Credit Repair Lawyer & Attorney
Improving Credit Scores Through Strategic Contesting of Credit Reporting
“Credit Repair” is a strategic mixture of skills and planning which utilizes: (a) consumer protections laws, which emphasize accuracy, transparency and accountability in credit reporting, in a manner where negative entries on the credit report are minimized and positive entries are maximized; (b) selective settlement of debts where the items that are a hinderance to improved credit are resolved; and/or (c) selective complaints to appropriate government agencies and/or litigation if specific items on the credit report are inexplicably kept as inaccurate or are not accurately updated by a credit reporting agency or creditor. Where the client has many true and significant entries showing high amounts of indebtedness, credit repair by itself, even when coupled with negotiated settlements, may be insufficient to eliminate so much debt and bankruptcy may be utilized to discharge the debt to make it less of an impediment to improved credit.
The goals of credit repair, are not just to “repair” credit, but also to use advocacy and strategic skills to bring up credit scores by legally diminishing or eliminating negative items listed on the credit report and increasing positive items listed on the credit report. By law the information report on the credit report by the major credit bureaus needs to be not just true and accurate but also fair and verifiable. Therefore credit reporting can be challenged if it can be alleged that it fails to meet these standards. Credit reporting deals with any debt, but most of the creditors who report are institutional creditors or banks and institutional lenders who are supposed to keep records of the items they report. The reality is that those records are often less than ideal and items are often misreported. When our office first meets with a client we obtain a credit report so we can decide with our clients which items the client can contest and set up a plan to improve their credit report by challenging these items.
Items that affect a credit score include: Payment history, credit utilization ratio (total credit you have available compared to how much of it you are using now), total debt, mix, age of accounts, hard inquires and public records. Positive steps to improve credit include the following: paying bills timely, lower the credit utilization ratio, and payoff credit cards with a personal loan that gives longer for repayment. Negative items remain on the credit report for different times:
a. Federal System – When do items need to removed under federal law:
Seven (7) Years – for late payments, for Chapter 13, for collections, for paid tax liens and for a civil court judgment. Ten (10) Years – for Chapter 7 and for unpaid tax liens. Two (2) Years – for hard inquiries.
b. State System – when do items need to be removed under New York State law:
Fourteen (14) Years – for bankruptcy; Seven (7) Years for civil court judgments or until the Statute of Limitations, which ever comes first, or Five (5) Years for satisfied judgments; Seven (7) Years for paid tax liens; Seven (7) Years for accounts in collection and Five (5) Years once they have been paid.
Credit repair is legal in every state but is mostly guided by federal law that on the one hand wants to protect consumers by ensuring that there is accuracy, accountability and transparency in credit reporting but on the other hand guides credit repair companies on how they can function to prevent manipulation, corruption and gamesmanship with credit information to ensure the reliability of that information. Credit repair is based on consumer credit protection laws which are are a series of laws, that are mostly federal, but are paralleled by state laws in certain areas, that seek to protect consumers in their interactions with the consumer lending industry in terms of borrowing, paying and having their information reported. We are fortunate that in New York State in most of the critical areas: credit reporting, debt collection and credit repair, New York State has not only passed its own consumer protections laws which can be enforced in the state courts, but the laws promulgated by New York, often supplement and expand upon the federal laws. These federal and New York State laws allow our office to have the necessary tools to contact credit agencies and creditors in an effort to make a credit report better for our client by making it: more accurate, less misleading, more relevant and more up to date. Because we smartly use these laws, they empower our efforts to improve our client’s credit reports.
The main federal statute giving consumers rights and protections in this area is the Consumer Credit Protection Act (CCPA) which Congress enacted in 1969, which has been updated and amended several times over the years and within it includes several well known consumer protection laws, which will be more thoroughly summarized below, and deal with debt collection, credit reporting, credit billing, consumer leasing and electronic fund transfers . The CCPA included: 1) the Truth in Lending Act (TILA), 2) the Fair Credit Reporting Act (FCRA), 3) the Fair Credit Billing Act FCBA), 4) the Consumer Leasing Act, 5) the Fair Debt Collection Practices Act (FDCPA), 6) the Equal Credit Opportunity Act (ECOA) and 7) the Electronic Fund Transfer Act (EFTA). We will give information about most of these laws below and show how they may help our credit repair efforts.
