Transcription
Paying collection accounts will not improve your credit. This is how you hack the system. Yes, you heard that right: paying your collections doesn't actually improve your credit score.
Now, many people have made the mistake of saying, "If I just pay off my collection accounts, they're going to update the balance to zero, and then my credit is going to skyrocket." I am here to tell you that that is absolutely not true, okay? A collection is a collection is a collection, regardless of the balance amount. So, whether you owe $55,000 or $500, or even if they've changed the balance to it being $0, it's still going to have the same credit impact on your actual credit score.
So, the idea is to get it deleted altogether. Otherwise, you're going to be stuck at that 595 credit score for a long time, waiting on that 7year clock to kick in.
But maybe you're like one of my friends that thought that if they just simply disputed it online, that it was going to get deleted. Now, this is one of the biggest mistakes because typically when you dispute collection items online, they come back auto-verified within 24 hours. And it's just a really big waste of your time and energy hoping that these computers are actually going to come back and verify things correctly.
Now, if you actually want to improve your credit score, you have to use what's called my "backd door method." Now, this is the method that basically takes you around the AI and the computer systems that auto-verify your disputes when you submit them online. Now, this is the same backd door method that I outline in my credit clapback kick, and so many of you have actually used these and seen drastic improvements in your credit score in less than 30 days. Some of you even saw drastic improvements in your credit score within a week.
So, before we get into all the methods behind how you can get things deleted within 30 days, I want to talk to you about why I'm telling you not to pay the collection.
Now, I am in no way saying that you should evade your debts or that you should just be a dishonest person that racks up a bunch of bills, because obviously that's not going to help you in the long run, especially if you're wanting to buy a house or get a higher-paying job. But the reason why I'm telling you not to pay the collections until you have all the information is this: most of the time, when you get a collection in the mail, it's got a fee added on to it known as a collection fee. And most people will unknowingly just pay that fee, thinking that they're obligated to pay that fee.
Now, according to the fdcpa laws, a collection agency can't just slap on any amount of a debt that they claim that you owe as part of a collection fee. That's not exactly legal, okay? What the fdcpa law says is that they can only charge a collection fee if it is explicitly stated in the original contract. Now, if it isn't stated, and if it doesn't state the actual amount that they're going to charge you for a collection fee, then essentially, they can't charge it.
There's also these state laws that talk about the most that a company or a debt collection agency is able to charge a consumer. And obviously, the law says that they cannot go over that amount, or that would be illegal, unethical, and all the things, right?
So, Jazzy, if you've been charged extra, what do you do? Well, the first thing that you do is you're going to ask for the original contract so that you yourself can validate how much they're legally able to charge you for these debts.
Now, let's say in a hypothetical situation that perhaps you had a doctor's bill that was $1,000, and the contract stated that the most they could charge in collection fees was 20%. Well, that would mean they can only legally add on an extra $200 for the collection fee.
Well, Jazzy, what if I got a bill that said I owe $2,000, and they added $1,000 of that from the collection fees? Well, that essentially, if it gets reported to your credit report, that would essentially invalidate the entire amount of the debt because the fdcpa would kind of view that as an illegal reporting of debt, meaning that it's kind of like frivolously collecting a debt that the consumer doesn't legally owe.
So, this is one of those methods that you can use in your favor with the right wording and with the right fdcpa inserts in your dispute letter to get that item not only deleted from your credit report, but in my situation, I was actually able to get a refund. Will that work for everybody? No. But the important part here is that you get the debt deleted because that is the thing that actually helps your credit score to go up.
So, when it comes time to dispute these items off of your credit report, there are a couple of "dos" and "don'ts" that you have to be wary of. And don't worry if you're not writing all of this down, because I have the templates in my credit clapback kit. I have everything that you need: all the Department contact numbers, along with all of the contact information that you're going to need to write out the perfect dispute letter, right?
Let's start with the "don'ts." Now, number one, the first thing that you should never, ever do is dispute online. This is because AI is essentially going to read your dispute, and it's going to come back auto-verified, usually in less than 24 hours. It's a waste of time. And if you dispute online too many times, they're essentially going to label you as kind of like a "frivolous disputer." They're going to flag your account, and then your disputes are kind of going to just be like thrown out anytime you dispute in the future. So, we want to make sure we avoid that.
Now, the second thing that you don't ever want to do is dispute positive accounts. Now, if you've got a positive payment history, whether it's like a credit card or it's monthly car payments, things that you positively have been paying on time, and you've got good credit reporting history with these companies, you never want to dispute that because disputing positive accounts would actually make your credit score go down.
The other thing is, you never want to dispute an account that you're actively like using, such as like a credit card. If you're actively making payments on a car payment, it'd be kind of hard to say, "Hey, this account doesn't belong to me," when you're driving the car, right? So, we don't want to be dishonest in our approach, and we don't want to do things that could actually hurt our credit.
