To all creditors and collectors:

I realize that you want to get paid for legitimate debts, and I believe you SHOULD get paid.

Unfortunately, due to Fair Isaac's credit scoring software, PAYING a collection does NOT increase the scores.

A SINGLE point can cause a decline or higher interest and insurance rates.

You can read the gruesome details at Fair Isaac's site at http://myfico.com/myfico/Home.asp

It is also extremely important that charge-offs and collections are reported with the correct dates.

The FCRA is very specific about this date, see http://www.ftc.gov/os/statutes/fcra.htm#605

"(c) Running of reporting period.

(1) In general. The 7-year period referred to in paragraphs (4) and (6) ** of subsection (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action."

An additional problem is that Fair Isaac, Trans Union and Equifax are not clear about WHICH dates they are using to age collections and charge-offs.

Trans Union's attorney Amanda Lewis first advised that the "Placed" date is used to age a collection. Later she stated that TU uses an internal date. I'm hoping that I will find out through discovery which date they really use, and I am demanding that this date be reported on all consumer disclosures.

I hope you understand now WHY I recommend that readers and clients should NOT settle any accounts unless DELETION is part of the settlement.

Speaking of settlements:

I have documentation proving that those "settled" notations collectors and creditors like to report to the bureaus can lower the scores even more. It can cause automatic declines just like bankruptcy and credit counseling.

See "ALERT: do NOT settle Capital One accounts" at http://creditforum.org/showthread.php?s=&threadid=251 and "Capital One "SETTLED" account deletion" at http://creditforum.org/showthread.php?s=&threadid=252

Why on earth should somebody settle an account to LOWER their scores?

If you want to get paid, please DELETE the accounts or include a confidentiality agreement with your settlements.

You may be surprised to get debt validation requests for PAID accounts.

That's because people often rather PAY a few hundred dollars than deal with your calls and letters. And of course many mortgage applicants HAVE to pay your collections in order to get their mortgage. And there are some people who got their credit reports and paid everybody off, because they thought it was "the right thing to do."

People routinely pay collections that do not belong to them or are the result of legitimate disputes with the original creditor.

Just like you, most consumers don't know the devastating effect a PAID collection can have on their credit scores until they read this forum.

The only way to raise the credit scores is deletion.

I am recommending that my readers request complete validation (not just some printout), and if necessary go to court if there are any reporting violations or failures to validate.

Collectors are surprised to get calls about their credit inquiries

Many collectors run "hard" inquiries, reported to Fair Isaac's credit scoring software as if the consumer had applied for credit. Because the consumer did NOT apply for credit with you, the reports you pull should be coded as account review (A/R) and NOT lower the consumers' scores.

With a potential of losing 35 points for only 1 inquiry, it is very important that you contact the credit bureaus to ensure that your account is properly configured.

Somebody needs to take these issues into federal court, create case law, and maybe the FTC will come out of their coma and prohibit or demand modifications to Fair Isaac's credit scoring software.

If you agree that the current credit scoring system is not fair and impacts on your ability to collect, please DO support legal action against Fair Isaac and the credit bureaus, and our efforts to change credit scoring and credit reporting through new legislation.

I would greatly appreciate any letters from collection agency and creditor executives in support of changes to credit scoring and reporting practices.

And of course, donations are accepted. For more information please check http://www.bayhouse.com/donate.shtml

Until a new and FAIR credit reporting and scoring system is in place, I can only recommend NOT paying collections and charge-offs unless deleted and "fishing for technicalities."

I am NOT an attorney, but a credit consultant.

I assist my readers and clients with the analysis of reports, credit bureau and creditor disputes, collection validations, settlements, and complaints with regulatory agencies.

If my attempts to settle disputes fail, I prepare a summary of disputes and violations and assemble the documentation required for my clients to either file a successful small claims complaint or I assist with locating an attorney specializing in FCRA and FDCPA violations.

When I advise you that I am recommending legal action to my client, it means that there is a good chance you will get sued.

