#5 – The Inside Story on Credit Repair

You now know more about credit reports, credit scores, and the devastating affect of poor credit than you will ever learn in school, and more than 95% of all the other people in the country. In Day 5 – the final day of this series – we will tell the rest of the story – the inside story. What credit bureaus, and many creditors, really think of consumer credit report inquiries, and how they are organized and equipped to deal with your credit report disputes as quickly and as cheaply as possible with little concern for the consequences to you.

You can learn much about how things really work from the sworn testimony of credit industry experts who regularly testify before Congressional committees or as expert witnesses in open court.

What Court Testimony Reveals About How Consumer Disputes are “Investigated”

The job of a credit bureau dispute department employee, even if titled “investigator,” is solely data entry. No matter how detailed the written dispute, the credit bureau will merely translate it into a two digit code and, usually by automated means (ACDV), send a message to the credit provider identifying the code its employee believes best describes the dispute. You should know that at least one  of the major credit
information providers (Experian) had outsourced its entire investigation division – lock, stock, and barrel – to Jamaica.

The employees of all three credit bureaus operate under a quota system whereby each employee is expected to process all of the disputes of an individual consumer in less than four minutes. Worse still, the “codes” used by both the credit bureaus and their subscribers (banks, credit card companies, and other credit providers) are limited in number and rarely describe the actual basis for the consumer’s dispute.

Testimony from court cases shows that the “investigators” at the credit bureaus never send the consumer’s supporting documents to the credit provider.

[Q] . . . The dispute investigator looksat the consumer’s written dispute and then reduces that to a code that gets transmitted to the furnisher?

[A]. Yes.

[Q]. Does the furnisher (credit provider) ever see the consumer’s written dispute?

[A]. No. . . .

[Q]. Are there any instances in which the dispute investigator would call the consumer to find out more about the dispute?

[A]. No.

Credit bureaus do not believe they have any duty under the FCRA to independently evaluate the documents and disputes before them. Rather, they continue to assert the position that their only duty in conducting an investigation is to confirm whether or not the credit provider, which furnished them the information in the first place, wishes to maintain the disputed item as is.   Trans Union brazenly admitted this fact on the record.

[Q]. What happens when a disputeinvestigator gets some type of documentation, other than the consumer’s dispute, that comes from a third party, but doesn’t come from the furnisher?

[A]. We wouldn’t be able to act on any instructions or anything in there. They’re not the furnisher of the information.

Trans Union’s policy is identical to that of Equifax and Experian. The credit bureaus simply parrot whatever they receive from the information furnisher. How diligent are the credit providers in investigating your dispute?

How Diligently Do Credit Card Companies Investigate Your Dispute?

In a 2003 Federal case MBNA, the largest credit card company at the time, admitted that its sole procedure for handling consumer disputes under the FCRA was to compare the credit bureau’s data to its own summary of the account in its computer. An amazing response when you know that the accuracy of the data in MBNA’s database was the subject of the consumer’s dispute!

MBNA’s 12 “investigators” were expected to perform an average of 250 investigations per eight hour day. They were never to consult original documents and were not provided any means by which to determine if the account summary within their computer was in fact accurate.

The credit providers merely proofread the consumer dispute form from the credit bureau and match it to the data within their computer’s account screen. There is no other means by which to verify and correct a credit reporting dispute once the error has worked its way into the credit provider’s computer account record. One expert said that “None of the major banks or credit card companies of which I am aware reviews original documents or paper records in the investigation of a consumer dispute.”

The Deck is Stacked Against You – Unless You Know What You’re Doing

It’s a wonder that any disputes are resolved in favor of the consumer, and the fact is that only a small proportion of them are resolved favorably to the consumer.

This is the kind of hard-hitting, investigative reporting that you need to know before you start the credit score improvement process. The major point that you can take from this lesson is the knowledge that credit improvement is serious business and not a casual dalliance. Whether you choose to do it entirely yourself, or go the self-help assisted route, or hire a credit repair law firm should depend on how much time and effort you are willing and able to put into the project.

Your Ace in the Hole

Earlier in this lesson we covered the consumer horror stories that make it seem impossible to fix a credit report, yet we know, either from personal experience, or from credible sources, that even the most serious and damaging negative information like bankruptcies, judgments, and liens are, in fact, deleted from credit reports daily.  How can that be done?

By law -“The Only Negative Information that Can Legally Stay in Your Credit Report is What Can Be Proved (by the Credit Bureau) to be Accurate and was Processed According to Proper Procedure.”

