Legally Resetting your Credit History
April 25, 2008 8:06 PM Subscribe
How to Lawfully Reset Your Credit History. A fascinating true story of how Max successfully deleted thousands of dollars of debt from his credit history. The follow-up, Why Max Won, has some interesting insight into removing emotion from the credit equation. (Previous Make Your Nut appearances on MetaFilter here and here.)
delmoi, fuzzy has been around here for a long time under another username. I would honestly be surprised if this were self-linky / spammy.
That said, the link describes retty much the same method for "repairing your credit" as this projects post.
The method seems to be this:
1. Run up a shitload of consumer debt by spending retarded amounts of money on shit you don't need.
2. Wait 'til it catches up with you, and the creditors are hounding you.
3. Say "Prove it!" to your creditors.
4. Profit!
Legal, but pretty fucking lame.
Note-- I am not defending credit card companies or collection agencies. They generally appear to be predatory assholes. However, the protagonist of the story told in these links kinda sounds like an asshole, too.
posted by dersins at 8:23 PM on April 25, 2008
That said, the link describes retty much the same method for "repairing your credit" as this projects post.
The method seems to be this:
1. Run up a shitload of consumer debt by spending retarded amounts of money on shit you don't need.
2. Wait 'til it catches up with you, and the creditors are hounding you.
3. Say "Prove it!" to your creditors.
4. Profit!
Legal, but pretty fucking lame.
Note-- I am not defending credit card companies or collection agencies. They generally appear to be predatory assholes. However, the protagonist of the story told in these links kinda sounds like an asshole, too.
posted by dersins at 8:23 PM on April 25, 2008
dersins: I didn't mean to imply that Fuzzy Skinner was a spammer, since I took a look at his profile. But the post just seemed that way (Although, I can see why people would read it that way) . I mean, a totally stock Wordpress Blog with a two million+ Alexa rank, and a generic post that basically distills down conventional wisdom about credit repair, the kind of topic that receives a lot of attention from spammy types.
Legal, but pretty fucking lame.
Well, I don't see how the method of repair is lame, although I can see how the "Max" character was kind of a dick, but I don't really think kids just out of college with no experience with finance should be given all these opportunities to fuck up by the credit card companies. And if you ask me the whole credit reporting system is a racket anyway, especially when it's used for things other then calculating loan risk, like getting a job or an apartment.
posted by delmoi at 8:43 PM on April 25, 2008
Legal, but pretty fucking lame.
Well, I don't see how the method of repair is lame, although I can see how the "Max" character was kind of a dick, but I don't really think kids just out of college with no experience with finance should be given all these opportunities to fuck up by the credit card companies. And if you ask me the whole credit reporting system is a racket anyway, especially when it's used for things other then calculating loan risk, like getting a job or an apartment.
posted by delmoi at 8:43 PM on April 25, 2008
I'm always afraid that genuinely false things are going to appear on my credit which I will have to challenge. It does happen; I've known people it's happened to.
So I don't like it when crap like this gets spread around, if only because idiots who can't think about things for more than two seconds read it and start clamoring to close the "loophole". If companies really wanted their money, they could just respond to the letters. If they don't, guess they didn't want it. There is nothing wrong with the process. Leave it alone.
posted by Potsy at 8:46 PM on April 25, 2008 [1 favorite]
So I don't like it when crap like this gets spread around, if only because idiots who can't think about things for more than two seconds read it and start clamoring to close the "loophole". If companies really wanted their money, they could just respond to the letters. If they don't, guess they didn't want it. There is nothing wrong with the process. Leave it alone.
posted by Potsy at 8:46 PM on April 25, 2008 [1 favorite]
given the long and disjointed chain of custody for his delinquent accounts, it was impossible for each bureau to verify the disputed items
That's not accurate. The bureau would have gone back to the creditors--trivially easy for the bureau to do, since the creditors are its customers. The creditor has to verify the debt, after all, they're the ones who are owed the money.
It's not unheard of for individuals to dispute an account and get it taken off their report. It does happen. Getting several bad lines in the report from different sources removed at the same time is very unlikely--that would assume that everyone you owe money to has messy bookkeeping and are too weak-kneed to stand their ground against one individual debtor. The story told here is not impossible, but it's very, very, very improbable.
posted by gimonca at 9:04 PM on April 25, 2008
That's not accurate. The bureau would have gone back to the creditors--trivially easy for the bureau to do, since the creditors are its customers. The creditor has to verify the debt, after all, they're the ones who are owed the money.
