You can ask, and they can do it, but they’d be in violation in doing so.
It is definitely somewhat murky water. As far as I know the fcra requires that they report accurately the status of your account. They can simply chose to report your account as paid and still be entirely accurate. For sure there is no law saying they must continue to report negative information. I am not going to spend the time searching for it, but I would be shocked if anyone has ever actually been sued for this.
Okay, let me put it succinctly: Some companies have lost their ability to report information to credit bureaus because they continually ‘caved’ to consumer requests to delete derog once payment was received.
Several companies went belly up, because if you are a collection agency and you can’t report accounts to a credit reporting agency, you lose a big chunk of your leverage.
I don’t think anyone has been sued or fined by the FTC, but I know this issue has been on their radar and they’ve been focusing heavily on the role of the data furnishers, and the the FACT Act gives the FTC some serious muscle in this regard.
In case anyone has lost track of my role in the thread, it was to say, “Yes, it is possible to negotiate payment for removal of derogatory information, but in doing so the data furnisher would be in violation”.
Why? I mean certainly they lose the leverage of being able to remove the derog, but the original creditor has already reported the debt as a derog.
I know we are talking about 2 different credit report issues: 1) Unpaid debts showing up, and 2) Old negatives that were settled but still lowering your score because they haven’t fallen off yet.
In my case, I had a couple of version 2 - small items that I settled a couple of years ago, but were still showing up and lowering my score. Before applying for a mortgage I wrote a letter to the 2 creditors in question, asked them to delete the bad mark, as I had settled the debt already and this small issue was hurting my chances of purchasing my first home, etc., etc.
Both companies (I think one was a credit card - I had closed it with a balance by accident and didn’t pay for a while; and Sear - they screwed me but I ended up paying the $50 to just move on) deleted the bad mark within a couple of weeks and all was good.
I have no experience with type 1, however.
Most decisions are made by computers. I recently tried to refinance my car loan to better rates and the computer turned me down. I wrote asking for reconsideration and after having a chance to talk to a person so I could explain what happened I was approved.
Ok what about paying a Collection Agency in exchange for them not reporting anything at all. Then the is no falsehood
I would love to find out what companies have lost the ability to report info to credit reporting agencies because I have never heard of any so I must say CITE?
Again if a Collection Agency (NOT OC) agrees to stop reporting entirely for payment what violation was made?
Bally’s Health Clubs were dropped.
They’d bully people into paying ridiculous membership fees that were overdue in exchange for deleting the information. No one would have paid Bally’s an overdue red cent, but when they went to get a mortgage and found the 250 dollar collection account on their file, they’d contact Bally’s, and Bally’s would have a confusing contract to back up their claim, and then the consumer would pay Bally’s in exchange for the removal. This tied up many resources.
Bally’s leverage is obvious here, so losing credit reporting rights means they lose leverage (ability to collect), because they could afford to sit back and have consumers contact them at virtually no cost, but their business model didn’t afford them the opportunity to track down every 75 or 150 dollar unpaid monthly health-club fee. The presence of the debt on a credit report did the trick.
Creditors are data furnishers and are required to submit accurate information. Skipping over the (accurate) bad, deleting the (accurate) bad and omitting the (accurate) bad is a violation, just one that has never been pursued all that much by regulators, but data furnishers have been getting away with all sorts of crap for years.
Ballys is not a collection agency. Next, they didn’t get in trouble for removing the derogs, they got in trouble for forcing dudes to pay questionable and inflated amounts in order to remove the Derogs. Entirely different scenario.
I once had the judgement set aside in exchange for paying a debt.
It wasn’t my debt, it was my fathers, who was refusing to pay it out of principle - until it hit my credit rating.
DrDeth, you need to read his post again. Everything he said was accurate. He said that companies have lost the right to report to CRAs because of their practice of removing derogs. He made no claim specific to collection agencies, except that everyone reporting info to the credit beaureaus has a responsibility to report accurately.
Do you have a cite for your assertion that they got in trouble for forcing people to pay dubious amounts instead of being in trouble for deleting derogs on the credit report?
DrDeth, I know you keep up on this stuff, but you know I am immersed in it. I have been very consistent in what I have said in this thread.
When a company loses their right to report information, it’s usually based on a number of criteria, and how Bally’s conducted business was to only report collection trades. Were they a designated collection agency? No. They were listed as health club or club. Doesn’t matter, because collection agencies (and there are many fly-by-night types) sometimes have their data rejected because it’s either dubious or because they disregard the standards, which is to report accurately, and verify information timely.
It’s much better now. I’ve also indicated that companies remove derog if they receive payment in trade, and while interpretation of the law is open to anyone, based on my experience, it is a violation.
