Self-help credit repair 101 Lesson 2



Credit Repair 101

As I considered writing this second credit repair lesson I must admit I had some problems getting started.  I didn’t want to write the same old information that is already all over the Internet because much of it is false and not very well researched.  And while the principles of credit repair are much easier talked about than they are to put into practice, it is still quite challenging to write a generic article about credit repair when the process depends so much on knowing a client’s particular circumstances.   Therefore, this lesson is not going to include any strategic information on how to restore your credit.  It will include information about how the credit industry works, when you should consider consulting a consumer rights attorney, and how to organize yourself before you begin the dispute process.  It makes no sense to me to include any information on particular FCRA or FDCPA laws when you will not need to use them at this stage of the dispute process.  That information will become more useful when and if you decide to file a lawsuit.  However, if your situation is complicated, the above stated laws and others are required reading if you want to be as effective as possible in dealing with the credit bureaus and collection agencies.

Many of the theories you hear or read about simply do not work all the time in the real world of credit repair.  Original creditors are difficult to contact by phone, and they rarely call you back.  Collection agencies lie to you and mis-quote the law.  Credit reporting agencies pretend to care about customer service, but really don’t care about their customers at all.  Most business, (generally referred to as original creditors or issuers of credit by the FCRA) and everyone in the credit reporting business is out to make as much money as they can off of your unfortunate circumstances.  Collection agencies, credit card companies, and all other original creditors make it difficult for anyone trying to restore their credit as they have a vested interest in keeping consumers’ FICO scores as low as possible.  If everyone had an 800 FICO score and always paid their bills on time, collection agencies would have no business, original creditors could not charge exorbitant interest rates on late pays, and everyone would be eligible for a near zero APR on everything they bought on credit.  There would be no sub-prime loan companies because there would be no sub-prime credit.  Take a look at these statistics from a report by the non-profit, National People’s Action:

The nation’s largest payday loan companies have earned a record $1.5 Billion in combined annual revenues from high-cost payday loans.

• The nation’s major banks including Bank of America, JPMorgan Chase, and Wells Fargo finance approximately 42% of the entire payday loan industry nationwide.

• State regulators report that payday loans cost borrowers a minimum of $3.4 Billion in fees annually.

• Every year an estimated $3.1 Billion in wealth is “stripped” from the pockets of needy borrowers directly into the coffers of the nation’s payday lenders.

• The segment of the payday loan industry funded by the big banks results in a minimum of $1.5 Billion annually in wealth-stripping from excessive fees paid by payday loan borrowers nationwide

My point is that when you decide to actually start doing something about your bad credit, or investigate errors you might find on your credit report, you are up against an army of vile, unscrupulous vultures not unlike the creatures from the movie, "Lord of the Rings."  The good news is that you have the law on your side.  The biggest challenge for the layman trying to restore their credit rating is understanding their legal rights, and effectively communicating it to the bureaus and collection agencies.  The ideal solution is to hire a consumer protection attorney, but not everyone can afford to do that.

Not everyone will need an attorney.  Thousands of laymen deal with the bureaus and collection agencies effectively all the time and get their credit file fixed or raise their FICO scores.  However, be warned that if your credit situation is complicated, it is likely you will need assistance from a legal professional who specializes in consumer rights law, because it also likely you will have to sue to get your credit report restored and corrected.

Credit repair, at its core, is the ability to recognize errors on your credit report, communicate those errors to the powers that be in such a way that clearly demonstrate that you have a VERIFIABLE LEGAL CLAIM.  Therefore, you must be ready and willing to take your case to the courts of law if necessary.  I say this because that is really the only thing that will get their attention and compel them to act.  All of the credit reporting bureaus, collection agencies, credit card companies and other original creditors know their business practices can usually be characterized under what the Federal Trade Commission calls “unfair and deceptive practices” but they count on the average person being too intimidated or too poor to do anything substantial about being treated that way.  Most people can scarcely handle keeping food on the table, and making the house payment.  And because of the current economic recession, thousands are not able to that anymore.