And when I advise that my client IS going to sue, it means that he/she will either file a small claims suit or I'm putting the attorney package together.

Because my clients PAID me for my work, they can show damages and getting those cases dismissed for failure to show damages are about zero.

I am thrilled to see so many suits filed in small claims and even district courts Pro Se. And I finally located attorneys taking FCRA and FDCPA cases on contingency nationwide.

My goal is to change credit reporting and credit scoring, and to seriously go after collectors who do NOT play by the rules, violate credit reporting requirements and engage in deceptive collection practices.

I am hoping for your support.

Sincerely,

Christine Baker
http://creditforum.org/
http://creditcourt.com/

I got tired of trying to explain this over and over to creditors/collectors. I found that they often don't have a clue what their credit reporting does to credit scores.

Please DO print the above posting and fax/mail it to your creditors and collectors and LEGISLATORS.

You may also repost it at other forums, sites, newsgroups, etc., but please WITH the URL to this posting because I will edit/update.

Please post any comments and/or questions here.

3/28/03 summary of my phone call to Sam Shannon, OSI Compliance Department.

tel: 678-417-5049 fax: 678-417-5074

I called on behalf of a client in the Air Force, stationed overseas since 98 and somehow he ended up with an NCO charge-off.

Mr. Shannon advised me that OSI has absolutely NOTHING to do with NCO. "They're like Burgerking and McDonalds."

I asked why their collectors didn't tell me that and he replied: "We have offices in 26 states with 7,000 employees and 26 million accounts and a minimum wage collector has no idea about the internal operations of our company."

Apparently OSI, Gulf State Credit, Perimeter Credit and Palisades are "companies that he works with" - unlike NCO and Sherman.

Does anyone else think it's strange that collectors don't know what company they collect for?

So I asked why the reported names change so often on the credit reports, and he claimed that it's the credit bureaus' fault. Then he did admit that they "buy accounts back and forth." He stated that each company can't report it more than once.

Apparently it is their normal business practice NOT to notify the company who purchases an account that it has been disputed by the consumer.

It appears to me that it would be an illegal collection practice to sell disputed debts without notifying the purchaser of the consumer dispute.

Mr. Shannon also claims that the SSCRA only applies to military personnel since they were deployed in Kuwait, he stated that my client was not covered until "4 weeks ago."

I had just told him that my client had orders from 98.

If you are or were in the military, don't believe that you're only covered by the SSCRA since the deployment to Kuwait. It's the date of your orders, in my client's case 1998 when he went overseas.

Based on Mr. Shannon's statements, I assume that OSI trains their collectors to misinform people in the military and deprive them of their rights under the SSCRA.

OSI shows their true "support" for the troops with those unscrupulous collection practices.

Mr. Shannon could not give me a number for NCO. And he could "not understand why people are so concerned with their credit, but not concerned enough to pay the debt, it just baffles me."

Just the night before he saw on the news that the delinquency rate on credit cards was 31%. I asked him why he thought that is: "Because they don't have to [pay], all they have to do is dispute a debt and it will go away."

So I said, ok, let's talk about people who DO pay their bills. I have a client with a PAID Palisades collection for AT&T. I explained that AT&T had changed the plan from 5 to 15 cents/min, and that I had the phone bills to prove it. My client PAID this collection to Palisades because he was told that payment would improve his credit. The big lie!

I explained to Mr. Shannon that this PAID collection lowers credit scores as much as an unpaid collection. He agreed that the collection HISTORY was still there.

I asked why they did NOT report this account as disputed in response to my client's disputes after the payment, as required by law. He responded that the reporting is accurate. However, it is of course not accurate because they fail to report my client's dispute.

Mr. Shannon stated: "You can't dispute it, because it's paid."

I asked why. "Because the law does not allow you to." My copy of the FCRA states the exact opposite.

Mr. Shannon stated: "But the reporting is accurate" "Was the account charged off as a bad debt? Yes. Did he pay it? Yes."

