Consumer protection has grown stronger in recent years. The Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and the Fair Credit Billing Act (FCBA) are just a few of the federal laws in place. These tools are essential during the credit repair process.
Although raising your credit score is important, it should always be done legally. Shady practices involving new identities, lying to the credit bureaus, and even defrauding the government will only land you in more serious trouble. Consider the three solid (and legal) methods below. They offer fair strategies to yield fair results.
The Goodwill Letter
So, your credit report isn’t perfect, but hope for redemption still exists. Even if those negative items are factual, a goodwill letter could help raise your credit score. This method allows you to appeal to your creditor directly. Many companies are sympathetic to their customers, especially in the cases of:
- Temporary hardship
- Loss of employment
- Rare forgetfulness
- Computer error (e.g., a malfunction bill-pay system)
Outline your previous payment history and highlight your long-term relationship with them. If this is your first offense, make sure your creditor knows it. Include other information such as your:
- Regret surrounding the situation
- Intention to keep a clean record in the future
- One-time use of the goodwill route
Many companies will have negative items removed from your credit report if you ask, especially if they risk losing you as a customer. While this method is not foolproof, it is the only way to legally remove accurately reported information from your credit report.
Debt Validation
You may discover some puzzling items on the path of credit repair. Your credit score could be weighed down by items that are:
- Inaccurate
- Not yours
- Outdated by the Statute of Limitations (SOL)
The FDCPA allows you to question these types of unverified debts. Begin by drafting a letter to your creditor, asking them to provide the following information:
- Proof that the debt was ever owed
- Proof that you are obligated to pay it
- Proof that they own your debt
- The amount you owe (including penalties, interest, and fees)
- A copy of your complete payment history, including the original debt contract or agreement
If your creditor cannot or will not deliver this information, then they must remove it from your credit report.
Credit Dispute
Even if debt validation proves effective, your credit score troubles may persist.
Consider the following example: Lily recently sent a debt validation letter to a local department store, asking them to prove her account carried a delinquent balance. After spotting a clerical error, the department store responded and told Lily they had corrected her account balance and she no longer owed an overdue amount. Six months later, Lily was shocked to find the negative citation still present on her credit report.
In Lily’s case, debt validation only solved half her problems. While she was no longer plagued by collection phone calls, her credit score was still suffering unfairly. This is where a credit dispute comes in.
Similar to debt validation, this method allows you to contact the credit bureaus to investigate questionable information. The information must be removed if the credit bureau cannot find supporting information. This option is especially useful when creditors fail to report updated information to the credit bureaus who are bound by the information they have (and limited by the information they don’t). Check your credit report periodically to avoid this type of pitfall. It could make all the difference.
