informal staff letter are not binding on the Commission. Sincerely yours, Clarke W. Brinckerhoff 1. Section 605(b) provides that there is no time limit applicable to a report made in connection with credit involving a principal amount (or insurance with a face amount) of $150,000 or more, or employment for a salary of $75,000 or more. Prior to September 1997, those amounts were $50,000 and $20,000, respectively. 2. The Consumer Credit Reporting Reform Act of 1996 (Title II, Subchapter D, of Public Law 104-280, signed into law on September 30, 1996), made many other changes to the FCRA. 3. Commentary on the Fair Credit Reporting Act, 16 CFR Part 600 Appendix, comment 605(a)(4)-2. 55 Fed. Reg. 18804, 18818 (May 4, 1990

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Here is the entire legal text of the Fair Credit Reporting Act pertaining to the credit reporting time period (if you quote it is “Section 605 of the FCRA”):
§ 605. Requirements relating to information contained in consumer reports [15 U.S.C. § 1681c]
(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:
(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.
(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.
(3) Paid tax liens which, from date of payment, antedate the report by more than seven years.
(4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.⁽¹⁾
(5) Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.¹
(b) Exempted cases. The provisions of subsection (a) of this section are not applicable in the case of any consumer credit report to be used in connection with
(1) a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;
(2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or
(3) the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.
(c) Running of reporting period.
(1) In general. The 7-year period referred to in paragraphs (4) and (6) of subsection (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.
(2) Effective date. Paragraph (1) shall apply only to items of information added to the file of a consumer on or after the date that is 455 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996.

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How To know if a trade line has been RE-Aged by a collection agency

Share | If you have finally decided to take a look at your credit report (this can be scary for some – for others, not so much) and you see some very old, maybe even ancient debt that you thought should have been long gone by now, it might be because they have been re-aged. This is not a new concept in the world of credit repair. In fact, re-aging of debts is about as old as the bureaus who keep the records. It is a practice proliferated by collection agencies that allows them to keep a debt listed on your credit report in hopes that you will pay it off even though you don’t have to any longer. This practice is illegal. The Fair Credit Reporting Act dictates that most debts can only remain on your credit report for 7 years. The proverbial "clock" starts ticking at exactly 180 days from the date of first delinquency; the day that your payments to the original creditor were first classified as late.
Don't confuse the statute of limitations for lawsuits with the credit reporting period's statute of limitations. These are two totally different time frames. The statute of limitations for lawsuits refers to the amount of time a debt collector can legally sue you in your state. Each state has different statutes of limitations. Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. This law is known as the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer’s credit report for 7½ years. The clock starts approximately 180 days after the date of first delinquency on the account.
The Federal Trade Commission lists the following steps as the appropriate method for resolving credit reporting inaccuracies. This is codified in § 632 of the FCRA, and 15 U.S.C. § 1681s-2.

Step 1: Get Your Credit Report

An amendment to the FCRA requires each of the nationwide consumer reporting companies -- Equifax, Experian, and TransUnion -- to provide you with a free copy of your credit report, at your request, once every 12 months.There is only ONE website that allows a person to get a free copy of their credit every 12 months. It is called AnnualCreditReport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print this FTC form.

Step 2: Look for Errors

Review the report and compare the information it contains to information you know to be accurate. In particular, make sure the report contains your accurate:

1. Name
2. Social Security number
3. Address and previous addresses
4. Accounts and account numbers
5. Date of first delinquency on each of your trade lines

If any of the above information is inaccurate, the consumer credit reporting agency may have added incorrect information to your account accidentally. This is very common. If incorrect addresses or Social Security numbers appear, this may be evidence of someone using your identity.
Under the FCRA, both the consumer reporting agency and the information provider – original creditor (i.e., the person, company, or organization that provides information about you to a consumer reporting agency) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting agency and the information provider.

Step 3: Correct the Errors

Tell the consumer reporting agency, in writing what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Send your letter by certified mail, "return receipt requested," so you can document what the consumer reporting agency received. Keep copies of your dispute letter and enclosures.