However, my client has a legitimate dispute due to billing fraud by AT&T.

I told him about this page, that I advise my readers NOT to pay collections unless they get deletion. He replied that I am jeopordizing the complete integrity of the credit reporting system. What does integrity have to do with not paying a fraudulent bill? He asked whether my client filed a police report under the theft of identity act. What a moron!

Can you believe that the OSI *compliance* person would suggest to people subjected to billing fraud that they had to file a police report for identity theft?

He went on to state that a debtor MUST dispute a debt within 30 days or he loses the right to dispute. That's an outrageous lie, in typical collector fashion.

He stated that the FDCPA does not apply because the debt no longer exists, as it is paid. Then he stated that the debt is valid. How can it be valid and not exist at the same time? OSI makes it possible!

I asked why he didn't think that the FCRA applies to OSI, and he replied that everything they report is accurate.

I had to get going to have a couple collectors served. When I offered Mr. Shannon to send him a copy of this posting, he advised that he didn't care to see it.

Somebody needs to SUE OSI/Palisades/Perimeter and whatever related companies.

Not in a private suit to collect a few bucks and get deletion, but in a public suit to expose their lies and to use these public records to have the laws changed so that people CAN pay their collections without ruining their credit.

I'm suing two collectors and I can't wait to see their WRITTEN responses to the court.

My published federal suit

In IL the maximum rate a collector can charge is 9%, Edelman, Combs and Latturner prevailed against Asset Acceptance and this is a very important ruling, check here for more info!

It's been a while since I've updated here, OSI filed for bankruptcy and I believe recently emerged again. That just shows that YOU don't have to feel bad for discharging your debts.

2/8/04: TU FICO 24 months after Ch. 7 filing -- 726!!!

I reviewed that report and the score factors and it validates my recommendation to DISCHARGE instead of paying your debts when you have financial problems.

On average, within 6 months from discharge your score will be 50 points higher than prior to the bk if you were delinquent at filing, you get all accounts reported correctly, and have open accounts all paid on time since the discharge and with a low balance/limit ratio.

Another client with NO bankruptcy or any other derogs had a charge-off deleted, the score went down 18 points to 646.

It's a crazy world, and unfortunately Fair Isaac was dismissed from my suit for lack of subject matter jurisdiction. I'm so busy with the other defendants, I can't file a new suit right now.

The regulators support this ludicrous credit system, they REFUSE to enforce and recommend sensible consumer protection legislation and they are responsible for many thousands of bankruptcies, divorces and deaths.

The FTC, FCC and the Federal Reserve Bank of Richmond spent thousands of dollars on attorneys to get dismissed from my suit INSTEAD of enforcing the law.

The regulators care only about maximizing the CRAs' and creditors' profits TODAY and they are NOT concerned with the long term consequences of credit scoring and the MANY FCRA violations by CRAs and creditors.

The PEOPLE in charge of consumer law enforcement are EVIL to the bone. James McAfee, Senior Vice President and General Counsel of the Federal Reserve Bank of Richmond refuses to take any action to get Capital One to report the credit limits - despite being named in my suit for failing to respond to my complaint as he had promised in 2002. He doesn't even care that he essentially states in his affidavit that he is stupid, that he didn't understand my complaint. I consider it perjury, he can't be that stupid, considering his position.

I had not realized how deep the greed and corruption are embedded in America. People are discardable, worth nothing. Only corporate profits are important.

To prevail, you have to play by their rules.

If you qualify to discharge your debts, do so!

With a little planning and especially if you're willing to sue creditors and collectors who violated the FCRA and FDCPA, you can also have FICO scores well above 700 only two years after filing.

If a collector violates the FDCPA and/or FCRA, SUE!

If the debt is not legit, below $1,000 or the SOL expired, don't waste your time trying to settle outside court and sending letters and legal threats. One notice with confirmed receipt is all you need.