The Fair Credit Reporting Act (FCRA) 15 U.S.C. Sections 1681 et seq., – Generally – The FCRA is a federal law that was enacted in 1970 to protect and limit dissemination of information given on the credit report. It seeks to regulate the sharing, transmittal, collection and storing of consumer financial information and the information/documentation shared by credit reporting companies. It gives the consumer the right to review all the information on their credit report to ensure it contains only accurate information. It also allows a consumer to get a free credit report from each of the major credit reporting agencies – TranUnion, Experian and Equifax – oncer per year . Under the FCRA any potential mistakes are found by the consumer, the consumer can legally report and dispute them with the credit bureaus, which are obligated under the law to investigate any reported errors. Once the mistakes are verified, the credit bureaus are required to delete or correct them. Outdated information that may be harmful must be removed after seven to ten years. Information must be regularly updated so that it is not information that once may have been accurate but now is no longer accurate. To the extent creditors or a credit bureau is notified of potential fraud or identity theft on an account they are not allowed to report the accounts once they have been notified. By law companies are prohibited from reporting information that is inaccurate and need to inform consumers of any negative information that is reported to the credit bureaus.
Consumer Rights Under the FCRA to Dispute Items on the Credit Report – Under the FCRA a consumer has the right to dispute the accuracy or completeness of any item on their credit report. 15 U.S.C. 1681i. The procedure for a consumer dispute is as follows:
a. Initiation of the Dispute – Once a consumer contacts a credit reporting service regarding a disputed item, they have to immediately investigate the issue and record the current status of the item or alternatively to delete the item from the consumer’s file within thirty (30) days. 15 U.S.C. 1681(a)(1)(A). The credit reporting agency needs to also notify the creditor of the dispute and give it all relevant information received from the consumer to allow for an opportunity to support the initial negative reporting of the item.
b. The Investigation of the Dispute – The credit reporting agency needs to review all the information available supplied by both the consumer and if applicable by the reporting creditor, if the creditor has responded to the dispute. Based upon such information the credit reporting agency come up with a determination. 15 U.S.C. 1682(a)(2)(A). If the dispute is frivolous, irrelevant or lacks information sufficient to warrant an investigation, the credit agency may terminate the investigation and notify the consumer within five (5) days of such determination. 15 U.S.C. 1681(a)(3). On the other hand if the investigation leads to a conclusion that the disputed information is inaccurate, incomplete or unverifiable, the credit reporting agency must remove such information from the credit report. 15 U.S.C. 1681(a)(5).
c. The Conclusion of the Investigation – The credit reporting agency must provide the consumer within five (5) days of the conclusion of the investigation, the results of the investigation and their results and an explanation for their analysis and conclusion. 15 U.S.C.1681(a)(6)(A). The consumer has a right to add a statement to the file with the dispute and to request that the credit agency notify specified parties of the deleted information.
Other Consumer Protection Provisions of the FCRA –
d. Permissible Use of Credit Reports – The FCRA lists permissible uses of the credit report: to review for extension of credit, for employment, insurance and licensing purposes, but not for transactions not initiated by the consumer, unless authorized by the consumer or unless they consist of a firm offer for credit or insurance and the consumer has not elected to have his name removed from lists provided by the credit reporting agency. A consumer may delete his name from such lists and make clear that he does not consent to the release of his credit report without his specific authorization.
e. Remedies Available for the Violation of the FCRA – Actions may be brought within two (2) years after the date if discovery by the plaintiff, or five (5) years from the date of the violation. A consumer can sue for actual damages and for attorney fees. P.L. 108-159, Section 156. The FCRA provides for statutory damages, actual damages, and where the violation is “willful” punitive damages, which should be identified separately in a law suit naming both the credit reporting agency and the furnisher of the information. To have grounds for such a law suit one would need to show multiple efforts to correct false information and lack of correction and/or investigation by the credit reporting agency and/or furnisher of the information.
How the FCRA Can Help With Our Office’s Credit Repair Efforts
The FCRA is focused on credit reporting accuracy and the right of the consumer to review and challenge inaccurate items on the credit report. It allows us to challenge items that are inaccurate and/or unfamiliar to our client.