Consumer reporting agencies must investigate the items in question -- usually within 30 days -- unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. (please see my article on e-Oscar for information on how this is ALWAYS done incorrectly).After the information provider receives notice of a dispute from the consumer reporting agency, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.When the investigation is complete, the consumer reporting agency must give you the results in writing and a free copy of your report if the dispute results in a change. This free report does not count as your annual free report. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.If you ask, the consumer reporting agency must send notices of any corrections to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation does not resolve your dispute with the consumer reporting agency, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting agency to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

Re-aged collections on your credit report can leave you getting turned down for loans and credit you actually qualify for simply because a collection agency is violating federal law. If you suspect that a collection agency is intentionally reporting the wrong dates to the credit bureaus in an effort to leave its black mark on your credit report for longer than the law allows, your first course of action should be to get a copy of your credit report from each credit bureau – Experian, Equifax and TransUnion.
Remember, federal law entitles you to one free credit report per year. If you order that free credit report from AnnualCreditReport.com, you won't have to deal with giving out your credit card number and then canceling any ridiculous subscriptions later on down the road. AnnualCreditReport.com is regulated by the FTC, and its the only place you should turn to for free credit reports.

Find Each Collection Account's Removal Date
Find the correct deletion date, flip to the collection accounts section of each credit report. The error you're searching for is collection accounts that show up on your credit report for longer than the time limit allowed by the Fair Credit Reporting Act. The FCRA says that collection accounts must be deleted from your credit report 7 years from the date of first delinquency on the original account. The date of first delinquency is 180 days from the date of your very last payment to the original creditor. The most effective way to verify the first day your account went delinquent is to find the paperwork that should have been sent to you by the original creditor, or call them and ask for the information.
If the Credit Bureau Doesn't Delete the Entry
If the credit bureau doesn't delete the re-aged collection account from your credit report, its time to take the fight directly to the collection agency. Send the company a letter noting the following:

1. You recently requested the name and address of the original creditor from the collection agency and the date of first delinquency for that particular debt occurred more than 7 years ago.
2. The credit bureaus deleted the original creditor's negative tradeline after 7 years and 180 days in compliance with the FCRA. The collection account should have been removed at the same time.
3. You notified the credit bureaus of the discrepancy and the credit bureaus contacted the collection agency, which verified the dates were accurate when, in fact, they couldn't be if the original creditor for the account was accurate.
4. The dates for the collection account were clearly re-aged – an illegal practice under the FCRA.
5. The collection agency must immediately delete its tradeline from your credit report to remain in compliance with federal law. If it does not, you will report the collection agency to the Federal Trade Commission for re-aging, contact your attorney general and file a lawsuit against the company for violating the FCRA.

If the collection agency persists, or ignores you, take more aggressive action by filing a complaint with your local Attorney General’s Office. If you can, have an attorney contact the collection agency on your behalf and prepare to send them a Summons indicating your intention to file a lawsuit. Most collection agencies will indeed respond to this by deleting the inaccurate information.

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Can accumulating enormous debt have an effect on your credit score?

Share |  Posted April 19, 2013 by guest writer Andy Raybuck at AscendantEquity.com

Can accumulating enormous debt have an effect on your credit score?
If you have incurred enormous debts, then you will have to take the necessary steps to pay them off. The company may write off your debt so that they can get tax benefit but, generally, your debt gets sold to a collection agency. The agency may either take legal action against you or sell it to the other collectors. This will ultimately fall off your credit report and leave a negative impact on your credit score for several years. If debts have become unmanageable for you, you may take the help of credit card consolidation and get rid of debt problems soon.

