have you fixed someones credit?

Question

i took a course last year on finding tenants who want to purchase a house but they can not due to bad credit --> lease options

i have a paper that shows me how to fix their credit. basically i file a complaint.  1 letter to credit bureaus, 1 letter to creditors (best buy etc.) and letter 3 to the credit bureaus again.

has anyone ever done this?does it work? heard of it?

Adam Hershman · Answer

Hey Gary,

This is a pretty common myth in the credit industry, and there is actually a much better way to approach the situation. Basically you have to understand how derogatory accounts work on a credit report, and how debt collection agencies work.

Essentially by sending a letter to the credit bureaus disputing the validity of the debt, you give a positive indicator to whoever holds that debt that you are trying to do something. If they can provide verification of the debt to the reporting agencies, then you're stuck in the water, and more likely to receive calls and letters attempting to collect the debt. The collection company now knows they have leverage on you, because you now want to pay those debts, which means you want to pursue an opportunity but it requires that you clean up your credit.

A much simpler idea is to use a "pay for delete" arrangement. Essentially you offer a sum of money based on the age and amount of the debt, and offer this to the collection company in return for the collection company DELETING all reporting of the debt. They have the absolute right to report, not report, or delete these records. You will want to make it very clear that the offer is not an acknowledgement of the debt, but simply and effort to remove it from the credit score. Also remind them that you are aware of the fact that whether a collection account is paid or unpaid, it still has a negative impact on credit, so there is almost no chance that the debt will be paid if a "pay-for-delete" arrangement can not be made.

Usually collection companies are happy to accommodate these arrangements for a few reasons. It isn't their debt, you don't owe them the full amount of the debt, and they usually buy debt for around 4% of loan value on average. This means that while the original debt may be for $1000 you may be able to settle with the collection agency and have the record deleted for less than half of that amount. Again you will want to look at the age of the debt, usually older collection accounts are easy to negotiate because they have gone unpaid for so long, most collection companies have written it down as a bad debt purchase, so they are even more excited to get any return on the purchase.

I don't believe that people should default on debt, and it should be viewed as a moral obligation as well as a legal obligation in my opinion. That being said mistakes are made and people need a way to rebuild, and besides, I certainly have no love for collection companies.

Many people are scared or nervous to deal with debt collectors, and it is an embarrassing thing to have someone calling you daily to collect money that you might have been obligated to pay. What you need to remember is you have what the collection agency wants, MONEY! If they want any money from you (or whoever you are helping to repair credit) make them work for it, and make sure it actually benefits you to pay them.

Adam

Adam Hershman · Answer

Hey Gary,

Like I said, this is a pretty common misconception. Currently it is incredibly easy for a debtor of any kind to provide sufficient "proof" of the debt, according to the reporting agencies. Good news is that will be changing come Nov. Here is an article about the changes http://www.nytimes.com/2015/03/10/business/big-cre...

The highlights are all good, medical bills will no longer be reported until 6 mos. after default to allow time to haggle with insurance and medical debt will be given less weight moving forward. Also there will be provisions to add positive reporting for tenants (this could be huge for you) which would allow landlords to report on time rent payments in addition to the current late payments being reported. That means you could tell your tenants if they pay on time you can report that to their credit score, very beneficial for most landlords.

Here is the part that will most interest you in regards to disputing first. Now if the debt is legitimately not yours (or who you are helping) then absolutely send a verification letter. Don't send one if you know the debt is yours (or who your helping) because they will easily prove it and increase collection activity, see below for the new changes.

From above linked article

Even though consumers are entitled to dispute any inaccurate information in their credit reports, the entire process has been criticized by consumer advocates for years: The bureaus often outsource thousands of disputes daily to workers overseas who generally are told to translate the problem into a two- or three-digit code that is fed into a computer; the code and any documentation are sent to the creditor. If the creditor verifies the information, no further investigation takes place.

Now, those automatic rejections will no longer be tolerated. And specially trained employees will have to review all supporting documentation submitted by consumers involving mixed credit files — in which aconsumers’ file is blended with another person’s report — fraud or identity theft.

So as you can see the current system makes it very easy for creditors to verify debt to the reporting agencies. Again like I said, if the debt is yours (or who your helping) then you should NOT send a verification letter first, because they will prove the debt easily, and now they have a better position from which to negotiate the pay-for-delete price. Additionally if they don't accept your pay for delete offer, you can no longer send a cease and desist letter because the debt has already been verified as yours.

Adam

Adam Hershman · Answer

Hey Randy,

I assume you were asking me?

Essentially what you will need to do is draft a letter. It doesn't need to be written by an attorney, it just needs to have some general language regarding the deletion of the account reporting, and not reporting on the account again in it.