The New York State Parallel Statute to the federal Fair Credit Reporting Act – Article 25 Sections 380, 380-A-380-V of the Consolidated Laws of New York is the New York State statutory parallel to the federal FCRA. Like the federal statute the state statute regulates and restricts the allowable use of credit reports to situations where the consumer/applicant consents to its being reviewed and requires that the consumer/applicant be aware when and why they are denied credit based on their credit report. But for our purposes for credit repair, the New York Article 24 Sections 380-F-380M, discuss the procedures for “resolving disputes” as to the credit report and which information is available and which information is not accessible while a dispute is being determined; the statutes then discuss the penalties for “willful” or “negligent” violations. Section 380-F “Procedure for Resolving Disputes”requires “re-investigation” of items disputed by the consumer and their expunging from the credit report if they cannot be verified, but their being marked as “disputed” if they can be verified but are non-the-less disputed by the consumer. Section 380-I “Requirements on Users of Consumer Reports, requires that the consumer receive a copy of the credit report and an explanation of the reason for a denial of credit. Section 380-J(a)(3) creates liability for the credit reporting company if it fails to timely correct a credit report, “(a) No consumer reporting agency shall report or maintain in the file on a consumer, information:….(3) which it has reason to know is inaccurate.”
Damages Available Under the New York State version of the Fair Credit Reporting Act – Section 380-L deals with “Civil liability for willful noncompliance” and makes the credit reporting agency or the user of the information, where applicable, liable to the consumer for “actual damages”, punitive damages as the Court would allow and the legal costs of enforcement. Section 380-M deals with “Civil liability for negligent noncompliance” and allows both actual damages and the costs of the action where it is successful as determined by the Court.
Jurisdiction Under the New York State version of the Fair Credit Reporting Act – Section 380-N deals with “Jurisdiction of courts; limitation of actions” and states that “An action to enforce any liability, created under this article may be brought in any court of competent jurisdiction, within tow years from the date on which the liability arises, except…” where there is misrepresentation, the date is two (2) years from the discovery of the misrepresentation. There is a right to sue a credit reporting agency in NYS Court New York Consolidated Laws, General Business Law – GBS Article 25 | NY State Senate (nysenate.gov)
How the New York State version of the Fair Credit Reporting Act Can Help With Our Office’s Credit Repair Efforts – The New York law makes the law more enforceable in that the state courts which are much more accessible than the federal courts are now made more available and receptive to litigation as to violations of New York State statutes. In addition, violations of the state statue, when combined to violations of the federal statute, lead to a greater prioritization given to this issue and more probable awards (when facts warranted it) if the creditors violate these laws.
However, the New York Court do adjudicate cases based on the FCRA and/or both the New York statute and the FCRA,, see below:
a. The Fair and Accurate Credit Transactions Act of 2003 (FACTA) – The FACTA was passed to ensure fairness in mortgage or debt application process. It focuses on the issue of identity theft by: creating a national system of fraud detection, fraud alerts, red flag indicators of identity theft and requires lenders and credit agencies to take action against fraud before the victim is even aware of the issue.
b. The Fair Credit Reporting Act (FCRA) (Continued From Paragraph #1 Above) as to Identity Theft Provisions – The FCRA allows fraud alerts placed on credit files and the blocking of information for files affected by identity theft. It requires the general truncation of certain credit card and social security information to increase consumer identity protection.
c. How FACTA and FCRA Can Help Our Office’s Credit Repair Efforts on Your Behalf – Where our clients do not recognize an old debt, they do not know if it is fraudulent or not. Challenging unfamiliar entries will either get us answers or can potentially succeed in removing items.
The Fair Credit Billing Act (FCBA) – The FCBA was enacted in 1974 to protect consumers from unfair and inaccurate billing practices. The law sets up protections against “billing errors” which it defines as unauthorized charges, charges not properly identified, charges for goods or services not accepted by the consumer or delivered to the consumer, failure to properly credit payments to consumer’s account, mathematical errors, failure to mail or deliver a statement to the consumer’s last known address (provided that the change of address was provided at least 20 days before the end of the billing cycle), and charges for which the consumer has asked for an explanation or written proof of purchase. 15 U.S.C. 1666(b); 12 C.F.R.226.13(a). The FCBA sets up a detailed and well explained process and time schedule by which consumers must report a “billing error” (within 60 days of the statement with the alleged error) , creditors must acknowledge the billing dispute (within 30 days of receipt) and then resolve the billing dispute (within 90 days of receipt). During the pending determination the creditor cannot engage in billing or collection activity as to the disputed billing item and cannot negatively report the item to the extent that it is disputed; however it can collect and report any non-disputed portions of the bill. A retailer has an obligation to reasonably investigate any allegation that goods failed to be delivered or that a bill is otherwise mistaken. Once the dispute is resolved the creditor must notify the consumer and inform and explain to the consumer the results of the investigation and what it reasonably concluded. If the conclusion is that the consumer owes the bill, a time is given by which the bill must be paid to avoid finance charges. The FCBA allows a private cause of action for actual damages, attorney fees, plus twice the finance charges up to $1,000.