Old debts – What is their reporting time?
The old debts generally get charged off when you do not agree to pay them. As such, the banks usually write off credit card outstanding balance within 180 days of negligence. The bill then gets sold to the debt collectors and it appears on your Equifax, Experian and TransUnion credit reports for seven years. The collection agencies may add up their own entries that will stay on the credit report for the same period of time. With having old debts, your credit score will get lowered till they get removed automatically in seven years.
Debt – What effect does it have on your credit score?
There are several factors such as old and new debts that affect your credit score to a great extent. The old debt consists of collection agency accounts and charged off bills that are a part of your credit report. This includes 35 percent of your credit score. You counterbalance the effects of the old debt by maintaining revolving account balances low and paying off the present accounts within their due date. Lenders will show more interest in your present financial condition than your previous mistakes.
Debt Settlement Law – What do you need to know about it?
Debt settlement is an industry that has conventionally not been regulated. As a result, many consumers have taken undue advantage by deceitful individuals in this sector. It has been undecided as to what organization should be controlling the debt settlement industry. Attorney Generals of individual states have varied in their approaches to safeguard the people. This has created a puzzled network of rules and regulations that often leave the consumer susceptible to untrustworthy debt settlement companies.
The Federal Trade Commission (FTC) has formulated a set of new regulations that will enable the FTC to better administer the debt settlement industry in a more uniform manner. The new FTC rules require that you do not need to pay any fees till debt settlement services takes place. This provides assurance to the clients that they’ll receive the services they had enlisted for implementation.
Old accounts – What are its considerations?
The old accounts usually get removed through the dispute process by the Fair Credit Reporting Act if there appears any error in the credit report entries. You can obtain your free credit reports through AnnualCreditReport.com and find even a small incorrectness to dispute with Equifax, TransUnion and Experian. The credit bureaus are needed in order to attempt legalization with the lender. The lender may even be out of the business if the debt is old by many years. However, if they fail to validate, it means that the wrong entry will be removed from your credit report. This, in turn, will help you raise your credit score.
Old debt – How is statute of limitation different from one state to the other?
You need to know that old debt has a statute of limitation that varies from state to state. This is the reason as to why the collection agency or the creditor cannot file a suit against you when the statute has been passed. The NOLO legal website cautions that dishonest debt collectors purchase your old debts and, in turn, make false threats to get the payments. They may even tell you that they’ll put previous bill on your credit report and hurt your credit score. However, they do not have the legal right to do so. Tell the debt collectors that you are aware about the law very much and will dispute for change in the credit report and report them to your state attorney general in case they may follow through.
Thus, if you have accumulated huge debt, this will hurt your credit score. As such, you should try to pay off your debts on time. This will prevent you from dropping your credit score.

The Consumer Financial Protection Bureau Turns its Gaze To Collection Agency Business Practices

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Today the Consumer Protection Bureau released a new set of rules allowing them to monitor and regulate how debts are collected by debt collectors, junk debt buyers, and any law firm or business who acts as a debt collector. These rules give the CFPB the authority to regulate any firm that has more than $10,000 in receipts from consumer debt collection activities. The CFPB’s authority over these business entities will begin on in January of 2013. This move by the CFPB to regulate debt collection activity is no doubt a response to the thousands of consumer complaints they have received. Companies like LVNV Funding, AFNI, Asset Acceptance Corp., and NCO Financial Systems are considered the worst of the worst amongst a murder of crows. The stories I have read on many credit repair blogs, and my own experience dealing with them confirm they are the biggest offenders of the law and will stop at nothing to collect a debt – whether the debt is valid or not. ”Millions of consumers are affected by debt collection, we want to make sure they are treated fairly”, said Director of the CFPB, Richard Cordray. “Today we are announcing we will be supervising the larger debt collectors in the market for the first time at the federal level” We want companies to realize that the better business choice is to follow the law, not break it”
Did you hear that sound? That is the collective sound of hundreds of thousands of Americans breaking forth in a great sigh of relief! Finally, the consumer has a protector – a champion who has not only the prerogative, but also the muscle to slay the beast…the Beowulf. Here are the details of what the CFPB is going to do regarding their supervision of collection agencies and how they are going to to do it:
Pursuant to the CFPB’s supervision authority, examiners will be assessing potential risks to consumers and whether debt collectors are complying with requirements of federal consumer financial law. Among other things, examiners will be evaluating whether debt collectors:

• Provide Required Disclosures: Examiners will evaluate whether debt collectors are properly identifying themselves and properly disclosing the amount of debt owed. The CFPB intends to ensure that debt collectors are upfront and clear with consumers.
• Provide Accurate Information: Examiners will assess whether debt collectors are using accurate data in their pursuit of debt. Inaccurate information can lead to collectors attempting to collect debt that consumers do not owe or have already paid.
• Have a Consumer Complaint and Dispute Resolution Process: As part of the CFPB’s compliance management review, examiners will assess whether complaints are resolved adequately and in a timely manner, whether the complaints highlight violations of federal consumer financial law, and whether the debt collector has a process in place to address consumer disputes.
• Communicate Civilly and Honestly with Consumers: Examiners will be assessing whether debt collectors have harassed or deceived consumers in pursuit of debt. For example, debt collectors should not be using obscene or profane language with consumers. Nor should they be engaging the consumer in telephone conversations repeatedly or continuously with intent to annoy, abuse, or harass. Debt collectors cannot threaten to imprison consumers who do not pay their debt or threaten to tell the consumer’s employer about the debt.

