How to Dispute Collection Accounts on reports

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An inaccurate or misleading collection account will lower your credit score. Either because of clerical errors or miscommunication collection accounts are among the most common errors on credit reports. That’s why factual disputes are always better than disputing “account not mine”, especially if the account is really yours.

To find factual errors go through the negative tradeline and list every error, inaccuracy, incomplete or false thing you find. No doubt you can find a factual error or two, or three.

And when you find an error, request the credit bureau delete the negative tradeline, not make a correction. Corrected negative information is still negative.

The E-Oscar Investigation Method

Because the credit bureaus utilize the E-Oscar method of investigation, a consumer dispute is reduced to a two-digit code. This code supposedly best describes the dispute issue. What the code really does is reduce the credit bureaus’ time in processing disputes and eliminates the FCRA requirement for the dispute to be properly investigated.

Finding factual errors causes the credit bureaus to do their job properly. Frustrate the credit bureaus to the point they will follow the FCRA and actually investigate a dispute or even better, frustrate them to the point they will delete the negative tradeline.

How to find a factual error

  1. Account reporting as “Open.” Collection accounts are not open tradelines as if you applied for the account and they as debt collectors extended you credit. If this were the case, they would have to be licensed in your State as a consumer bank, lender or finance company.
  2. Account reporting “One Month Term.” What terms and agreements did you sign and agree to when the debt collector purchased the debt? None. Collection accounts should not have one month terms.
  3. Account reporting as “120 days late”. How can this be? Collection accounts are not like original creditor accounts. You did not open an account with a collection agency and promise to pay monthly payments. The debt collector can report the last status from the original creditor but they cannot update lates on a monthly basis.
  4. Account is reporting as an “Installment”. Again, what terms and agreements did you sign and agree to when the debt collector purchased the debt? None. Is the debt collector posing as a bank, lender or finance company? Collection accounts are not installment accounts.
  5. Account “ balance” or the “high balance” is incorrect.
  6. Many collection agencies pose as Data Factoring Companies. Even if the credit bureaus allow this deception, you did not open a “data factoring account” with them. Collection accounts are not “data factoring accounts.”
  7. The date of first delinquency with the original creditor is not reporting and according to the FCRA, Section 623, “…A person who furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or subjected to any similar action shall, not later than 90 days after furnishing the information, notify the agency of the date of delinquency on the account, which shall be the month and year of the commencement of the delinquency on the account that immediately preceded the action.”

You will probably find more than one factual error, however, do not list all of them in one dispute letter. Save some for later in case you do not get the desired result on your first round of dispute letters. Disputing negative tradelines based upon factual errors may eliminate the credit bureaus’ excuse of “previously investigated” notation.

It may not work every time but you will find you can get a lot more mileage out of dispute letters containing factual errors whether than disputing “not mine” only to have the investigation results come back verified.

There could be negative consequences to your credit score by disputing collection accounts so it is important to read “What you should know before disputing a collection account.”

Dispute collection agencies that are listed twice

Collection accounts often change hands with debt collectors selling accounts to other collectors making it possible to have more than one debt collector listed on your reports for one account. When this happens, you can typically have the older collection removed by disputing it with the credit bureaus.

Pay for Delete

If you can’t remove the debt by disputing it, try negotiating a “pay for delete” with the collection agency. With a pay for delete the collection agency removes the account from your credit report in exchange for payment. Send the collector a letter stating your interest in paying the account. Offer to make payment if the collector agrees to remove the entry from your credit report. Ask that the collector to return a signed copy of the letter to you to seal the agreement. Make sure you get the agreement in writing before you make a payment. Don’t make any payment, full or partial, until you have the agreement in writing. See (Sample Pay for Delete Letter.)

Options if disputing does not work

If you have exhausted your dispute efforts there are still options you can attempt. Make complaints to the CFPBthe FTC, or your state’s attorney general. You can also sue the debt collector for this or other violations of the Fair Debt Collection Practices Act (FDCPA). If you sue under the FDCPA and win, the debt collector must generally pay your attorney’s fees, and may also have to pay you damages.

Consider allowing a professional repair your credit. Lexington Law helped clients remove 3,120,442 negative items in 2013 alone which included collection accounts. Other methods can be used to get rid of collection accounts such as debt validation, settle the debt and even pay for deletion of a collection account.



Comments

  1. Lisa Phillips says:

    Your question has been moved to appropriate section “Questions & Answers” and you can find a reply here.

  2. I’m tackling my reports – and man is it a hefty task but thanks to people like yourself, it isn’t as hard as it could be.
    Here’s my question – I have 4 collection accounts (each duplicated 3 times – once in open accounts, once in neg. accounts and once more in closed accounts of my Equifax 3-in-1) They all state open or installment which I will dispute – but first, all of these collection accounts list the original creditor in the comments section but on my credit reports there is no record from each of these OCs (Bally Total Fitness (2xs), Sprint, Bright House Networks). What does that mean?? Do I have something going for me here, or does the OC not have to report at the same time the collection accounts are reported? If so, how would I compare? and if I do indeed dispute this, if it is correct, it’s probably possible for the original creditor to suddenly appear… Then it would be worse? I don’t know. All debts are $1500 or less and are reported as opened within the last three years.

    Any help would be greatly appreciated.
    Thanks!

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