In lesson three I am going to first cover the legal claims that can be made by a consumer in a civil lawsuit as opposed to the legal claims that must be initiated by federal regulatory agencies such as the Federal Trade Commission, the Consumer Financial Protection Bureau, or the Office of Comptroller of the Currency.  Because the laws that regulate the credit industry are federal laws, when the FTC initiates a law suit against a company like Experian, the legal caption says: The United States v. Experian, and the case is litigated by the US Justice Department in federal district court.  And the Justice Department usually wins because of the egregious business practices of the many businesses that control our credit information and issue credit in this country.
It has only been since the very recent creation of the Consumer Financial Protection Bureau that companies that are investigated by the CFPB for unfair and deceptive business practices have been required to pay extreme penalties and fines (similar to Punitive damages in civil lawsuits) for their actions as well having to pay back the money they received from consumers.  For example, in July of this year, the Consumer Financial Protection Bureau tacked on a $35 million restitution penalty in addition to the $150 million settlement with credit card company Capitol One for violating section 5 of the Federal Trade Commission Act for unfair and deceptive business practices.
Now, let's discuss the consumer dispute process and how to write an effective dispute letter to the credit reporting bureaus, collection agencies, (CA) and original creditors (OC).

Before you Begin
The entire re-investigation process is initiated by the consumer disputing the accuracy of information in their credit report, but before you even think about writing a letter or making a phone call to anyone, you MUST get organized.  Below is a brief list of the items you will need to prepare for the dispute process:

1. A notebook (s) to write down all conversations with creditors, credit bureaus or whomever you call about your credit report
2. A computer with word processing software like Microsoft Word so you can transfer what you write in your notebooks to an electronic or digital format
3. A monthly calendar to make appointments, record dates of phone conversations, and keep up with time deadlines
4. A postage budget to send everything via certified mail
5. Full copies of the FCRA, FDCPA, CROA, and the FACTA

Sending your first dispute letter
Opinions vary on what constitutes an effective dispute letter.  Some believe a consumer should send a letter that indicates their knowledge of their rights under the FCRA.  Others believe a consumer should adhere to the “kiss”(keep it simple, stupid) rule.  The truth is, both are equally effective if done correctly.  Personally, I believe if a consumer is writing the dispute letter a simple letter works best. Credit bureaus do not like, nor do they care if you know the law.  They only care if you are going to utilize it.  Complicated dispute letters that quote the FCRA don’t compel anyone to do anything.  Remember, you are not going to intimidate anyone with a letter that has all kinds of quotes from the FCRA.  The minimum wage worker at a credit bureau who receives your fancy letter is not going to care about you quoting the law.  It certainly will not further your cause at that point in the dispute process.  Moreover, they have lawyers who deal with lawsuits all the time.  Believe me, it doesn't impress or intimidate anyone.  Reserve that language for when you actually intend to sue.  That is what the, “intent to sue letter” is for.
Your first letter to the credit bureaus should be simple.  Below is a list of information that you should include in your letter:

1. Full legal name
2. Current address (include a utility bill for proof)
3. Social security number (include a photo-copy of your ss#)
4. A photo-copy of your legal picture ID
5. Phone number
6. List of accounts (include account #’s) you want to dispute.  Highlight those same items on the copy of your credit report you send with the letter
7. Brief explanation why you think the accounts are inaccurate (with supporting documentation if possible)

Remember to send everything by US Postal Service with Return Receipt so you have documented proof they received it. Document what you did in your notebook or on your computer.  As for the number of items you can dispute, some say don’t dispute too many at once.  I believe a consumer should dispute everything that is inaccurate on their report.  That includes identity information like a wrong letter in their name, a wrong number in their address, a wrong past address – anything and everything that is inaccurate!
A few points to remember
Always be professional when dealing with creditors, credit reporting agencies and collection agencies.  Be nice, but don’t be naïve! They are often dishonest and won’t think twice about lying to you.  That’s why they get sued so much.