According to a report on the CFPB website, the CFPB is also publishing new questions and answers about debt collection in its Ask CFPB database. This interactive, online database answers consumers’ most frequently asked questions in plain language. The questions cover topics such as the definition of a debt collector, the best way to negotiate a settlement with a collector, and what a collector has the authority to do. You can also find information on debt collection on the FTC website under the Consumer Protection tab.

Is your private information secure?

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For the last few days the news media has been all abuzz about an alleged cyber-attack on either one or all of the “Big three” credit bureaus that involved the publicizing of private financial information belonging to several celebrities including the First Lady, Michele Obama. According the AP news wire, a Russian based website called “exposed” is responsible for releasing the information. And the list of celebrities who’s information is now public is growing. No one is sure if the information is correct, but I don’t think it would be smart for any curious onlookers to somehow try to confirm the information as the White House has “released the hounds” to investigate who the owners of the website are and how they were able to hack their way into the three largest credit reporting agencies in the US.

Have you ever heard the saying, “if a tree falls in the forest and no one hears it, did it really make any noise? I use that analogy to say that there is an estimated 42 million credit reports held by Experian, Equifax, and TransUnion and in recent years, all three companies have experienced a massive increase in identity theft cases, some due to data security breaches at the agencies themselves, and other types because some guy decides to go through his neighbors garbage looking for bank statements. Apparently, it doesn’t really make the news until it happens to a celebrity. Believe me, my paltry $589.00 in my Bank of America checking account is just as important to me as Oprah Winfrey’s $589 million.

“We should not be surprised that if you’ve got hackers who want to dig in and devote a lot of resources, that they can access people’s private information,” Obama told ABC News in an interview aired Wednesday. “It is a big problem.”
Obama added: “It would not shock me if some information among people who presumably have pretty good safeguards against it, still gets out. Even though President Obama is not the one person whom I would assume has the last word on this country’s cyber security situation, it’s a pretty good bet that he is privy to some high-level information that informed his statements.

That alone is just scary.

The United States Department of Justice stated that in 2010, 7% of all United States households had at least one member of the family at or over the age of 12 who has been a victim of some sort of identity theft. Identify theft comes in various forms: medical information fraud, stealing the identity of persons deceased, credit card fraud, and check fraud. It is estimated that there 34,520 cases of various forms of identity theft per day, up from 22, 000+ in 2011.

Back in October of 2012, South Carolina Governor, Nikki Haley announced a massive security breach in the State’s Department of Revenue that resulted in the theft of 3.6 million social security numbers and 387,000 credit/debit card numbers (only 16,000 of which, it is believed, were unencrypted). These kinds of cyber-attacks are becoming more numerous as hackers are becoming more sophisticated.

I found a some good information on this subject at a site called Quizzle.com. They suggest some ways to protect yourself from cyber-attacks and identify-theft:

 

Don’t save credit card information on-line. I know that Google has an auto-fill plug -in that auto fill forms and job applications, etc. That same plug-in can save your credit card information as well. Don’t do it. Many hackers can figure out passwords by simply typing in multiple common passwords with different numeric combinations. If they get into an account that has stored your credit card number, they can easily charge items to your card without you knowing. The best way to avoid this is to use sophisticated password and not save your credit card number on any online store account

Keep your credit card pin number to yourself. Keep your credit/ debit card and the pin in completely separate places. And I don’t mean separately on your person, I mean if you have your credit card with you, your pin number should be at home. You should never write your PIN number on your credit card, according to experts at Identitytheft.com. Doing so makes it easy for thieves to access your account, if they get hold of your actual credit card. It’s also smart to shred all mail that you don’t want. This includes credit card offers and other mail that asks for financial information or social security number.

