The Credit Sweep Scam

Uncategorized Nov 07, 2013 Comments Off on The Credit Sweep Scam

Once a person starts to recover financially from income struggles they start to research ways to fix the mess left behind on the credit report. The vast majority of people have no knowledge of their rights or the laws that govern them. As always, this has created a vulnerability that opportunists seem to be cashing in on. They are offering what is called a “Credit Sweep”. I will define this as it relates to consumer credit (corporate credit sweeps are completely unrelated).

By definition, a credit sweep is a complete deletion of all negative information from your credit report found with any or all of the 3 major credit reporting bureaus (Experian, Equifax, and Trans Union).

It is important to note that it is 100% illegal for anyone other than the original creditor to guarantee the removal of any valid information from your file!  There is no exception to this rule!

Your credit report is considered to be accurate until proven otherwise. The dispute must PROVE inaccuracy to cause it’s deletion. That process has rules of engagement that provide a 30 day window for the creditor to validate the information. It can’t be circumvented.

The best way for you to understand how far from legal this credit repair tactic is we should start with what the law says about items listed on your credit report and how they should be disputed if necessary.

The Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. The key in this statement is “promotes”. There is little enforcement of the rules to ensure that consumer information is accurate. In fact, the vast majority of credit profiles have inaccuracies. This includes people with good credit. This created the need to establish rules that govern how a dispute needs to be addressed, what the time limitations and response requirements are, etc. It can be very confusing. To make matters worse, you really have 1 true opportunity to dispute any specific item on the report. The bureau only is required to validate information once. If it is done again you will receive “frivolous dispute” responses.

According to the FCRA summary:

You can dispute inaccurate information with the consumer reporting agency. If you tell a consumer reporting agency that your file has inaccurate information, the agency must take certain steps to investigate unless your dispute is frivolous. Inaccurate information must be corrected or deleted. A consumer reporting agency or furnisher must remove or correct information verified as inaccurate, usually within 30 days after you dispute it. However, a consumer reporting agency may continue to report negative data that it verifies as being accurate.

The rules of the dispute process according to the Federal Trade Commission (FTC):

Credit reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the credit reporting company, it must investigate, review the relevant information, and report the results back to the credit reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide credit reporting companies so they can correct the information in your file.

A credit sweep is not validating the information as incorrect and therefore subject to deletion. The sweep is actually erasing the negative accounts from the file, but temporarily.

The sweep is performed in 1 of 2 ways:

1) Inside contact at collection agency is paid under the table to delete items from the file. Many times this is offered as a 1 bureau sweep because that collection agency has the ability with only 1 bureau. All collection agencies have the right to remove as well as post negative information on files. The bureaus allow this to compensate for human error. The bureaus always catch up to this as the deletion of all items from a file can’t be considered human data entry error. All the items will re-appear once he gets caught.

2) An identity theft alert is filed with the bureaus. This is more common now and the bureaus are catching on. In this case the identity theft claim forces all accounts to stop reporting, but its only temporary. Once the accounts are proved to be valid by the creditor they re-appear.

In summary, anyone guaranteeing to completely delete all your negative information is committing fraud. More importantly, you are an accomplice. You an accessory to the crime and can be held liable. To top it off you will have wasted the $500-$3000 that these services charge upfront. Remember, there should be no NO UPFRONT FEES for any credit repair services.

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