It's not unheard of for individuals to dispute an account and get it taken off their report. It does happen. Getting several bad lines in the report from different sources removed at the same time is very unlikely--that would assume that everyone you owe money to has messy bookkeeping and are too weak-kneed to stand their ground against one individual debtor. The story told here is not impossible, but it's very, very, very improbable.
posted by gimonca at 9:04 PM on April 25, 2008
I hate to let the air out of this particular balloon, but this method of "credit repair" stopped working consistently about five years ago, maybe before then. The credit reporting agencies and major creditors have been on to this particular trick for at least that long. Yes, under FCRA, they have to remove the listing until the creditor proves the debt-- and nowadays, that can happen in, say, an hour. Maybe less. The bar isn't set very high for the creditor to "prove the validity" of the debt.
People in the "credit repair" business have, for the most part, long since moved on to the gambit of "borrowing" a creditworthy person's good credit by dummying up a cosigned loan, but the agencies figured that one out too.
posted by missouri_lawyer at 9:06 PM on April 25, 2008
People in the "credit repair" business have, for the most part, long since moved on to the gambit of "borrowing" a creditworthy person's good credit by dummying up a cosigned loan, but the agencies figured that one out too.
posted by missouri_lawyer at 9:06 PM on April 25, 2008
I don't think I could do what Max did with a clear conscience. Although, credit companies certainly don't lose any sleep over whether all their charges are accurate.
The Make Your Nut blog has some pretty interesting ideas and insights. Effective? Useful? I don't know. I'm the furthest thing from a financial expert. But, in my opinion, worth reading. Or I wouldn't have posted it, of course. My cursory examination leads me to believe it's not spammy. Just someone who has more interest in writing the blog than changing the default theme.
posted by Fuzzy Skinner at 9:13 PM on April 25, 2008
The Make Your Nut blog has some pretty interesting ideas and insights. Effective? Useful? I don't know. I'm the furthest thing from a financial expert. But, in my opinion, worth reading. Or I wouldn't have posted it, of course. My cursory examination leads me to believe it's not spammy. Just someone who has more interest in writing the blog than changing the default theme.
posted by Fuzzy Skinner at 9:13 PM on April 25, 2008
Ha. My brother-in-law just did this to clear a cell phone bill from his credit.
Granted, he owed them money, but they kept slapping late and nonpayment fees on him - without ever canceling his service - until they decided he owed about 5 grand. If I'm a phone company, I'm cutting poor customers off at a much lower amount owed than $5000. I would have preferred he pay his bill, but couldn't blame him for not wishing to pay that much for less than a year of service. My bill would be only a bit over $1000 a year, and that covers three different phones in my calling plan.
posted by caution live frogs at 9:32 PM on April 25, 2008
Granted, he owed them money, but they kept slapping late and nonpayment fees on him - without ever canceling his service - until they decided he owed about 5 grand. If I'm a phone company, I'm cutting poor customers off at a much lower amount owed than $5000. I would have preferred he pay his bill, but couldn't blame him for not wishing to pay that much for less than a year of service. My bill would be only a bit over $1000 a year, and that covers three different phones in my calling plan.
posted by caution live frogs at 9:32 PM on April 25, 2008
I, too, would have more sympathy for credit collection agencies if they demonstrated any willingness to break down payments into digestible chunks, rather than demanding their money in one lump sum -- yesterday. People who can do that generally don't have credit problems in the first place.
posted by RavinDave at 9:46 PM on April 25, 2008
posted by RavinDave at 9:46 PM on April 25, 2008
I'm always afraid that genuinely false things are going to appear on my credit which I will have to challenge. It does happen; I've known people it's happened to.
/me raises hand
I was a victim of identity theft and I had a dispute with the IRS. The former haunted me for a while, the latter I'm still trying to clear. The IRS dispute was a convergence of circumstances, but when all was worked out, the IRS owed me money. Regardless of that, I still have two liens marked on my credit report -- when there was only one lien in the first place. All attempts to get the second, erroneous report removed have been unsuccessful, and the first one that doesn't even apply will remain anyway (the liens are for the exact same amount, so it's obvious it was a clerical error).