Be weary of Wi-Fi

Wi-fi has introduced a new opportunity for hackers to steal your identity, according to Hacked Info, a website devoted to cyber security. Most wi-fi networks are not covered by security software, thus making them a goldmine for hackers hoping to steal your identity. And computers typically have standard default settings that are common knowledge to most hackers, making it easy to get into your personal information.

To avoid having your computer overtaken through wi-fi networks, change the password on your wireless router. Passwords are often standard on routers, so replacing that password with your own is a great way to protect your computer from cyber attacks.

Think about what you’re posting on social networks

Cyber thieves stole above $25 million from businesses in the first quarter of 2009, and that number is consistently rising, according to Krebsonsecurity.com. And cyber theft has yet another target – social networking sites. People share information about themselves so freely that it is easy for criminals to pose as someone else and find your personal information.

The cyber theft process is easy for those with experience in programming, but many are buying software to steal information as well. Firewalls were once thought to protect your computer, but even they are not enough anymore.

Cyber security is all about being careful. If you engage in on-line shopping, slow down and ask yourself few questions before you enter that credit card number, “am I doing the most secure thing with my credit card information, or, am I sure this website is secure?” Be thoughtful about what you say and do while on the Internet and even on your home computer. A little common sense will go a long way to keeping your personal information safe from hackers and would-be identity thieves. And remember if you want to keep financial records like credit card numbers, and pin numbers or passwords more secure, place them on a thumb drive so the information is not just sitting online or on your computer waiting for some sophisticated hacker to get at it.

Related articles

My thanks to Shannon Dickinson at Quizzle for her article, “Combating Identity Theft: How to protect yourself from cyber crime” http://www.quizzle.com/blog/2010/10/combating-identity-theft-how-to-protect-yourself-from-cyber-crime/

• Chase Bank fends off cyber attack (heraldtimesonline.com)
• How To Prevent Identity Theft and Protect Your Credit Score (creditrepair.com)
• Senior US Official Says China Must Stop Cyber-Attacks (theepochtimes.com)
• Michelle Obama Victim of Hacking, Obama Does Not Confirm Amidst Meetings on Cyber Security (+Video) (theepochtimes.com)
• What To Do About Identity Theft (nationaldebtrelief.com)
• Pursuit of hackers who took credit reports expands (news.yahoo.com)
• Hackers Attack Bank Minutes After NSA Chief Warns Senate About Hackers Attacking Banks (theatlanticwire.com)
• Identity Theft in America by The Numbers (creditloan.com)

What to do if you get sued by a collection agency

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Today I received a text from my old college roommate who said he received a Summons and Complaint from a Junk debt buyer. He’s a Paralegal and will know what to do, but it got me thinking about how scary it is to be on the receiving end of one those things. So I jumped on over to one of my favorite credit repair go-to websites, Creditinfocenter and found a very good article on what you should do if you ever get sued by an original creditor, collection agency, or ANYONE for that matter. Here is a copy of what I found on the Creditinforcenter blog:

Sued by a Creditor? Learn How to Fight a Debt Lawsuit

 

With many collection agencies and JDBs turning to the legal system to collect, more and more people are talking to me about lawsuits over debts. This article will cover the best way to handle the situation if you find yourself with a summons. This article covers lawsuits dealing with DEBT ONLY. You might also watch to watch our video on being sued.

Please Note: I AM NOT A LAWYER. If you are facing court, it’s ALWAYS a good idea to hire an attorney or get some legal assistance. Depending on your area and circumstances, in some cases, you can get free help. If you cannot afford it, though, take heart. Lot of people have handled their cases pro per (in other words, without a lawyer.)

What To Do If You Are Served a Lawsuit

If you have been served with a lawsuit, the time to send a debt validation letter is OVER. People always think that sending a debt validation letter to the law firm/collection agency/junk debt buyer will somehow stop the court case or serve as a proper answer to the summons. IT DOES NOT. At this point, your priority should be writing your answer to the court addressing each point in the complaint. If you don’t do this, you automatically lose the case. Your time to answer the complaint is limited, usually 20-30 days from the day you are served. Don’t waste this precious time on debt validation.

What is a Summons and Complaint?

