A simple, relatively unknown but proven legal strategy can be implemented to raise FICO scores from 60 to 120 points. In 1999, H. Bruce McInnis Jr. in Maine examined Section 609 of the Fair Credit Reporting Act (FCRA) and noticed something that, as far as he knew, no one had noticed before; 609 (c) (2) (E): “A consumer reporting agency is not required to remove accurate derogatory information from a consumer’s file, unless the information is out of date under section 605 or cannot be verified.”
If the precise derogatory information in the consumer’s file cannot be verified, the reporting agency is required to remove it. This law requires that all companies that report credit events, not just the original creditor companies, can present verifiable evidence of the negative event. Holds credit reporting agencies accountable for negative information they transmit. Obviously, this is related to the debtors’ right to question the accuracy of the negative facts reported to them. The government’s intention was to protect debtors so that inaccurate information was not used against them.
The burden of proof does not rest entirely with the original creditors. All parties reporting this data are responsible for its accuracy. The companies that report credit facts, in addition to the original creditors, are the credit bureaus; mainly Experian, Equifax and TransUnion. Did they keep verifiable records of people’s debts? Mr. McInnis began challenging the credit reporting agencies to verify negative credit events on his clients’ credit reports by producing a copy of the original Creditor Documentation. He did not question the accuracy of these events, only used a legal strategy to question the ability of credit reporting agencies to verify their accuracy. In effect, it used Section 609 of the law to require credit bureaus to justify their reports. If they couldn’t verify the data, they had no right to keep it on their credit reports. The credit bureaus began to comply. They removed negative events from credit records.
Credit reporting agencies do not keep records of original documents for credit applications and events. They do not have a signature on a Visa card application. They do not have a signature on an auto loan application. They do not have a signature on a bankruptcy filing. All they have are electronic signals in their databases. They simply accept what the creditors have told them about the debtors. Although the debtor knows it is correct, the credit reporting agencies do not. They cannot verify the accuracy of a single piece of data in their database.
Credit bureaus are regulated by the government due to the nature of their business, but it is important to understand that they are private companies. They are not legally or morally obliged to report anything about anyone. For example, most people know that most negative events stay on a credit report for seven years (ten years for Chapter 7 bankruptcies). This is not a legal requirement. In fact, they could remove all bankruptcies from all records tomorrow, if they wanted to. They are simply not allowed by law to report these events for more than seven (or ten) years. They are not required to report them at all.
Of course, it is their business. That is why they do it. But they have a choice and when they are forced to verify the data they report, they will choose to eliminate negative events. Essentially, credit restoration does not eliminate negative credit events. In fact, it makes them “invisible” to anyone viewing a credit report and this, of course, is reflected in the credit score.