• Don’t ever initiate a dispute by filling out a form over the Internet at the the credit bureaus’ website.  You might loose important rights by doing this, and it legally extends their time to re-investigate the dispute.
• Don’t write an overly aggressive letter.  It doesn't help your cause to be nasty to anyone.
• Don’t make threats to sue if you don’t intend to follow through.  If you intend to sue, send a “intent to sue” letter and be prepared to file you claim with the courts.

I have included a link to a sample dispute letter from the Federal Trade Commission website that you can use as a guide along with all of the information in this lesson.  There is other information on the FTC website that you might find useful, including the link to annualcreditreport.com where you can get a free credit report from all three credit bureaus.  You will find information on how they think a consumer should start and manage the dispute process.  They also have contact information for all three credit bureaus.

The FTC and credit repair

In 1914, Congress passed the Federal Trade Commission Act (FTCA), thereby creating the Federal Trade Commission (FTC). The commission was given the mission of preventing "unfair methods of competition" (Pub. L. No. 203, 1914), and was designed to complement the antitrust laws. As such, the FTC originally was conceived as a protector of business and competition, with no direct responsibility to protect consumers.

The FCT is the governing body of the entire credit industry. It has enforcement and regulatory power given to it by Congress. It wasn't until 1938 that Congress amended the FTCA to include protections for consumers as well as businesses (Pub L. No. 447). It was given power over "unfair or deceptive practices." The division of the FTC which actually enforces the laws and regulations is the Burueau of Consumer Protection.

The Division of Enforcement litigates civil contempt and civil penalty actions to enforce federal court injunctions and administrative orders in FTC consumer protection cases; coordinates FTC actions with criminal law enforcement agencies through its Criminal Liaison Unit; develops, reviews, and enforces a variety of consumer protection rules; coordinates multi-pronged initiatives to address current consumer protection issues; and administers the Bureau of Consumer Protection's bankruptcy program.

United States of America v. Credit Bureau Collection Services

Technorati Tags: FCRA litigation,unfair and deceptive practices,collection agencies

A nationwide debt collector has agreed to pay a civil fine of more than $1 million to settle Federal Trade Commission charges that it violated federal law by inaccurately reporting credit information and pressing consumers to pay debts they often did not owe.
According to the FTC’s complaint, the company and two of its officers illegally tried to collect invalid debts and reported them to the credit reporting agencies without noting that consumers disputed them. In addition, even after receiving information from consumers that a debt was paid off or did not belong to the consumer, the company continued to assert, no longer with a reasonable basis, that the consumer owed the debt, without trying to confirm or dispute the consumer’s information, in violation of the FTC Act.
The FTC charged that the company, Credit Bureau Collection Services, and two of its officers, Larry Ebert and Brian Striker, violated the FTC Act and the Fair Debt Collection Practices Act. The company also is charged with violating the Fair Credit Reporting Act by reporting information to credit agencies that consumers had proved was inaccurate, failing to inform the credit agencies that consumers had disputed the debts, and failing to investigate after receiving a notice of dispute from a credit reporting agency.
In addition to imposing the $1.1 million civil penalty on the company, the settlement order:

• Bars the defendants from further violations;
• Prohibits them from making unsupported statements to collect a debt or obtain information about a consumer;
• Bars them from making claims that a debt is owed or about the amount, without a reasonable basis;
• Requires the defendants, when a debt is questionable or a consumer questions it, to either close the account and end collection efforts or investigate the dispute. If they cannot show that the consumer owes a debt, they cannot sell the debt or provide it to any business other than the original client; and
• Bars the company from re-reporting information to credit reporting agencies that it had voluntarily deleted from credit reporting before December 2008.

