How to Dispute Items on your Credit Report in a more Advanced Way

So, you’ve done things the nice way by writing the creditors a “Goodwill Letter” and still nothing has changed.

Then, you tried removing negative items from your credit report by firing off “Challenge Letters” to each of the three credit bureaus, and Unlikely that some items wouldn’t be removed but stranger things have happened.

What’s the next move?

It stands to reason that if a piece of data about you, describing your spending pattern, and associating itself with you, appears on your report than it has to be proven to be yours. It would not make any sense if a slew of late payments on a Victoria’s Secret charge card appeared on the Transunion report of say a single teenage male. We are now entering the realm of what’s commonly known as Debt Validation.

Logically speaking, the burden of proof is on the creditor, collection firm, attorney, credit bureaus, to prove or validate that the debt is yours. If they’re going to report something, positively or negatively, about you it has to be true. According to the FCRA, Fair Credit Reporting Act, if a consumer asks for a validation of the debt the reporting party has 30 days to provide sufficient proof that the debt is yours. If they cannot, and they often cannot within this allotted period, then on the removal list it goes.

Now, this should do the trick in the majority of cases, but like anything else several attempts may have to be made. Several cycles of letters may need to be written. Be dogged and stay on the offensive. The creditors and credit bureaus are are made up of guess what…people just like you and I.

Another great strategy is the “Pay for Delete.” Sometimes, you have to bite the bullet and weigh the importance of fighting and writing to no reasonable end. Negotiating for anything is always made easier when you have the financial wherewithal to backup your argument. If a creditor or collections agency is giving you a really hard time; try calling the creditor and offering to pay and settle the debt. Obviously, if you have the money this helps tremendously. A Pay For Delete would involve asking the opposing party to remove the negative late, collection, judgement, payment permanently upon receiving settlement funds from you. Try offering an even higher amount than would be customary as an incentive for the collector to seek permanent removal of the negative item.

You will probably end up saving more money in the long run because better credit means cheaper rates to borrow. So, don’t be stingy. It’s the old addage, “you get what you pay for.”

How to Dispute Negative Items on your Credit Report to Increase your Credit Score

The intention of removing negative items from your credit report is to achieve the very simple yet important objective of increasing your overall credit score.

It’s widely known that maintaining a positive payment history month after month on your debts is the best way to increase your credit score. Conversely, missing payments, and becoming delinquent on your bills is the fastest way to assist what will undoubtedly be the rapid decline of your credit score.

Bills that are overall highly important to pay on time would include your mortgage payment first and foremost. The reason that paying your mortgage on time is essential is because typically that will be the largest debt that you carry on your trade-lines. After that, it’s vital that you pay installment contract-type debts such as a car note on time and of course don’t forget about your revolving debt….credit cards.

Going late on any of the aforementioned is a death sentence for your credit score. So, if in fact you have gone through a particularly rough patch in your life and it has caused you to become delinquent on your bills fear not because we will outline several strategies to help you. Our ultimate goal is to inform you how to to go about disputing those negative items so that either the creditor, collection agency representing the creditor, or credit bureau can remove these items thereby increasing your overall credit score.

There’s an old saying that “you can catch more flies with honey than with a swatter.” With that being said, start out playing nice. The first letter you should write is a “Goodwill letter.” This is a nicely written letter appealing to the empathetic side of whomever agency is currently handling your file. The letter would say something along the lines of “I apologize for being late, I went through a tough time financially, but I am working towards making things better.” It may sound somewhat trite but it works. Credit card companies and credit bureaus are made up of people like you and I.

If that doesn’t work right away (though you shouldn’t expect a response for at least 30 days), follow that letter up with a professionally written “Challenge Letter.” It would sound like, “Dear Sir/Madam, I challenge you to formally validate this debt by providing me documentable proof that the debt is mine, the debt amount is accurate, and I owe what you say I owe.” Again, these bureaus are made up of people…who may fumble the ball and not get to your request in the FDCPA mandated time allotted or may not be able to find proof forcing them to begrudgingly remove that item.

From our experience those are the two most effective initial disputes that can yield the best results. We will follow up in another article with more advanced approaches.

Good Debt vs. Bad Debt

It’s not just a war of words but a cause for action. Being good with your good debt can yield great results for you, and being bad with your bad debt can be disastrous. Well, what the heck does that mean? It’s simple. If your credit is important to you then it is vital that you understand the different types of debt and how they impact your credit score positively and negatively.

What is good debt? First of all, good debt is certainly any and all type of debt that you can afford to handle and accommodate by paying the required payments on time. If you’re only making the minimum payment on a credit card that’s fine; as long as you can afford to make the payments on time. The key word is afford. If you are carrying debt on your personal household ledger it’s crucial that you budget your personal finances accordingly to properly maintain the debt. Making your payments on time and carrying the debt for a long period of time in good standing are two critical components toward increasing your credit score. So, from a wide perspective good debt can be any debt that you carry that you can sustain and afford to maintain on a timely basis. What is bad debt?

Bad debt is debt that you were forced into acquiring because of familial pressure, peer pressure (keeping up with the Joneses’), business debt, etc., that you cannot continue to maintain. Bad debt is debt that is so overwhelming and un-affordable that it routinely causes you to miss payments, go delinquent, or underpay, because of carrying extra large balances, having high minimum payment requirements, or high interest. Bad debt is debt that can harm your overall credit score.