The federal Credit Repair Organizations Act (CROA) -The CROA is a federal statute that was passed in April 1, 1997, to regulate credit repair services to avoid scams and provide transparency to the consumer. Under the CROA credit repair companies cannot do any of the following: lie about your credit history, alter your identity or misrepresent their services. They need to be fair and honest with the consumer who employs them.
The New York State Credit Services Laws – Article 28-BB, Sections 458-A – 458-K of the General Obligations Law regulates “Credit Repair Services” to make sure that they do not engage in unfair or deceptive marketing and practices. Section 458-B(1)(b) makes clear that the definition of a “credit services business”, which is a business which receives compensation for improving the a consumer’s credit record, does not include “Any person admitted to practice law in this state where the person renders services within the course and scope of his or her practice as an attorney at law.” Therefore, attorneys, such as the Law Office of Ronald D. Weiss, P.C. which provide credit repair services as a part of the overall legal services delivered are not bound by the regulations of this Article including the prohibition in Section 458-E of collecting an advance fee. Section 458-F requires a specific retainer agreement andSection 458-H forbids deceptive acts. Section 458-I allows an “Action for recovery of damages by consumer” by an injury caused by a violation of the Article. Section 458-J allows enforcement by the attorney general, in addition to the other remedies in this section, for a violation of this article.
How the New York State Credit Services Law Can Help With Our Office’s Credit Repair Efforts – The NYS Credit Services Law statute regulates credit repair services very heavily, unless they are services rendered by an attorney as part of a larger task or bundle of services provided by the attorney.
The Fair Debt Collections Practices Act (FDCPA) (15 USC 1692 et seq.) – The FDCPA, a federal statute passed in 1978, is aimed at curbing deceptive, harassing, abusive and unfair consumer debt collection practices in the realm of personal, as opposed to commercial, debt and primarily regulates “debt collectors”, or any person regularly collecting debt for another. The law seeks to regulate the actions of debt collectors when it comes to collection of outstanding personal debt and applies to third -party collectors and attorneys and not the company with whom the consumer originally created the debt. The FDCPA regulates the actions of debt collectors so that they are not allowed to reveal to persons other than the debtor that they are calling to try to collect a debt and are only allowed to try to contact the debtor between 8 am and 9 pm. Consumers can stop collection efforts by sending a cease and desist letter to the debt collector. Collectors cannot make false claims, harass, intimidate, irritate or threaten to take legal action that they do not have the right to take. Under the FDCPA a debt collector violating these laws can be sued for damages, attorney fees plus $1,000.
The New York Fair Debt Collection Practices Act – Similar to the FDCPA the focus of the New York statute is the regulation of general collection, communication, validation requirements and disclosures. Prohibited are various forms of collection abuse, embarrassment, harassment and misrepresentation and other unfair debt collection practices. For example, a creditor cannot pursue debts that are past the Statute of Limitations for debt collection which is six(6) years from the time of the initial default. New York Consolidated Laws, Civil Practice Law & Rules Law – CVP §213 | NY State Senate (nysenate.gov) Another area where a debt could be non-enforceable is when the judgment expired after ten (10) years without being extended. New York Consolidated Laws, Civil Practice Law and Rules – CVP § 5014 | FindLaw
How the New York State and Federal Debt collection Practices Acts Can Help With Our Office’s Credit Repair Efforts – We can initiate a litigation or counterclaim, where applicable, over the issue of violations of these principles, for example if a creditor blatantly violates collection statutes.
