SCORE IMPROVEMENT


 

The Factual Dispute Methodology is an important distinction for credit repair companies who seek to help people restore their standing by referencing the Fair Credit Reporting Act (FCRA) to dispute inaccurate information. Nearly 80 percent of all credit reports in the US have inaccuracies that need to be modified.d by your company.


A few bad apples

The reason that credit repair companies have gotten a bad rap for being unethical or dishonest is largely due to the way that some credit repair companies have chosen to operate. Some of these unethical companies do credit repair by simply asserting that all negative items on their client's credit reports are due to identity theft and crossing their fingers that some will be removed. This is not credit repair it is fraud.

Many credit repair companies who operate in the grey will dispute items without their client knowing what is being disputed and why. Not only is this unethical, but it can have serious legal consequences.

Yes, the Fair Credit Reporting Act (FCRA) gives a consumer the right to dispute anything on a credit report. And yes, accurate items can be challenged and removed if they cannot be verified, but it all must be done in a correct, smart and legal way.

Professional Credit Repair

True credit repair requires skill, experience, and patience. Ethical credit repair professionals go through their clients’ credit reports together with their clients looking for information that is false, unverifiable, or incomplete, and then contact the bureaus to have it modified or removed. We call this strategy the Factual Dispute Methodology.

The Methodology Explained

The Factual Dispute Methodology is an important distinction for credit repair companies who seek to help people restore their standing by referencing the Fair Credit Reporting Act (FCRA) to dispute inaccurate information. Nearly 80 percent of all credit reports in the US have inaccuracies that need to be modified. That is a staggering number. The basis of the Factual Dispute Methodology is this process of examining a client’s credit report to find these inaccuracies and creating a plan of action to dispute them.

There are several types of negative items you will find on a consumer’s credit report, including inquiries, late payments, collections, bankruptcies, foreclosures, repossessions, judgments, and charge-offs.  When examining a credit report, the first step is to determine whether each piece of information adheres to the following standards:

1. Is it Accurate?

Check that all account numbers, dates, account status, account types, and other information is correct based on the consumer’s personal records. Check that the credit reports you have accessed from all three bureaus contain the same exact information.

2. Is it Complete?

There should be no missing dates, account numbers, balances, or other information. This is one of the most common errors you will find on a credit report.

3. Is it Verifiable?

Creditors are required by law to have back up documentation for everything that is listed on a credit report. If the information does not exist, then the item should be removed completely. Are the records murky?  Is there no signature from the client?

Once you have marked up the credit report with the items that are inaccurate, incomplete, or unverifiable, prioritize those that you will dispute first.

How to Prioritize

Many people choose to start with the easiest or most glaringly non-compliant items, then move on to the more difficult ones. This is often the best route because your clients will see results faster.

Others prioritize based on how much the item affects the consumer’s total credit score. For this strategy, it is helpful to know how scores are created. Credit scores are reported based on the following approximate formula:

  • 35% payment history
  • 30% amounts owed
  • 15% length of credit history
  • 10% inquiries/recent credit decisions
  • 10% types of credit used

Understanding this information, it would make sense to tackle the non-compliant items related to payment history and amounts owed first before moving on to other discrepancies.