Philster, I completely concede you know more about this than I do, you’re the expert, I am but a well-informed amateur (that sometimes needs to advise members of the public about possible options). OTOH, you are somewhat biased towards the industry side, whilst I am somewhat biased toward the public side.
I concede that a creditor or a collection company may indeed be sanctioned, but you have to admit Ballys practices went beyond simple “not reporting accurate info”, just as Al Capones crimes went beyond income tax fraud.
crazyjoe- Ballys is pretty well known as is their deceptive trade practices. Google them sometime. I give them one bone, they are not alone in this, many of this type of “health club” have had similar problems. They aren’t really interested in having you attend their gym, what they want is for you to pay and NOT attend the gym.
One even had to be reported for violations of Title 31, due to their billing practices.:eek:
gasp wasn’t there a Star Trek episode from the '60s warning us against this very form of machine-controlled dystopia?
Philster may think he’s an expert on all things credit reporting, but he is mistaken about one thing: it’s not “illegal” for a creditor or collection agency to delete even accurate reporting at the bureau (Experian, Equifax, Transunion) level. Philster is relying on the Fair Debt Collection Practices Act and the Fair Credit Reporting Act to support his claim, but nowhere in either of those Acts is there any verbiage relative to consequences for violating either Act with respect to deleting even accurate information.
Let’s take a look at the Fair Credit Reporting Act. A quick review of the Table of Contents is informative.
http://www.ftc.gov/os/statutes/031224fcra.pdf
§ 601 Short title
§ 602 Congressional findings and statement of purpose
§ 603 Definitions; rules of construction
§ 604 Permissible purposes of consumer reports
§ 605 Requirements relating to information contained in consumer reports
§ 605A Identity theft prevention; fraud alerts and active duty alerts
§ 605B Block of information resulting from identity theft
§ 606 Disclosure of investigative consumer reports
§ 607 Compliance procedures
§ 608 Disclosures to governmental agencies
§ 609 Disclosures to consumers
§ 610 Conditions and form of disclosure to consumers
§ 611 Procedure in case of disputed accuracy
§ 612 Charges for certain disclosures
§ 613 Public record information for employment purposes
§ 614 Restrictions on investigative consumer reports
§ 615 Requirements on users of consumer reports
§ 616 Civil liability for willful noncompliance
§ 617 Civil liability for negligent noncompliance
§ 618 Jurisdiction of courts; limitation of actions
§ 619 Obtaining information under false pretenses
§ 620 Unauthorized disclosures by officers or employees
§ 621 Administrative enforcement
§ 622 Information on overdue child support obligations
§ 623 Responsibilities of furnishers of information to consumer reporting agencies
§ 624 Affiliate sharing
§ 625 Relation to state laws
§ 626 Disclosures to FBI for counterintelligence purposes
§ 627 Disclosures to governmental agencies for counterterrorism purposes
§ 628 Disposal of records
§ 629 Corporate and technological circumvention prohibited
The only sections pertaining to civil liability are Sections 616 and 617, and even they don’t say that a creditor will lose credit bureau reporting privileges for negotiating with a debtor. Anyone can read those sections for themselves. It may be that Experian, Equifax and Transunion have such a policy, but they’re not the law; they’re for-profit corporations. Therefore, there are no fines or other punishment to the consumer for seeking deletions of derogatory information.
When a creditor tells you it’s illegal to delete accurate information, they are simply lying or are misinformed.
Unfortunately, the FICO scoring algorithm makes no distinction between a paid collection and an unpaid collection. From the creditor’s perspective, you’re a deadbeat either way. After all, if you owed only $200, why didn’t you pay it to begin with? You were willing to make yourself a deadbeat for two hundred bucks? So the logic that a paid collection ought not be as deleterious to one’s credit score as an unpaid collection doesn’t fly where FICO scoring is concerned.
Therefore, before you pay a delinquent account is the time to use the leverage you have to get a derog removed. There’s a saying, “you can get price or terms but not both,” so don’t expect to secure a delete unless you pay the account in full, including accrued interest.
No collection agency is going to give you a delete letter before you pay in full, so you’ll have to arrange for a simultaneous exchange of delete letter for money. Sometimes a promise-to-delete letter will be provided, after receipt of which you pay. A promise to delete plus a receipt for payment in full is all that’s needed for a “deputy” bureau–that is, the approximately 70 credit vendors who have been given authority to delete at the bureau level–will delete the derog.
There are two types of “affiliates” in the credit industry:
Those who third party collect on behalf of the original creditor
http://www.acainternational.org
Those who third party report on behalf of the three major credit bureaus.
http://www.loanprospector.com/about/crc.html
My credentials for opining on this topic is that I’ve been a mortgage broker for 20 years and have assisted hundreds of consumers in effectively deleting derogatory information in order to qualify for a loan. Some may question the ethics of removing accurate information. Talk to me when the punishment for credit misconduct actually fits the “crime.”