The most important thing any head-of-household can do is be honest about your financial predicament, and capability, articulate a financial plan to your family, and adhere to that plan through good times and bad.

How to Cope with the Stress of Not Paying your Credit-Card Bills on Time

From a very young age we are all taught by our parents to always do the right thing. Don’t cheat, don’t steal, don’t lie, and on and on. As we grow into our teen and adult years we begin to experiment with budgeting, bill-paying, and yes, even having to manage credit card debt. Some of us may be prone to experimenting with other things using credit cards, but that is an article for another day.

One of the age-old adages that we almost all adopt is that it is extremely important to always ALWAYS pay our bills on time. Yes, I know Mozart was in debt, and many famous and noteworthy people also died in debt and penniless. But, as a society, we certainly don’t want to teach our children how to end up in debt. However, sometimes it just becomes a fact-of-life that we as individuals, families, business-people may find ourselves for one reason or another head-over-heels in debt. Perhaps we willfully abused our credit card privileges. Perhaps we accumulated the debt from inheritance, home-remodeling, a once-in-a-lifetime trip, helping out a family member in need, or due to a medical catastrophe.

In any case, we may be faced with the tough decision to enter into a debt-settlement program and be forced to face one of our biggest fears…having to go delinquent purposely on our outstanding credit-card debt. Oh my, the stress! Many clients have said their biggest stress comes from no longer having that good feeling of paying their bills on time. Others have said they cannot deal with the stress of fielding harassing phone calls on their cellphones all day long, or worse than that….dealing with embarrassing calls at work. Others have even told us that they’ve gone to sleep at night dreaming that by not paying their credit-card bills on time that there was a likelihood they may be arrested….by the credit card police, no less!

So, how do we, or better yet, how can we cope with the stress of not paying our credit-card bills on time? First of all, we have to learn to be present and put things in a healthy perspective. What do I mean by present? Normally, as adults we associate feelings of guilt, shame, and negativity to our current problem that are nothing more than a clear and direct result of how we associated those feeling from the pain of a past painful event. Our minds are like a long tape recorder of history and our minds tend to play tricks on us. Get present and clear-headed and tackle this current decision of not paying your bills on time with a sense of steadfastness and clarity.
When your mind is present and focused it’s only then that you can “get your power” back and understand that by entering into a debt-settlement program you “hold all of the cards” and are firmly in charge of your financial future for the first time in a long time.

Also, it is wise to have a healthy perspective. If you are going to go behind in paying your credit-card bills try to ensure that all of your other major bills are indeed being PAID ON TIME! This will help to create a strong attitude knowing that your whole “house” is NOT falling down. Lastly, open up to trusted family members and your debt counselor and talk about your feelings of stress. Never ever keep it bottled up. Try to live a productive, positive lifestyle in all other areas of your daily life; and you will no doubt be able to to cope with the unnecessary stress of beating the credit-card companies at their very own game.

Stay Credit Healthy

Supporting your healthy credit is a lot like supporting your healthy physical self. It would be a mistake as a consumer to assume that because you are making your monthly minimum payments on time every month that your credit is as healthy as can be. It’s almost like assuming that because a person is skinny that they are in peak physical health.

I will give you a couple of good examples of what I mean. An average male, height 5’9″, weighing 150lbs, may appear to be in great physical health to the naked eye. On second thought, if you did some homework about the background about that same individual you may find some things that can severely impact your perception of his health. Does that person have an eating disorder, that is causing him to lose weight? Is that person a smoker or does his family have a long history of heart disease? How’s his cholesterol level? See what I mean.
The same things applies to credit. If you assume that credit is more than the three digit score but rather an amalgam of different factors then you will agree that simply making the payments on time is not a clear indication of your actual credit health.

Credit in my opinion is a bridge towards borrowing money. Ultimately, credit is simply the ability to borrow money from a lender, bank, or broker. Many people mistake having a positive payment history for having credit. Let’s dig a little deeper. In today’s harsh economic environment banks, who are the gatekeepers of the money, so to speak, are evaluating your potential borrow-worthiness based on a whole host of factors.

Today banks want to ensure that you have a reliable income and a steady job. In other worlds, the banks would prefer you to be able to provide them with some type of verifiable income…a W-2…instead of being self-employed…where your true income can be a bit murky.
In addition, banks are more willing to lend you money if you have some type of collateral. Banks want to see that you are a homeowner, and furthermore, that you have equity in your home. In today’s lending atmosphere DTI (debt-to-income ratio) measures are being scrutinized more and more.

So, to determine if your credit is healthy by simply utilizing the measure of making payments on time is only half the story. That said, making payments on time to your creditors is a great indication of your future ability to pay back what you may eventually borrow. And, that’s important. Some ways in which you can ensure that your credit is healthy and that your payments are going to be made on time are the following…

Avoid late payments and late fees by setting up account alerts on your smart phone to remind you when your upcoming payments are due. Set-up auto-pay. Auto-pay sets up your payments on auto-pilot letting you schedule your payments months in advance. Choose your own due-date. Lots of creditors are much more flexible than they used to be and as long as you’ve demonstrated a good payment history they will let you set up the date that is most convenient for you. Finally, get with technology and download your creditor apps on your smartphone and use those mobile apps to make payments and check account balances.

Finally, stay credit healthy, it’s the only way to be.