Welcome back to Part Two of the How to Fix Your Credit the Bad Ass Way! Its Michelle again, and I’m back to talk to you about the next step in the process to fixing your credit score!!
Now that I had my list I had to send out my letters. Remember last week when I said do not dispute online? This is where this very important rule comes into play. Credit bureaus use a system called eOscar; this is an automated system that helps “sort” credit disputes. What happens when you place an online dispute, you are not getting a real person. I don’t want to mislead you either when you send a letter a real live person is opening your letter but they enter your dispute into the eOscar system. All of our disputes then fall under a very small amount of categories, which is why some of our debts that are truly not ours on our report come back verified. What does that mean? If there is a debt on your report that’s not yours, but it’s been verified, meaning they “checked” it to make sure that it’s yours. But in reality they put it in a certain category code and it says verified via the computer. Seems legit right?
For example, one debt I am still working on is a paid off car loan. My fiancé has such a good heart; he bought a car for his previous girlfriend. When they were living together, he made sure all the payments were made, but when she took over after they went their separate ways, she defaulted just about every month! There were more late payments then there were on-time payments. During my investigation on how to repair this, I read about goodwill adjustments. With a goodwill adjustment, you simply write a letter or make a phone call and plea with the original creditor that you made some mistakes in your past and would be forever grateful if they were to remove your late payment. They don’t have to but it all depends on how friendly you are and how friendly the person who picked up the phone is. I have heard some people will hang up and call back just to get a new person. So, I dialed the number, handed him the phone and it was ringing… after my fiancé gave his story, the person on the other end told him they had no record of him having any relationship with this company. He was the primary signer and she was the co-signer. I was a bit confused but this played into our favor! Since they had no record of him having any relationship with them, even after supplying them with the VIN number of the vehicle, they cannot report it if they cannot validate it. They told him to dispute it with the credit bureaus to have it removed. When we did dispute it to all three credit bureaus we received a letter back from one saying they had removed it but another one said it was verified. How could this be possible?
This is where eOscar comes into the mix of things. They will take your dispute enter it into a computer and the computer spits out a numbered code. This code will be the determining factor if the debt is a valid debt or not. A lot of times they will check that the original creditor had supplied them with the correct information and that is all they check. Rarely do they ever call the original creditor to verify, they merely send over a code that gets spit back and BAM! It’s verified. You, then, get a letter stating it was verified and to take up your problem with the original creditor.
The “verification” and “validation” thing is a little confusing right? So what’s the difference? When you are verifying a debt it means you are asking if this is my debt. When there’s something on your report that doesn’t seem like it’s yours, you call to have them verify that it is, in fact, your debt. It’s a basic yes or no answer. But when you are validating a debt, they need to send you proof that the there is signed documentation of the relationship with that company. You know when you go to the hospital or the doctor and they make you sign a form saying you’re responsible for the bill?
There is more to this process so don’t get discouraged if you get one of these letters back during your process. We will get back to this a little later because we first need to send out the letters.
Sending your letters!!
When I sent out letters for our reports, I used all my research and searched online for a “debt validation letter” there are many forums and a whole lot of people who love to help you out with this. They will give you examples to use. (Here’s the one I used: Collection Agency Letter) Make sure you plug in your own information before sending them out. The debt validation process is done the same way, really no matter what the letter states so feel free to read some examples and come up with your own. The debt validation letters are going to be sent to the people who are claiming you owe them money (Debt collectors, that Macy’s card you defaulted on, etc.). Always, always, send this first before doing any kind of money exchanges. A lot of times, even if you know it is yours, they do not have the proof to be reporting it on your report, so because they placed a damaging item on your credit file, you want them to show you it is yours before you start in negotiations. (If you have more than one debt on there that has a balance and you cannot afford to be negotiating all of them at the same time, start with the smaller ones or the ones that are falling off first – the ones you can afford).
When you send out a letter to validate a debt, send one every time you get a notice of a new collections account and every time BEFORE you acknowledge it is your debt. Sending letters is a more formal way to communicate with them versus calling. You have all your negotiations and requests in writing.
The collection agency has 30 days from the date they receive it (give a few days for mail to go to them and to come back to you) to reply to your request for validation. If they do not reply, they are in violation of the law and they no longer have a right to report the debt on your report.
Even if you owe $0 on the debt, send a letter anyway. If they are reporting a debt, even if it is paid off, they still have to validate it. A lot of times, they will not send anything back in the 30 day time because it will cost them money to send you a letter stating it is validated, plus the man hours to look into the validation. It costs them and you already paid them. Once they do not reply, this is in your favor because they are in violation of the Fair Credit Reporting Act (FCRA) you have the right to request removal of the item.
Once you have typed up your letter, you can find the address of the business you need to send it to on your credit report. Send all letters CERTIFIED MAIL with a RETURN SIGNATURE. As I was sending my last letter, the post office did mention that I could use a return signature through my email instead, which would be cheaper; I like the paper copy myself.
When validating a debt, debt collectors have to prove it is your debt according to a court case that was won. (Debt Collection Practices Act, 15 USC 1692g sec. 809 [b]) They have to have solid proof from the original creditor that you actually owe this debt – and they have to show you. They cannot send you a letter stating “You owe $350 from Macy’s, please contact our offices immediately to make a payment” Solid proof – your signature, original documents, etc.
Once you send out your letters, it is a waiting game. Cross your fingers they don’t reply, but in our case some replies were good. On a debt that was going to stay on the report the longest they sent a letter back stating they have went ahead and removed the debt from all the credit reporting agencies. This is a timely waiting game from this point out but sometimes you get pleasant surprises.
Your letters are out and you’re waiting for your 30 days to pass. What happens next? Well it depends. If you get letters back verifying your debt it’s time to negotiate. If you don’t get letters back…it’s time for more letters. Next week I’ll talk about what to do while you wait for a response (or lack thereof) from the creditors and what to do after you receive your response.