Fixing bad credit is not easy. It takes time, patience and persistence. Just because you aren’t able to get something removed from your credit report the first time you dispute it, does not mean all is lost.
One of the best strategies to fix bad credit is debt validation.
What is debt validation and how can it help me fix my bad credit?
Debt validation is an advanced method of credit repair. You need to go through the regular credit bureau dispute before implementing this strategy to fix bad credit.
You will employ this strategy on accounts that have been turned over to a collection agency.
When you request a debt validation, you are requiring the agency to prove to you that they are legally entitled to collect the debt. They need to prove that they own the debt through a contract between the collection agency and the original creditor. They will also need to provide you with some type of accounting. (Otherwise, how are they establishing the amount you owe?) You also want to request a copy of the original signed loan agreement or application.
Another key thing to request is that the collection agency is legally able to collect in your state. You would think that this wound not be an issue, but believe it or not, many agencies will try to collect in states that they are not licensed in.
What you are looking for?
One thing you want to determine is if the collection agency was assigned the debt or if they purchased the debt. If they were assigned the debt, they do not legally own it and there is no way they will be able to prove that you owe them the money. One thing that would change this would be if your original contract states “OR ITS ASSIGNS”. If it does, the debt collector does own the debt.
Even if the collector does own the debt, don’t let this stop your quest to fix bad credit! There is still hope. Proceed with your request to validate that they purchased the debt and to validate the account. The MUST show you proof that you owe the debt to the collection agency. Do not accept some print out from their system simply stating you owe the debt! They need to provide you with original documentation.
If the creditor is unable to verify the debt, you are on your way to fixing bad credit! Wohoo!
Why? Unless they can verify the debt, they can’t collect it, contact you or report it to the credit bureaus. If they do, you can sue them in small claims court for $1,000 plus damages.
After you have sent them the initial letter, the collection agency has 30 days to respond with validation of the debt. If they have not and the item is still on your credit report, you will need to go to the next step.
Sent a copy of your original letter and proof that it was sent along with a letter stating that they have not complied with the Fair Debt Collections Practices ACT and they are in violation of the law. Let them know that if they do not comply, you will be forced to sue them. Wait a few weeks after you send this letter. If they do not respond, you may have to sue them.
Before you file suit, you will want to contact the credit bureau and let them know that the collection agency has failed to comply with the FDCPA. Send your proof to the credit bureau. Request that they provide you with their method of verification. If they do not comply, you may have a valid lawsuit against them as well.
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