The Commission vote to authorize staff to refer the complaint and consent decree to the Department of Justice for filing was 4-0. The documents were filed in the U.S. District Court for the Southern District of Ohio, Eastern Division.
The Commission recently released a video for consumers who are facing debt collection. The video is at www.ftc.gov/MoneyMatters, a site that includes information for consumers on managing credit, dealing with debt, and a variety of other financial topics. Here are some of the allegations contained in the Complaint issued by the FTC:

• Customers notified CBCS that address, name, or social security number information was being incorrectly reported to credit reporting agencies(CRA’s)
• CBCS did not conduct meaningful investigations when requested by consumers
• CBCS did not make a notation of consumer dispute and report it to CRA’s when consumer disputed information in their file
• CBCS directly or indirectly used false representations concerning the character, amount or legal status of a customers debt.
• CBCS in the course of collecting debts from consumers, defendants directly and indirectly have represented to consumers, expressly or by implication that the debts were valid and that consumers had an obligation to pay the debts

One would think that the CBCS is one of a small amount of collection agencies who are doing business this way, but that couldn’t be further from the truth. Most collection agencies engage in these types of unfair and deceptive practices as a rule, the exception to the rule are the few agencies that do not engage in those practices! CBCS just happened to get caught. As a credit repair specialist for several years, I have dealt with many collection agencies who are very dishonest and not reputable. The reason they get away with being so dishonest is because most people who have to deal with them are not savvy enough, or organized enough, or patient enough to actually file a lawsuit against them. Moreover, most people who have to deal with them are stressed out, low-income, and too tired to invest the time it would take to actually take a collection agency to court. Collection agencies that engage in unfair and deceptive practices count on people being too stressed out and busy to make them accountable for their actions.
When dealing with a collection agency, it is always a good idea to know your rights under the Fair Credit Reporting Act. Familiarizing yourself with the law is the only way to compel dishonest companies to abide by it. So before you attempt to restore your credit or dispute erroneous information in your credit file, make sure you are ready to take your case to court if necessary.

Your Fair Credit Reporting Act Rights





Do you know your FRCA rights?

Before you dispute anything on your credit report it is a good idea to know your rights according to the Fair Credit Reporting Act. They are:

1. The right to have your dispute investigated
All bureaus are required by law to investigate your dispute, usually within 30 days by contacting the creditor, collections agency or other information provider that supplied the data that is in question. Any information provider contacted in this way must launch its own investigation and report results back to the bureau.

There is a major exception to the 30-day rule. If the credit bureaus decide your dispute is frivolous they might tell you so and refuse to investigate. This is what happens if you repeatedly demand investigations into information that has been previously been verified. Needless to say this discretionary right of the credit bureau to name your complaints as frivolous can be very frustrating for people who are dealing with a creditor that refuses to correct its mistake.

2. The right to have erroneous information corrected
If the provider says the information is indeed inaccurate it is required to notify not just the bureau that originally contacted it but all the other major credit bureaus as well so that the error can be fixed and the item deleted. If the provider can’t verify the information it must be deleted from your credit report.

The bureaus can however reinsert the deleted information or undo the correction later on if the provider later verifies that the original item was in fact complete and correct. This exception can frustrate consumers who think they have clean reports only to see the negative information reappears on their report again after just a few months. However, you will have a clear cause of action if you know the information is wrong and you continue to tell them after it is posted again to your credit report.

3. The right to a written response
After completing its investigation the bureau must give you a written report of its findings and a free copy of your credit report if the investigation changed anything on our file.
Furthermore if the bureau later restores the information that was deleted or changed it must notify you in writing and provide you with the name, address and information of the provider who resubmitted the information.

4. The right to have a statement included in your file.
If the dispute doesn’t turn out the way you want you are entitled to insert a 100-word statement inserted into your credit report explaining your side of the story.
However as you read in the previous chapter these statements have no actual effect on your credit score and most lenders will not see it while assessing your loan. All most lenders see is that three-digit number that is your credit score.

5. The right to sue.
If a creditor or collection agency violates your rights by reporting inaccurate, unsubstantiated information or by failing to respond to your dispute you can sue the creditor or agency instate or federal court. Some people have even pursued these claims successfully in small claims court.
Hopefully you can solve all of your credit problems with having to involve a judge. However sometimes it takes the threat of a lawsuit to get results with a very difficult or unresponsive creditor or credit bureau.


