A simple, relatively unknown but proven legal strategy can be implemented to raise FICO scores 60 to 120 points. In 1999, H. Bruce McInnis Jr. in Maine looked at Section 609 of the Fair Credit Reporting Act (FCRA) and noticed something that, to his knowledge, nobody had ever 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agency is not required to remove accurate derogatory information from a consumer’s file, unless the information is outdated under section 605 or cannot be verified.”
If accurate derogatory information in the consumer’s file cannot be verified, the reporting agency is required to remove it. This law requires every company that reports credit events, not just the original creditor companies, to be able to produce verifiable proof of the negative event. It holds the credit reporting agencies accountable for the negative information they pass on. This is obviously related to the right of debtors to challenge the accuracy of negative events reported on them. The intent of the government was to protect debtors from having inaccurate information used against them.
The burden of proof is not entirely on the original creditors. All parties reporting this data are responsible for its accuracy. The companies that report credit events, besides the original creditors, are the credit bureaus; principally Experian, Equifax and TransUnion. Did they maintain verifiable records of people’s debts? Mr. McInnis started challenging the credit bureaus to verify the negative credit events in the credit reports of his clients by producing a copy of the Original Creditor’s Documentation. He did not challenge the accuracy of these events, just used a legal strategy to challenge the credit bureaus ability to verify their accuracy. In effect, he used Section 609 of the law to demand the credit bureaus justify their reporting. If they couldn’t verify the data, they had no right to continue to maintain it on their credit reports. The credit bureaus began to comply. They removed the negative events from the credit records.
The credit reporting agencies don’t maintain original document records of credit applications and events. They don’t have a signature on a Visa card application. They don’t have a signature on a car loan application. They don’t have a signature on a bankruptcy filing. All they have are electronic blips in their databases. They simply accept what the creditors have reported to them about debtors. Even though the debtor knows it’s accurate, the credit bureaus do not. They can’t verify the accuracy of a single piece of data in their database.
The credit bureaus are regulated by the government due to the nature of their business, but it’s important to understand they are private companies. They are not legally or morally obligated to report anything on anyone. For example, most people know that most negative events remain on a credit report for seven years (ten years for Chapter 7 bankruptcies). This is not a legal requirement. In fact, they could take all bankruptcies off all records tomorrow, if they chose to. They are simply not allowed by law to report these events for more than seven years (or ten). They’re not forced to report them at all.
Of course, it’s their business. That’s why they do it. But they have a choice and when forced to verify the data they report they will choose to take negative events off. Essentially, credit restoration doesn’t eliminate negative credit events. It does make them in effect “invisible” to anyone looking at a credit report and this of course is reflected in the credit score.