In the packet of papers you received from the process server, you will find:

• A paper telling you when your court date is,
• Some kind of certification that you were served (meaning it goes over how you were notified of the lawsuit: in person, by mail, etc.),
• Instructions for answering the complaint or a form to fill out,
• Any evidence the Plaintiff (i.e. collection agency) is submitting. There could be documents such as affidavits from the collection agency. There might also be documents from the original creditor, although this is extremely rare,
• A list of allegations, which constitutes the complaint. The paper may or may not be titled “Complaint”. Next we will go over the steps to identify the complaint in the paperwork. There will ALWAYS be a complaint in your paperwork. Please look for it.

Complaint

If you are still having trouble finding the complaint, this next information may help. Most complaints will look like the following.
Complaint Number #XXXXXXX Collection Attorney Plaintiff vs. YOU Defendant
Allegation 1: Allegation 2: Allegation 3: Typically, this next allegation will say something like “Defendant obtained a credit card from Credit card Company X” Allegation 4: Typically, this next allegation will say something like “Defendant used the credit card to obtain goods and services using the card” Allegation 5: Typically, this next allegation will say something like “Defendant racked up charges totally $XX and then refused to pay”

Answer

The most important thing you can do is to answer the complaint by the due date. This is the most important thing you can do when you receive a summons.
Once you’ve identified the paperwork which constitutes the complaint, you must answer it. You merely reply by stating whether or not you agree with the statements in the complaint and why. Don’t hide your head in the sand, you have NOTHING to lose by answering the complaint, even if you don’t do it exactly right. You must do it quickly, you only have 20-30 days (depending on your court) to answer the complaint. If you do NOTHING, you automatically lose and the collection agency has a judgment against you.

You MUST answer the complaint. It will cost you next to nothing to answer, and it’s pretty easy to do. If you do nothing, you AUTOMATICALLY LOSE. By answering, you have a good chance of winning.

Answering the Complaint Correctly

You can write your answer on a plain piece of paper, or type them up on your computer. No fancy or legal format is necessary. As long as your answer is clear, it will be fine. In some court systems, they provide written forms for you to fill out. You can use them and attach a more detailed answer. A sample answer is posted at the bottom of this page.
IMPORTANT: You must ADMIT or DENY each allegation. Failure to deny an allegation means that you are admitting to it. In the above complaint example

Your answer to Allegation number 1 can be: In your answer, you would ADMIT allegation 1, that the plaintiff is who they say they are.
Your answer to Allegation number 2 can be: You would also ADMIT allegation 2: that you (the defendant) are who Plaintiff says you are.
Your answer to Allegation number 3 can be: We are assuming in allegation 3, that you opened a credit card account with them, has been backed up by zero evidence. For instance, some lawsuits are filed by Junk Debt Buyers acting as collection agencies who don’t even list the account number of the original credit card. They don’t have any statements from the credit card companies, nothing. They’ve provided no proof so you, as a result, have no idea what they are talking about. The same holds true for allegations 4 and 5.
ADMIT in part. I did have an account with Bank X. DENY in part, I have been presented no evidence that the account I had with Bank X is the same account as the debt alleged in this complaint.
-or-
DENY. Responding Party objects to this request on the ground that it is vague, ambiguous and unintelligible in that Responding Party has to speculate as to the meaning of “the credit card” and “the account.”
Your answer to Allegation number 4 can be: DENY. This request calls for admission of matter defendant has denied and thus it is improper.
-or-
DENY. Responding Party objects to this request on the ground that it is vague, ambiguous and unintelligible in that Responding Party has to speculate as to the meaning of “the credit card” and “the account.”
Your answer to Allegation number 5 can be: DENY. This request calls for admission of matter defendant has denied and thus it is improper.

Affirmative Defenses

Affirmative defenses are legal reasons why the complaint should be thrown out. Some of the best affirmative defenses are:

• Failed to state the basis of the lawsuit: They did not cite an actual state law which was violated.
• Debt is Time-barred: The statute of limitations has passed.
• Statute of Frauds: No contract exists as proof.
• Failure of Consideration: No exchange of money or goods occurred between the plaintiff and the defendant.
• Lack of Privity: No relationship exists between the collection agency and you. You never signed a contract or agreement with the collection agency, remember?

You can list these affirmative defenses at the bottom of your answer, after the specific responses to the allegations.