Organizing a Plan of Attack
At this point you should divide all of the errors you’ve discovered into two major categories.
The first category should include:

• Errors in unpaid debts that belong to you
• Debts that you suspect may have been illegally re-aged (old debts that have been submitted by vengeful lenders to look like new debts see the Chapter 6 on Vengeful re-Aging in this section for more clarity about this.)
• Errors in collection accounts
• The second category should include:
• Accounts that aren’t yours
• Wrong information about paid up accounts
• Debts that were included in a bankruptcy and were not listed that way
• Anything in the second category can be disputed right away.

With your letter or email of dispute make sure to include copies of any documentation that you have that supports your assertion. Needless to say you should never send originals. After you have noticed the credit bureaus follow up by sending a letter with that certified receipt requested to the creditor that supplied the mistaken information. This puts the creditors and the bureaus on notice that there is a problem. Failure to act on their part regarding these mistakes is a violation of the Fair Credit Act and gives you grounds for a lawsuit if they don’t at least send you a letter l notifying you that they are launching an investigation within thirty days.

In many cases creditors and bureaus will correct legitimate errors with no resistance. However you are highly advices to monitor your credit reports at least every sic months to make sure the information does not pop up again in the future. If that does happen resubmitting the paperwork and correspondence you sent to the bureau in the first place can help you get the errors removed more quickly and permanently the second time around.

If the creditor or information provider insists that its information is accurate then you might need to dispute the information with them again or if you feel so inclined you can hire a lawyer. Sometimes all it takes is one letter from a lawyer to get a creditor to stop giving you’re the run around.
If you need a good lawyer to represent you in a credit report matter a good resource where you can find one is the National Association of consumer Advocates that can be found at www.naca.net. This organization provides referrals to attorneys as well as links to many sites devoted to do it yourself credit repair.

When it comes to collections you have a very important right as outlined in the Fair Debt Collection Practices Act of 2003. This most important of rights your right to have a collection account validated.
The right to have a collection account verified refers to your right to ask a creditor to verify information. There are reviews of its records and any information supplied by the consumer and the lender then decides if the information on your credit report is right or not.

Sometimes when a collection agency is asked to validate a debt the process can get pretty complex. The collector must prove to the credit bureau that the debt is your responsibility and also that they have the legal right to collect it from you. This also means that the collector has to cease all collection activity until they provide this evidence to you. If the agency can’t validate the debt it must end its attempts to collect on the debt and stop reporting the collections account to the credit bureaus.

Note that your right to validation applies specifically to collection agencies and not the original creditor. Collection agency records are notoriously less reliable than those kept by the original lenders. As this is so, the validation process is intended to protect consumers from creditors that go after the wrong people or misstate the amounts of money owed on a credit report.

To validate a debt, the collector needs to provide current documentation obtained from the original creditor proving that you do indeed owe the money. This process of validation can be a powerful weapon in your battle to clean up the collection actions on your credit report. This is because more often than not collectors really don’t have the accurate documentation required to verify your debt. This is especially true if the debt has been passed around from one collection agency to another. Frequently they have little more than a computer printout to back up their claims and the Federal Trade Commission as made it clear that a mere itemization isn’t sufficient proof to constitute a validation of a debt.

The flaws in this validation process can work greatly to your advantage. Not only help you eliminate collection accounts that don’t belong to you but it can also help you get rid of some debts that do belong to you too. Surprisingly you can get accurate harmful information removed from your file simply because there is no trail of documentation attached to it.

Sometimes the collection agency won’t bother to verify the account especially if it’s too old or really small. If that’s the case the collection is usually dropped from your report without much fuss.
In essence, if a collector fails to respond or can’t provide sufficient evidence that you owe a debt it’s supposed to remove the collection form your report. If that doesn’t happen you can bring that matter to the attention of the credit bureaus and ask for reinvestigations. Make sure that you make it clear to the bureaus that this is not a repeat of your earlier request but rather let them know that you are contacting them because the collector did not comply. If the account is not removed at this point you have both the credit bureau and the collection agency on the hook for credit reporting violations and can pursue a lawsuit.