Now, another "don't" is you never want to dispute more than five collection accounts at one time, right? So, during the 30-day period, the most I've ever disputed was five collection accounts. Now, sometimes these were accounts that had been reporting on my credit for longer than seven years, or they were just like accounts that were trying to charge me triple what the original amount was, things of that nature. But the point is, if you dispute more than five collection accounts within like a 30-day period, you start to become like this "frivolous disputer," and you don't want to attach that sort of like reputation or history to yourself. So, you want to have a reasonable amount of disputes, and for me, that magic number is kind of like four or five per month maximum. And yes, this is per Bureau.
And my last "don't" is: don't give up after the first round. The credit bureaus and these collection agencies, they're very funny with their money, okay? They don't like to delete things because if they delete it, they essentially lose money. So, you don't want to give up after that first round of letters.
Like, there's an entire whole government agency that you can contact to kind of support you in this process if you're disputing and those things are coming back verified, right? So, I definitely put that government agency in your roadmap. This is a part of your credit clapback kit because sometimes we've got to call in our "Big Brother," we've got to call in reinforcements where we're doing this whole credit disputing process, whether we're disputing with the agencies or with the collection companies, right? Two different pathways, but still, we're aiming for the same result.
Now, one of the biggest "dos" is you absolutely want to insert the fdcp a verbage into your credit dispute letter. Now, you want to put that verbage along with the FC verbiage in there to let them know that you're basically wanting to dispute it under the federal laws that you're entitled to, right? You're entitled to that protection. So, you're not just disputing because today is Tuesday; you're disputing because you want to make sure that the credit bureaus, as well as the collection agencies, are operating under the federal guidelines, right? 'Cause everybody's got a boss to answer to, right?
Now, the next "do" is you want to make sure that you are requesting verification of the debt, which is different from validation, okay? We talk about the different ways that you're supposed to word these letters and why wording is so freaking important.
And another "do" is you definitely want to dispute other types of erroneous accounts. Like, let's say that you had an account that popped up on your credit as a result of identity theft. Now, that is something you absolutely should be disputing.
So, now let's fast forward and assume that you've already gotten your letters written out. You've inserted your fdcp a statements into the letter. Make sure that when you send these off at the post office, you are using like the return postage that comes with tracking, because the credit bureaus and these collection agencies are slick. They're going to swear up and down that they never got your letter, and that's going to be one way that those items essentially remain on your credit. So, you always want to get tracking, and you want to make sure that it is a signed delivery slip where somebody has to sign off saying that they received your letter.
Now, once you send off those letters, the clock starts ticking from the moment that they receive your letter, and they have 30 days to verify the information. And if it's not verified in 30 days, essentially, it has to be deleted from your credit report.
And you may be saying, "Well, Jazzy, what does the verification process look like?" Well, that looks like where they verify that the account actually belongs to you, and they're also supposed to verify things like signatures and things like making sure that the contract amount matches what's being reported, um, essentially on your credit. So, if they don't do that in 30 days, legally, they're supposed to remove it from your credit.
Now, sometimes they remove it, sometimes they don't. That's when we have to call in the "Big Brother" agency, that government agency that I told you about that's in your credit kit. We call in the big guns sometimes because we need reinforcements, right? So, in most cases, if they cannot verify the information and fully validate the debt, especially sending you copies of the contracts, then essentially that is going to allow you to say, "Okay, since you were not able to validate this, I need for you to remove it from my credit report." And generally, they do that in the process, but sometimes they don't; you have to remind them. So, that's why we have our templates, we've got our fdcp a laws, we've got our government agency that helps support us in the process if they do not follow the laws and delete those items from your credit report.
So, if you're trying to get your credit back on track, you want to get into that 700 Club, or you're like me and you want to sit in the 800 Club, which by the way, your girl's sitting at an 832, so trust me, I know what I'm talking about because I started at a 495 credit score, okay? So, if I can bring my credit up 300 plus points, you definitely can too.
And if you have things like pesky late payments or maybe you have charge-off accounts, check out my other videos because I did a deep dive into how you can get things like charge-offs and late payments removed. And I also just put it in your credit clapback kit because I wanted to make it easy.
And my final "don't" of the hour is: don't pay anybody to do this for you. You should never be paying a credit repair service or debt consolidation companies. Those types of organizations can't do anything for your credit that you can't do. Technically, you've got more power than they do, and they're just going to charge you a bunch of money for the debt to be placed all into one little account, and you're still going to owe the debt, and your credit still is going to be shot.
So, I do not care for credit repair companies. I've had major credit repair companies wanting to pay me thousands of dollars, and I mean close to six figures, for me to represent their brand, and I just flat out said no because I don't believe in that work. I don't believe in lying to consumers or taking advantage of them being in a vulnerable place. I just don't believe in that. So, make sure you're checking out these other videos if you're ready to get your credit in order for the New Year. Talk to you later, bye!