For those that work in the credit industry, how does this apply:
Creditor: You owe X
You: I don't owe X, you owe me Y
Creditor: You're right. Here's Y.
Credit reporting agency: You owed X * 2
Seriously, wtf?
posted by ryoshu at 11:10 PM on April 25, 2008
/me raises hand
I was a victim of identity theft and I had a dispute with the IRS. The former haunted me for a while, the latter I'm still trying to clear. The IRS dispute was a convergence of circumstances, but when all was worked out, the IRS owed me money. Regardless of that, I still have two liens marked on my credit report -- when there was only one lien in the first place. All attempts to get the second, erroneous report removed have been unsuccessful, and the first one that doesn't even apply will remain anyway (the liens are for the exact same amount, so it's obvious it was a clerical error).
For those that work in the credit industry, how does this apply:
Creditor: You owe X
You: I don't owe X, you owe me Y
Creditor: You're right. Here's Y.
Credit reporting agency: You owed X * 2
Seriously, wtf?
posted by ryoshu at 11:10 PM on April 25, 2008
Anything that motivates credit providers to keep full and verifiable records, disaggregate credit, retain control and responsibility for loans rather than selling them off for cents in the dollar to lowlife debt collection agencies, and cease offering loans to people who cannot repay them, is a good thing. The whole credit industry needs a serious shakeup. It's basically become the financial equivalent of crack pushing: tempt the users with the high, offer them cheap tastes, get them hooked, get them thoroughly hooked, jack up the prices, and strongarm them into continuing to use and pay no matter what.
posted by aeschenkarnos at 11:40 PM on April 25, 2008 [1 favorite]
posted by aeschenkarnos at 11:40 PM on April 25, 2008 [1 favorite]
I got another credit card offer in the mail today (I've noticed a marked increase lately, for some reason), promising a $400 line of credit from some no-name bank. And when you read the micro print, you discover that, upon acceptance, you will be sent a card credited with -- not $400 -- but $76 dollars! That's some serious handling fees they're getting. When does this sort of thing become usury? And how many hapless fools don't make it to the micro-print because they plug in the click-thru URL and sign their electronic approval?
posted by RavinDave at 12:04 AM on April 26, 2008
posted by RavinDave at 12:04 AM on April 26, 2008
I've been the victim of ID theft as well, and I can tell you that it's much, much harder to get shit off your report(s) than this implies.
I had no trouble proving the fraud to one agency -- since the person in question had used my name and SIN but had provided an address on the other side of the country from my own. But the second agency refused to believe that I'd not deliberately manufactured an address. It took about 6 months and numerous faxes, letters, police reports and phone calls to get it removed.
I finally had my profile frozen, meaning I cannot be extended further credit without elaborate song-and-dance measures, but this did clear up the problem.
And yes, one of the problems was that the 'agencies' involved had reported the same sum several times.
posted by jrochest at 2:15 AM on April 26, 2008
I had no trouble proving the fraud to one agency -- since the person in question had used my name and SIN but had provided an address on the other side of the country from my own. But the second agency refused to believe that I'd not deliberately manufactured an address. It took about 6 months and numerous faxes, letters, police reports and phone calls to get it removed.
I finally had my profile frozen, meaning I cannot be extended further credit without elaborate song-and-dance measures, but this did clear up the problem.
And yes, one of the problems was that the 'agencies' involved had reported the same sum several times.
posted by jrochest at 2:15 AM on April 26, 2008
but I don't really think kids just out of college with no experience with finance should be given all these opportunities to fuck up by the credit card companies.