Employers who make hiring decisions based upon an applicant's credit report

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Are they judging you based upon your credit score?

Have you ever applied for a job, got to the second interview, had the discussion about salary and benefits, had a really good feeling about getting the position, only to have the wind knocked out of your sails because the employer needs to check your credit report?  Several months ago, a close friend of mine applied for a position with the US Department of Justice's local Seattle office and after the first interview, she was denied further consideration because of the information they found on her credit report.  They told her (in so many words) that the reason they require a clean credit history is because people who have bad debt can somehow be tempted to do unethical things on the job.  In other words, the content of a person's character is a direct result of their financial condition.  I could not disagree more with this flawed logic. But more on that topic later..

My friend has been unemployed for 8 consecutive months, haven't found full time work in almost 3 years, and has applied either in person or online to over 700 jobs with no success.  I'm telling you her story because my still employed friends keep telling her that many people are in the same position as she is; their unemployment benefits have run out, their home has been foreclosed, and things have reached a critical level financially. 

It truly amazes me how many peoples lives have been utterly and completely devastated by the economic recession and home foreclosure crisis.  We have all heard about how the home foreclosure crisis happened, who's to blame, and what the president is trying to do to help a fraction of those people who didn't loose their home, fight to keep it.  What about the people who must rebuild their lives from nothing because of not being able to pay their bills for all this time?  How will they survive a credit check if they haven't been able to pay their bill at all, let alone in a timely manner?

According to the US Bureau of Labor Statistics, the national unemployment rate is 8.3%.  Nationally, That percentage converts to about 26 million people.  And that's not to mention what economists call the real unemployment rate that includes people who have been forced to take part-time jobs, or seasonal positions, or those who are working jobs that pay way below a living wage, or people who have stopped looking for work altogether.  Those economists say the real unemployment rate is somewhere between 17-20 %!  In my home state of Washington (not the District of Columbia) the unemployment rate is 8.7%, just above the National average.   

In recent years, employers have been trending towards using credit reports to screen out potential applicants who might be untrustworthy or unreliable based upon an unsatisfactory credit history.  According to an article written by New York law firms, Dechert LLP, and Associated Corporate Counsel because of this corporate trending towards using credit reports in hiring decisions, federal regulations are expanding in an attempt to avoid possible discrimination law suits.  In recent months, the The Equal Employment Opportunity Commission has likewise stepped up its enforcement
efforts in this area. For years, the EEOC, like many state fair employment practices agencies, has taken the position that the use of credit reports in employment decisions has a disparate
impact on certain minority groups. Recently, however, the EEOC has become much more
aggressive in trying to curb employers’ use of credit checks.

In an attempt to send a firm message to employers, the EEOC brought a class action suit in December 2010 against Kaplan Higher Education Corp. in the Northern District of Ohio, alleging that the company engaged in a pattern or practice of discrimination by refusing to hire applicants based on their credit histories. The EEOC contends that this practice has an unlawful disparate impact on African Americans. It's not just African-Americans who are feeling discriminated against by this relatively new trend, but all people who were adversely affected by the economic recession.  For Blacks, the situation is obviously much worse.  The unemployment rate for them is somewhere around 20% and that was before the recent economic recession.  A Vermont law going into effect on July 1, 2012 will severely limit the use of consumer reports by employers during the job application process. Joining California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington, Vermont is the eighth state to pass such a law, with Vermont's arguably being the most restrictive to date. For a full summary of the new Vermont law, click here - http://www.jdsupra.com/post/documentViewer.aspx?fid=4a2b9a29-984d-4000-883e-1f4427f51632

To date, 61 bills in 29 states and the District of Columbia were introduced or pending in the 2011 legislative session. The total number of states that limit employers' use of credit information in employment is now seven: California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington. Washington enacted legislation in 2007, Hawaii enacted legislation in 2009, Illinois and Oregon enacted legislation in 2010. California, Connecticut and Maryland enacted legislation in 2011. In my home state of Washington,


According to John Ulzheimer at http://www.credit.com/, Equifax has chosen to cease selling credit reports to employers for pre-employment screening. Apparently, the profit from selling this type of credit report was not worth the risk to Equifax. There has been a lot of reporting about the trap that potential employees find themselves that starts with them becoming unemployed, leading to them getting behind on their bills, which hurt their credit scores and then, when they finally get an interview, they don't get the job because their potential employer doesn't like the looks of their credit report, which leads to further unemployment and further damage to the credit report. 

