Many credit repair companies fail to understand even the most basic concepts of ethical and legitimate credit repair. For them, credit repair dispute mistakes are common. Unfortunately, even many of the industry leaders lack the knowledge required to ethically and competently repair credit on behalf of consumers.
Ordering Credit Reports
Ordering credit reports is an important component of credit repair. Obviously, without the reports a consumer cannot make an informed assessment of whether or not there is any inaccurate information to dispute. Unfortunately, however, the proper procedure for obtaining credit reports is often grossly misunderstood by many credit repair organizations. Indeed, some credit repair organizations are so ignorant as to the proper method for obtaining credit reports that they actually provide the reports to their clients or even create fake reports based on information provided from other credit bureaus.
The proper method for obtaining a consumer credit report is for the consumer to order the report by mail. The reasons for this are critical yet simple. First, ordering reports from the credit bureaus online requires consumers to waive their consumer rights by agreeing to mandatory arbitration. Doing so essentially precludes consumers from suing the credit bureaus no matter how egregious the legal violations or damages. Mandatory arbitration is the antithesis of true consumer advocacy.
Obtaining reports online from third party sources can sometimes avoid the issue of subjecting the consumer to mandatory arbitration against the credit bureaus but introduces inaccuracies in the reports if you use the wrong source. Indeed, it is common in the industry for third party providers to merge information from different credit reports and some even omit important information. For credit repair purposes, third party credit reports are inherently unreliable and virtually useless if fair credit litigation ever becomes necessary.
Credit Repair Dispute Letters
Credit repair dispute letters are a critical component of competent credit repair. Most credit repair organizations fail miserably in this regard. The reason is focus. Credit repair organizations focus more on repairing credit than in protecting the legal rights of consumers. Accordingly, they send out letters that fail to adequately preserve, and in many cases, actually waive, consumers’ rights.
In addition to waiving the legal rights of consumers, credit dispute letters from credit repair organizations also often misconstrue, misquote, or ignore the legal statutes and precedents that govern credit reporting. Sending a letter that demonstrates a failure to comprehend the law is a clear sign to the credit bureaus, creditors, and debt collectors that they should not take the dispute seriously. Why would they? If the consumer demonstrates a lack of understanding about the applicable legal concepts, that consumer is no real legal threat and can therefore be ignored. This is also another indicator that the credit repair organization is sending generic form letters rather than the well-researched competent authority used by true consumer advocacy attorneys.
Some credit repair organizations actually forgo a written letter altogether choosing instead to send disputes electronically. This is a catastrophic error for several reasons. Primarily, sending the disputes electronically not only waives the consumers’ right to sue the credit bureaus but also often results in failing to provide the credit bureaus information critical to the credit dispute process. A well-written dispute letter should provide the credit bureaus with enough information to actually investigate the dispute. Unfortunately, however, electronic disputes often do not allow consumers to satisfactorily provide the essential details.
Electronic disputes also fail to provide the consumer with adequate proof of exactly what was disputed, when it was disputed, and on what grounds the information was disputed. Written letters avoid this problem altogether. And as any competent consumer advocacy attorney can tell you evidentiary issues are greatly simplified with a written letter as opposed to an electronic dispute.
Reasons for Dispute
Perhaps the most egregious problem with most credit repair organizations is a lack of understanding on what constitutes a proper dispute. For example, it is common for credit repair organizations to dispute certain trade lines on the grounds that the underlying account was supposed to be paid by a divorced spouse. Since divorce decrees are not binding on the credit bureaus, creditors, or debt collectors, arguing that someone else was supposed to pay a debt listed in your name is not, by itself, a proper basis for dispute. The same argument is often also incorrectly used to dispute medical trade lines on the basis that medical bills were supposed to be paid by an insurance company. Disputes formulated on similar misunderstandings of student loan laws, truth-in-lending regulations, the federal tax code, the Fair Debt Collection Practices Act, and the bankruptcy code are also commonly misused by credit repair organizations.
The problem with sending disputes of this nature is threefold. First, the unsupported dispute demonstrates to the credit bureaus a genuine lack of competence on the part of the credit repair organization. The response is typically for the credit bureaus to stall or ignore the dispute. Another problem is that the reason for the dispute is often false. In addition to potentially giving rise to criminal liability under state and federal laws, making any false representation to the credit bureaus is a violation of the Credit Repair Organizations Act (CROA) and can result in an award for substantial damages against the credit repair organization. The third issue that arises when disputing without proper legal support is that doing so can trigger a loss of legal claims and defenses the consumer may have if litigation ever occurs.
Unfortunately, incompetent credit repair organizations are the industry norm not the exception. If you need knowledgeable and ethical credit repair partner, a consumer protection attorney is your only reasonable choice. An ethical and competent credit repair lawyer will protect your interests, preserve your legal rights, and assert only those legal arguments that have merit; a credit repair organization usually won’t.