The Equal Credit Opportunity Act (ECOA) – The ECOA prevents lenders from discriminating against individuals and businesses based on non-financial factors such as age, race, religion, marital status, color, and/or the receiving of public assistance. While lenders can ask for this information, it cannot be used to determine eligibility.
The Truth in Lending Act (TILA) – TILA is a federal law that ensures that lenders comply with giving certain basic information for an installment credit contract. Such information includes: the amount financed, the annual percentage rate (APR) , the amount of the monthly minimum payments, the finance charges, including any additional fees and penalties, the payment schedule, and the total to be repaid over t the duration of the loan. The purpose of TILA is to assure disclosure of credit terms so that consumers could meaningfully compare and understand the cost of credit. TILA was amended several times for enhanced disclosures as to credit card minimum payments and introductory rates (the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005), extensions of credit secured by the the dwelling of the consumer for variable rates or payment schedules (The Mortgage Disclosure Improvement Act of 2008), for the servicers of pooled residential mortgages regarding the net present value of the pooled mortgages in an investment to all investors and parties having an interest in such an investment (The Homeowners Act of 2008), making TILA applicable to all private education loans by imposing disclosure and protection requirements and warnings to borrowers. TILA authorizes a private right of action to obtain civil damages from any creditor who fails to comply except for a bona fide error timely corrected.
The three main credit reporting companies are TransUnion, Equifax and Experian. They maintain, update and transmit to your creditors and other businesses permitted by law your credit report. The credit bureaus get the information from your creditors and from public records. To repair credit the contact is usually one or all three credit reporting agencies and the creditor(s) that have been furnishing the disputed information. Because credit reports are “man-made” the approach to them is inherently subject to all the subjectivity and range of possibilities as any other medium created by people.
As stated above credit repair is based on disputing entries under the FDRA or under the NYFDRA, and/or on an investigation of the alleged debt. Items can also be taken off the credit report, based not on only disputed the entries themselves but also based on allegations of: (1) identity theft; (2) discrimination; (3) improper motives by the reporting creditor; (4) inaccurate records kept by the reporting creditor; (5) lack of proof of its own allegations by the reporting creditor. Once there is a dispute going and until its resolved the negative items that were disputed are removed.
Credit Reporting companies need to investigate disputes and give the person disputing entries the benefit of the doubt. Disputes can be over: (1) the negative information reported; (2) the existence of the creditor as a creditor of the debtor; (3) the amount of the debt; (4) the dates of the debt; (5) who owes the debt; (6) whether the debt was settled. Some disputes are more serious than others for example allegations of identity theft are extremely serious in that there is considerable identity theft present in the current on-line economy. Until the investigation is complete, the credit reporting agency needs to give the benefit of the doubt to the disputing consumer. If the creditor fails to substantiate the debt the dispute is won by the consumer. Because of this system as discussed below, credit entries are tiered in terms of the difficult level to dispute.
The Law Office of Ronald D. Weiss P.C. is uniquely well situated to help with credit repair because we offer a range of services that can help repair the credit. Dedicated credit repair is only one service among many. Often it is too much focus on one task to be able to always rely on it.Where there is inaccurate or mistaken information we can just repair the credit. But often the problem has been going on for a long time and is more complex than merely correcting an error. Where the item can be disputed either as inaccurate or as potential identity fraud, it sets off a dispute that often is inconclusive leading to possible withdrawal of the negative entry. Sometimes the strategy becomes to really settle the item and then to engage in credit repair as to the settlement. Bankruptcy can also be used to leverage legal services. Where settlement is insufficient, client wants to litigate by vacating a judgment and then do the credit repair.
Credit Reporting Companies rely on FICO scores to rate credit. A FICO score can range from 300 to 850. A score of 670 to 739 is considered to be “good”. Credit repair usually results in a “disputed” item and a re-investigation of the accuracy of the item. While the item is investigated it is usually not reported. The item is removed from the credit report only if: (1) there is no verification of it’s accuracy; (2) there is agreement to remove it; and/or (3) the time has expired in terms of the required time on the credit report.
While the CARES Act has given a “pass” to items that are new and/or Covid-19 related, it does so largely for Covid related items only. Therefore if a situation was brewing and was a problem prior to covid, one cannot rely on the credit reporting bureau’s laxness as to credit reports during the continued pandemic. Once these items go back to their state pre-pandemic, there will again be a vital need for credit repair.