Credit Repair: Part 2 – the Methods

Continued from Credit Repair: Part 1 – the Enemy

You’ve read thus far because

you want (or need) your credit fixed. Perhaps it was some trouble in your past, maybe a medical bill you couldn’t afford, or you were cheated. No matter what the cause, the solution may be easier than you think. There are several methods of attack. This text won’t judge – you do this for whatever reason you see fit, but don’t think that they think you are an honest person. You have already been classified as a deadbeat and must proceed with that in mind.

Before you do anything,

get your latest credit report. CreditKarma is one fast, easy, and free way to accomplish this. You can also get a free annual report (required by law) from AnnualCreditReport. All the credit bureaus (Group 3: Equifax, Transunion, and Experian) also offer some level of free online reporting. You need this current information in front of you before you can start disputing it.

After you have your report,

challenge the bad credit reported by the reporting bureau (group 3). This should take about 30 days. They will contact the collections agency or financial institution involved and notify them that you dispute the item. They will have to investigate. Surprisingly, many companies won’t carry paper records for more than a year. They will be unable to provide proof and your problem is over! If they do provide proof, then you have to proceed with one of the following tactics:

Method 1: If the debt is legit

and you want to pay, make sure the collections agency (group 2) agrees in writing to remove any derogatory marks on your credit report. They will most likely agree. They’ll be making many times their investment back, and they have nothing to gain by leaving you screwed. In fact, restoring “good” credit to a risky person increases the likelihood of them getting another account (yours) down the road from your next “victim”. Everyone wins except the original creditors –  and they deserve their fate for so easily giving you credit.

The original creditor has probably tacked on late fees and other penalties on your balance. You can offer the collection agency (group 2) a settlement. Remember – they are taking a risk when they buy the debt from the creditor (group 1) – so they are will probably accept as little as 10% of the original debt. If you decide to negotiate, I’d recommend a book by Herb Cohen entitled “You Can Negotiate Anything”. He describes useful tactics for drawing your opponent in to invest his time and effort into your problem. People hate to waste time. If the collections agent develops a relationship with you, he will be more likely to accept an extremely low offer. So pay it all, or pay a fraction, either way, it is your choice from the very beginning.

Negotiate. It’s worth your time and effort. If someone offered you $500 to make a 5-minute phone call once a week for 12 weeks, would you do it? Of course you would. Saving $500 is the same as earning it. Negotiate these people down and earn your pay, baby!

Method 2: If you have been cheated

through fraud of any sort, you should challenge the debt. You should call the original creditor (group 1) and ask them for copies of the contract that names and identifies you. If the debt is more than a year old, they may not have it! If they never requested identification, then you’re done – they can’t come after you and they have to clear it up with the collections agency! If someone else took out credit using your name, how can they morally hold you responsible? They will. That’s insane, and it happens much more than you imagine.

Even if they do have positive ID, if you can prove it a forgery (as in identity theft), then they will have to remove the record. This will take persistence on your part. The police will be very unlikely to help you with this unless the amount is substantial. The burden of proof of identity though lies upon the vendor (the creditor). They’re the ones who got robbed by your “impersonator”. You may have to take the vendor to court, in the end, should they choose to be stubborn, but most won’t be. Most times the debt disappears and your credit is fixed!

Remember, your corner bank won’t hand you money without proper ID and funds, so a merchant doing so is stupid, and deserves some pain in this harsh business climate. I’m not advocating fraud, but don’t let someone else’ bad behavior change yours. Their bad business practices should not cost you a nickel!

Method 3: Wait 7 years

for the accounts to fall off your credit history. This will obviously take a while. You probably can’t do this, but except for the two methods listed above, you have little other choice!


Now you know the methods, next are some sample letters and simple explanations of the laws behind them…

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