File Your Answer

You will need to send a copy of your answer to the courts and the lawyer listed in the complaint. Make sure you send them within the time allowed and send them registered mail! As another option for selected states, here is a service where you can submit your court filing online.
A sample answer is posted at the bottom of this page.

Requests for Discovery

In some courts, you need to file any counter-suit along with your answer. In addition, if you intend to ask for discovery (request disclosure of information and documents from the Plaintiff), you may need to send it along with your answer. Every court’s rules are different, you need to look this up. Which brings us to the next item.

Look up Courts Rules of Procedure

Most courts have online instructions and information. Take the time to read it. You will at least need to know the timetable of your case.

Evidence Included in the Summons and Complaint

Most often you will be presented with exhibits (documentation which serves as evidence) in the case file, such as credit card agreements and affidavits of debt. Usually you can object to this evidence and get it thrown out of the case based on hearsay. If you are successful getting this evidence thrown out (struck from the records), the Plaintiff will have no evidence against you. If they have no evidence, they cannot win.

Tips for Filing Your Answer

Many courts will let you handle everything via the U.S. Mail. There is no need to take time off of work to personally file your answer. Send everything certified mail, return receipt requested; one copy to the court, one copy to the lawyer representing the Plaintiff.
Another good idea is to include a self-addressed stamped envelope and one extra copy with your answer to the court. In some cases, if you made a mistake in your answer, they will let you know immediately. If nothing else, they will send you a an endorsed-filed copy of the filing so you know it was entered. One of our readers received a hand written note from the clerk asking my reader to call so the clerk could help correct the filing.

Testimonial That This Advice Works!

I want to say THANK YOU!!!!! I was recently (11/06/08) sued by a Debt Collection agency and taken to my local District Judge for an old credit card account of just under $2500. This account was originally opened in the early 90s and I last made a payment to a collections dept. in 2002. Well, a junk debt buyer bought it and have been harassing me since 2004. I received a summons in the mail to appear in court, which I promptly replied that I would defend since referencing your creditinfocenter website.
I not only built a case using the SOL argument and re-aging, but embarrassed the counselor that showed up against me by asking for signatures, original documents, account histories, etc. He showed up with GENERIC documents w/ no signatures and I won the case!!!!
Thank you SOOOOO much. The best part was when the counselor stopped me after the judge left and said how impressed he was with my preparedness and that no one usually knows about those items!! Thanks so much.
Thanks again!
M. (Pittsburgh, PA)

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You can also read this detailed description of what it’s like to go to court against the big boys and WIN. The story is enlightening, educational and ENTERTAINING.

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Sample AnswerPLEASE DO NOT JUST CUT AND PASTE THIS – Every complaint is different. One size DOES NOT fit all. If you merely cut and paste, you WILL LOSE.

Complaint number #XXXXXXX Collection Attorney Plaintiff vs. YOU Defendant
Defendant’s Answer to Complaint
Allegation 1: Admit Allegation 2: Admit Allegation 3: Denied: Responding Party objects to this request on the ground that it is vague, ambiguous and unintelligible in that Responding Party has to speculate as to the meaning of “the credit card” and “the account.” Allegation 4: Denied: This request calls for admission of matter defendant has denied and thus it is improper. Allegation 5: Denied: This request calls for admission of matter defendant has denied and thus it is improper. FUTHERMORE, Defendant DENIES every other allegation not previously admitted, denied or controverted.
AS AND FOR AFFIRMATIVE DEFENSES
1. Plaintiff fails to state a cause of action against the defendant. 2. Plaintiff, as the defendant is informed and believes, lacks the legal standing to bring and maintain this action. 3. The action is barred by the Statute of Frauds. 4. The action is barred by the Statute of Limitations. 5. The court would unjustly enrich the plaintiff by granting the relief sought herein. 6. The plaintiff has not proven the debt is valid or the amount of the debt is accurate. The plaintiff must prove that the principal, interest, collection costs, and attorneys fees are all correct, agreed to in your contract, and lawfully charged. Defendant also insists that the plaintiff come up with the contract, account statements and purchase receipts to prove the amount of the debt.
WHEREFORE, the defendant asks the Court for judgment: a. dismissing the complaint herein with prejudice.

Not really sure who the real plaintiff is? Read this!