Hell, in the UK they're pushing credit cards on teenagers. I know people who are still, almost a decade later, paying off credit card debts from teenage indulgances. I got my first credit card at a moderately sensible age of 23 (too many airlines and online shops require credit cards) and still treat those things like loaded guns.
posted by slimepuppy at 4:12 AM on April 26, 2008
Hell, in the UK they're pushing credit cards on teenagers. I know people who are still, almost a decade later, paying off credit card debts from teenage indulgances. I got my first credit card at a moderately sensible age of 23 (too many airlines and online shops require credit cards) and still treat those things like loaded guns.
posted by slimepuppy at 4:12 AM on April 26, 2008
I tried this a few years ago (actually, got suckered into it), and yeah, it's most shite. But I have had luck negotiating 2/3 of the debt down to collection agencies (they but the debt at pennies on the dollar), and thus, have begun repairing my credit legitimately-ish. Certainly wish it'd never gotten bad in the first place, and hindsight is, well, y'know.
posted by moonbird at 5:56 AM on April 26, 2008
posted by moonbird at 5:56 AM on April 26, 2008
IANAL, but I'm not sure that Max's ploy is actually legal. Sure, he's using a legal method, but he's materially misrepresenting his understanding of his credit history when he writes “To the best of my knowledge these credit lines do not belong to me."
If Max knows the credit lines are actually his and he's just doing this to try to get them expunged from his record, isn't that fraud?
posted by darkstar at 8:04 AM on April 26, 2008
If Max knows the credit lines are actually his and he's just doing this to try to get them expunged from his record, isn't that fraud?
posted by darkstar at 8:04 AM on April 26, 2008
Darkstar,
I have a feeling he'd be in some hot water in the event that last collection agency down the line--who'll invariably end up holding the bag if they can't sell it off to someone else and write it off as a loss--decided to sue Max on his account.
I can only hope he's doing this in good faith. Otherwise, how could he sleep at night? "Aha! This company's so big and spread so thin they won't even KNOW I owe them!"
What a loser.
posted by resurrexit at 8:33 AM on April 26, 2008
I have a feeling he'd be in some hot water in the event that last collection agency down the line--who'll invariably end up holding the bag if they can't sell it off to someone else and write it off as a loss--decided to sue Max on his account.
I can only hope he's doing this in good faith. Otherwise, how could he sleep at night? "Aha! This company's so big and spread so thin they won't even KNOW I owe them!"
What a loser.
posted by resurrexit at 8:33 AM on April 26, 2008
I know I'm immature but when I read 'make your nut' all I can think of is 'bust a nut.'
posted by ao4047 at 8:58 AM on April 26, 2008
posted by ao4047 at 8:58 AM on April 26, 2008
It's OK, we were all thinking it.
posted by Civil_Disobedient at 9:14 AM on April 26, 2008
posted by Civil_Disobedient at 9:14 AM on April 26, 2008
If Max knows the credit lines are actually his and he's just doing this to try to get them expunged from his record, isn't that fraud?
That's exactly the reason I couldn't do what he did. Even if he couldn't get in legal trouble for saying that (the agency would have to take him to court and then prove that he knew; it's less work for them to just show he owes it), it's just not morally right. However, there may be situations where the liability is legitimately questionable. For example, in the event of a divorce, it may be totally legitimate to have the company provide proof of liability. There are also countless people who have so much debt that they legitimately may not have kept track of what they are liable for. With identity and credit card info theft being an escalating problem, there can be accounts opened falsely in your name, and fraudulent charges to legitimate cards you hold.
posted by Fuzzy Skinner at 9:19 AM on April 26, 2008
That's exactly the reason I couldn't do what he did. Even if he couldn't get in legal trouble for saying that (the agency would have to take him to court and then prove that he knew; it's less work for them to just show he owes it), it's just not morally right. However, there may be situations where the liability is legitimately questionable. For example, in the event of a divorce, it may be totally legitimate to have the company provide proof of liability. There are also countless people who have so much debt that they legitimately may not have kept track of what they are liable for. With identity and credit card info theft being an escalating problem, there can be accounts opened falsely in your name, and fraudulent charges to legitimate cards you hold.
posted by Fuzzy Skinner at 9:19 AM on April 26, 2008
I'd be interested to know what the standards of proof are for listing something on someone's credit record in the first place. Do the Big Three just take their customers' words for everything? Or is their some level of verification that has to be offered up front?
posted by jacquilynne at 10:49 AM on April 26, 2008
posted by jacquilynne at 10:49 AM on April 26, 2008
If I'm a phone company, I'm cutting poor customers off at a much lower amount owed than $5000.