Here is a sample I prepared for a friend, I don't do this type of work professionally:

Collection Agency Name

Date

Account # if you have it, if not use whatever information your credit report has (i.e John Doe - City Bank - $1001 - Opened 7/27/2004)

To Whom It May Concern,

This letter is to inform you that the validity of this debt is disputed. I am unaware of this account and have no verification that this debt is mine. I know of this account based on my credit report(s). I have the right to dispute this account, as well as request for verification and validation of this debt, however, in an effort to quickly resolve this matter:

I XXXX, am willing to pay you, XXXXX, the sum of $XX.XX on the condition that this account be deleted from any and all reporting agencies, that this account be considered satisfied and closed, and that no future reporting to any/all agencies will take place.

I am aware of your rights as well as my own, and I know that you are the source reporting this account. I know that you have absolute right to report, not report, or delete it from all reporting agencies. We are both aware that paying this unverified debt is of no benefit to me and merely having a collection on my credit report has a negative impact, whether paid or unpaid. The purpose of this proposed restricted settlement is to have this item remove from all reporting agencies, this is not an acknowledgement of liability for this debt in any way, nor is it a promise to pay, a renewal, an admittance to this debt or an agreement that this debt is mine.

If you agree to the terms and accept this proposed agreement, I will send you certified funds immediately upon receipt of this signed agreement. The funds will be sent only in exchange for deletion of ALL records related to this account from ALL reporting agencies, this debt will be considered satisfied, with nothing owned, and nothing further to collect. Since certified funds will be sent, all information about this account must be removed from all reporting agencies within 15 calendar days of your receipt of the funds. If you agree to the terms and wish to accept this agreement please have an authorized representative sign this agreement, and print clearly their name and position held. It will be implied that this letter shall constitute a legally binding contract, enforceable under federal and state law. Please also include with this signed agreement a company letterhead stating you received, signed, and agree to this restricted settlement offer and its terms.

I will expect your response no later than 20 days from your receipt of this restricted settlement offer, and it will be withdrawn 30 days after today, March 3, 2015. If you decide not to accept this restricted settlement offer and begin attempting to collect this unverified debt, I will withdraw this offer immediately, send a cease and desist letter, and request full validation of this unverified alleged debt as is provided by the Fair Debt Collection Practices Act.

Thank You

Then just attach a page for them to sign, print name and title, and date. In this case the debt was a small ($700) credit card debt from when he was in college. I believe the offer was $100 for the delete, but again, I don't do this professionally so I leave deciding how much to offer up to you. Like I said, old debt is easier, so in the case a $100 offer for $700 debt that is 4-5 years old would likely be accepted. Most debt collection agencies would rather take some money now, then wait another 4-5 year trying to collect, especially considering they most likely purchased the debt for 4%, so $28 in this case. The key is you want to make clear that you do not acknowledge the debt (as you may need to ask them to verify it later if they do not accept) and that if they accept your offer they will delete all reporting, and never again report on that account. Some of the more underhanded collection agencies will send a response saying something to the effect of "Sure we will accept  your offer of $100, and close your account" but not sign or return the agreement you sent. That is not what you're looking for, and they will most likely never delete the record and keep reporting it as a closed account, but with funds still owed. The only way this works is if they agree to delete the records, and never again report. Essentially if they don't sign this agreement or an agreement with substantially similar language, don't send them any money.

Adam

Account Closed · Answer

you renamed me gary? what

Randy Frazier · Answer

Adam This is Randy can you call me. I am the guy that posted yesterday. I renamed you Gary I think  you can tell I am not great on navigating the computer

Randy Frazier · Answer

You taught me today. I really want to say thanks.Soon I will be sending you some business!

Adam Hershman · Answer

@Jerry Padilla & @Lakeisha Robichaux

Thanks!

This is something I am pretty passionate about, it's one of the few areas where you can really help someone on a life changing level, with nothing more than a little information and insight. Granted people have to act on the information, and that can be nerve-wracking but when they see their credit score jump by 25-50 points in 2-3 weeks, its worth it.

Fred Heller · Answer

The only way to "fix" credit is paying bills on time and allowing 7 years to pass from the time the derogatory mark was placed on the credit report.

There are scams out there promising to fix credit. All they do is send letters to the credit bureau disputing the account. The credit bureau then asks the creditor to confirm the account. The hope is that records are lost, people are too busy, things fall through the cracks, and the creditor doesn't respond. When it doesn't work, they do the same thing the following month, charging the customer along the way.

And, by the way, the credit bureaus and creditors have been on to this scam for years.

The only way to legitimately get a bad mark removed from a credit report is to negotiate an agreement with the creditor to remove the account from your report if you pay it.

Jerry Padilla · Answer

@Adam Hershman Great response!!

have you fixed someones credit?

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