How FACT-ACT Section 312 amends FCRA Section 623

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Today on C-Span, I watched and listened to a Senator speak about a bill that would infuse small community banks with about 7 billion dollars to give our lagging economy a shot of much needed "adrenaline." While the recent economic downturn has wreaked havoc on general bank lending, small banks (those with revenues under 10 billion annually) have suffered the most. Even as banks like Goldman Sachs, Citicorp, and Bank of America (which currently holds more mortgage paper than any bank in the US) are starting to pay back the TARP (Troubled Asset Relief Program) funds they borrowed from us tax payers, they still refuse to loosen their new, tighter lending policies. This fact is forcing our government consider new ways to stimulate the economy without raising taxes. Timothy Geithner, the current US Treasury Secretary said at a Senate hearing that TARP funds were ultimately meant to spur small business, but admitted that the program has not performed as well as anticipated. Anyone who is smarter than a tree knows that banks aren't going to start lending again until people start working again. While I don't subscribe to the Ronald Reagan trickle-down economic theory, I do believe that big and small businesses, including banks will be last to participate in any kind of economic recovery until they see a sharp increase in jobs all over the country.

Unemployment compensation claims are still increasing for heavens sake!! The Obama administration is now touting that at least claims aren't increasing at the same rate they were a year ago. I guess that's an interesting perspective, but it does not help those who still cannot find work after more than a year of being on the unemployment compensation rolls. Let's be clear, the US economy is still in trouble, and some are even talking about a "double-dip" recession. Most agree that the housing crisis was the cause of the recession, and is likely the key to any future economic recovery. Because the housing crisis also caused a crisis of dependable and accurate credit information, our banking system has become heavily dependant upon procedures and systems that do not allow misinformation to occur.

To this end, Congress has amended the FRCA Section 623 with a new FACT Act law that is located at Section 312. Section 623 of the FCRA is entitled: Responsibility of Furnishers of Information to Consumer Reporting Agencies. In the interest of accuracy, especially with regard to a consumers ability to dispute the accuracy of information directly with an issuer of information/credit, or an original creditor, companies realized it was in their best interest to have policies and procedures in place that show how they control, and access data on it's customers.

Section 623 places a requirement on issuers of information to provide accurate information to the credit bureaus. The FCRA gives consumers the right to directly engage the issuer of credit in the dispute process by demanding to see exactly HOW they came to their conclusions about debts they say the consumer owes them; Issuers are required to provide, upon written request, all documents that prove the legitimacy of the debt; prove the alleged debt is strictly accurate with regard to the amount, correct dates of delinquency, and all late payments. If they cannot provide proof in those and other areas, they must cease reporting the information to the credit bureau, who in turn must delete the debt listing from the consumers credit file.

The new FACTA Section 312 gives FCRA Section 623 the teeth it should have been born with. It places not only a requirement on issuers of information to keep complete and accurate records, it also creates a right of the consumer to bring a lawsuit under FCRA Section 616 - wilful non-compliance. The FCRA requires that issuers of credit must perform a "reasonable investigation" and that they must have appropriate audit plans in place to evaluate their own ability to retain complete and accurate records. If they do not have such a program in place, there is no way they can claim they are following reasonable procedures to insure their data is accurate.

What does all of that mean for a consumer trying to restore their credit? It means the dispute process just got a little easier, in some ways. The dispute process can be complicated, but these two important sections of the FCRA and FACTA make it easier for the consumer to navigate the process. Just remember, my brother in arms, that credit repair is not about finding loopholes in the law, or luck. It's about protecting your rights as a consumer and holding companies accountable for violating those rights.

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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