Well, that's one business model. Another is, swallow the pretty nominal cost to keep said customer on your books (and to maintain the guilt/fear factor in your mark), then go after the pretty good chance that you can eventually screw him out of 5K.
posted by IndigoJones at 11:16 AM on April 26, 2008
Well, that's one business model. Another is, swallow the pretty nominal cost to keep said customer on your books (and to maintain the guilt/fear factor in your mark), then go after the pretty good chance that you can eventually screw him out of 5K.
posted by IndigoJones at 11:16 AM on April 26, 2008
what the standards of proof are
Under FCRA, there's a $1000 penalty for intentionally making a false report on someone. Wikipedia, full text at the FTC. That's only for 'willful' violations, and of course the $1000 by itself is a flyspeck to most companies. I'm not a lawyer, but I'd assume that if a company was caught sending out false negative info on tens of thousands of customers at once, that could rack up quickly. Whether it was "willful" or not would be something for the lawyers to chew on in court.
At another level, the value of the product that credit bureaus sell is based on the accuracy of the information in the product. In other words, if their reports are bogus, nobody will want to buy them. It's not in the interest of the credit bureau to sell false info. If one particular company consistently provides bad info, the best interest of the credit bureau is to stop accepting their submissions. Now, my personal guess is that that would be more likely to happen with a small company than with a big bank or retailer--with the big guys, my guess is that there'd be quiet conferences to make sure it doesn't happen again. After all, the big lenders are both major suppliers and major customers to the credit bureau, which makes things complicated.
Also consider that accounts receivable can be a big number on the asset side of a company's ledger, and can be used as collateral against loans that the company itself might take out. If word gets around that the company is reporting bogus info about debtors to the credit bureau on an ongoing basis, that could raise questions about the viability of the company's bookkeeping practices, their accounts receivable portfolio or even their solvency as a whole. Playing fast and loose or sloppy with financial numbers at any point in your business is just not good, and likely to show in a bad way in any sort of proper financial audit.
(Of course, there's a bigger discussion about what should happen versus what does happen in the economy that goes beyond credit reporting. When "the rules" aren't followed in business, you get savings and loan bailouts, Enrons and mortgage bubbles. But notice that those things did happen, because at times people in business didn't follow "the rules". Just because rules and common sense are available doesn't mean people will automatically follow them. And when rules are written into actual law, it becomes a political question as to whether they'll be enforced or not.)
posted by gimonca at 12:52 PM on April 26, 2008 [1 favorite]
Under FCRA, there's a $1000 penalty for intentionally making a false report on someone. Wikipedia, full text at the FTC. That's only for 'willful' violations, and of course the $1000 by itself is a flyspeck to most companies. I'm not a lawyer, but I'd assume that if a company was caught sending out false negative info on tens of thousands of customers at once, that could rack up quickly. Whether it was "willful" or not would be something for the lawyers to chew on in court.
At another level, the value of the product that credit bureaus sell is based on the accuracy of the information in the product. In other words, if their reports are bogus, nobody will want to buy them. It's not in the interest of the credit bureau to sell false info. If one particular company consistently provides bad info, the best interest of the credit bureau is to stop accepting their submissions. Now, my personal guess is that that would be more likely to happen with a small company than with a big bank or retailer--with the big guys, my guess is that there'd be quiet conferences to make sure it doesn't happen again. After all, the big lenders are both major suppliers and major customers to the credit bureau, which makes things complicated.
Also consider that accounts receivable can be a big number on the asset side of a company's ledger, and can be used as collateral against loans that the company itself might take out. If word gets around that the company is reporting bogus info about debtors to the credit bureau on an ongoing basis, that could raise questions about the viability of the company's bookkeeping practices, their accounts receivable portfolio or even their solvency as a whole. Playing fast and loose or sloppy with financial numbers at any point in your business is just not good, and likely to show in a bad way in any sort of proper financial audit.
(Of course, there's a bigger discussion about what should happen versus what does happen in the economy that goes beyond credit reporting. When "the rules" aren't followed in business, you get savings and loan bailouts, Enrons and mortgage bubbles. But notice that those things did happen, because at times people in business didn't follow "the rules". Just because rules and common sense are available doesn't mean people will automatically follow them. And when rules are written into actual law, it becomes a political question as to whether they'll be enforced or not.)
posted by gimonca at 12:52 PM on April 26, 2008 [1 favorite]
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