But what is the hot button that make the credit bureaus pay attention to your dispute and follow the law?

The Dispute is the Key

The hot button is the dispute letter, which is referred to in the industry as the “Dispute.” For relatively straightforward credit report errors, like an account that was paid in full but reported delinquent, you learned that a concise, thoughtful dispute letter accompanied with proof of payment would likely solve the problem. Such a letter is within the capability of almost everybody with the time to write one.

To successfully resolve more complicated credit report claims, or claims that come back “verified” from the credit bureau,  the writer must be knowledgeable of the inner workings of the Fair and Accurate Credit Transactions Act (FACTA) and the Fair Credit Reporting Act (FCRA). The Dispute must be specially crafted to challenge, for example, some aspect of the data collection procedure, or the data entry procedure, or an element that questions the integrity of the original information, or the method used by the credit bureau to verify the information, or by the
creditor to investigate your claim.

In many cases the credit bureaus and creditors are just better bluffers than the consumer. A credit card or consumer finance company may be reporting a late pay from two years ago when in fact the computer records that could have verified the late pay were lost or made useless in a merger or database changeover. If your Dispute does not call their hand about the inadequacy of the investigation you will never know and the item will remain on your report by default.

The Dispute must convey that there is a continuing violation of some provision of of FACTA or FCRA even without quoting chapter and verse. The words, and even the order of the words used in a Dispute matters a very great deal, indeed.

If the only thing you take from this course is the concept that information on your credit report that may have been accurate and verifiable at one time may not be verifiable today – you graduate with honors. The credit bureaus must prove both – accurate and verifiable – to keep the item on your credit report.

Credit Repair Law Firms

Credit repair law firms like Lexington Law and Ovation Law are successful in most cases in removing negative credit information because over the years, and from the experience of handling thousands of credit report cases they have developed an extensive library of Disputes which have proved successful. In a way battle-tested Disputes are like beating the credit bureaus and credit providers at their own statistical game.

You should consider hiring Lexington Law or Ovation Law if you feel that you are not up to the task of taking on the credit bureaus on some of the more complicated issues, or if you are not prepared to aggressively continue the fight when some item in your original dispute is “verified” by the credit bureau. The fees are a little less than $100 up front retainer and $35-$55 per month thereafter for so long as you remain a client. They both have generous refund policies.

There are other credit repair law firms and non-lawyer credit repair service organizations on the Internet. Some are probably OK, and some are worst than useless. Don’t bother with them. You are not going to do any better than using either of these two specialty law firms. The right kind of experience and a good reputation count for a lot in this business.

Lexington and Ovation will provide you with frequent progress reports but they will never show you their collection of Disputes. You can understand why. The Disputes are their proprietary information that sets them apart from their competitors. The Disputes are the trade secrets of the credit repair industry and are protected as aggressively as any other secret formula.

For what you pay and what you get Lexington Law and Ovation Law are good value. They operate on economy of scale so they can charge much less than your own attorney could and they will have more expertise too. If there is a downside it’s that if you hire them on the minimum fee schedule the credit repair law firms will not move nearly as fast as you would like them to.

Assisted Self-Help

The third way, and if you stuck with the course this far may be suitable for you, is to go with assisted self-help.

You do all the work and get your expertise from an experienced and reliable resource. The self-help resource we used and would use again is Consumer Publishing Group’s “Credit Secrets Bible.” They’ve been the top selling credit repair course since 1996 so we know they will be around for us down the road as well. They know the business inside-out and they update frequently. Most importantly they provide you with more than 50 proven and battle-tested Disputes and show you step-by-step how you can easily customize them for your particular situation. We can’t say enough how important these Disputes are to your success cleaning up your credit report. Even for dings you probably don’t think you can get rid of.

One way to analogize the choice between the established credit repair law firms and the Credit Secrets Bible is to compare a lawyer who practices his whole career in a county court. He may be competent and always well-prepared but he knows that he is going to see that judge again, and is always mindful of that. The Credit Secrets Bible (they are not lawyers and do not claim to be) would be more like the out-of-town guy who is a little bit of a rogue and is not too concerned about displaying an edginess or being called rude or aggressive, if you know what I mean.

Use Chaos Theory To Make Your Life Less Chaotic

One of the big scientific discoveries of the last 100 years is that even tiny changes in seemingly unrelated initial conditions can have dramatic affects on the outcome of everything from a national economy to global weather patterns. You can apply this powerful principle to your own life by doing something, right now, to change the initial conditions of your credit report. Don’t put if off because you think it won’t make a difference.