Stage #3 of the Credit Restoration Process – Negotiation
Stage #3 of the credit repair process is one of the most powerful and effective ways to raise credit scores quickly. A key factor is that you must NOT jump the gun and move to stage three before completing stages 1 & 2…
Stage 3 of the credit restoration process is both daunting and powerful at the same time.
Negotiation.
Now some people think that you can negotiate or even speak directly with the 3 CRA’s Equifax, Experian or TransUnion but they are virtually untouchable to consumers but keep in mind that they only report the data that is sent to them.
Negotiation must be done directly with creditors and collection agents which can definitely be an interesting experience if you don’t know what to expect. You will specifically negotiate with creditors who have passed the validation test in Stage 1 of the credit restoration process and the investigation test in Stage 2.
Most of the time these creditors claim that you still owe them money so you’ll have to now deal with the balances they claim that you owe. The goal of this stage is to negotiate settlements with these collectors but more importantly to get the creditors to delete the negative item from your credit file as if it never existed.
As you can imagine, collectors are very resistant to this agreement. They will claim that it is illegal because they are obligated to report items correctly to the CRA’s. But what they don’t tell you is that they are not under obligation to report the item at all.
Therefore, you will need to request that they stop reporting the item all together.
Be very, very careful with this step.
If you settle on a collection account that is older than 6 months old and it reports to your credit file as paid or settled with a renewed date of activity, your credit score can actually go down. Yes, I said down.
Even though you paid the account there are two reasons why this can happen.
1. Anytime an account is reported as settled for less than the full balance, the credit models will read that as a negative and will penalize you with a lower score.
2. If the collection item was over 6 months old, it was starting to have a diminished affect on your credit score. If the date is renewed, it refreshes the life of that collection account and looks like a new collection and again, your score will go down.
In order to avoid this, you must be sure the collection account is updated appropriately.
Of course the goal is to have it deleted so you should always go for that, but if they will not delete, you must try to get them to report it as paid or paid in full. NOT settled. In addition, you will want to be sure that they do not update the date of activity on the credit item. The challenge, is that the collector will be very resistant to agree to do anything other than report it as settled.
Sometimes the collector will do nothing in terms of updating the credit file. You need to know that they will tell you what you want to hear in order to get you to pay. They don’t always follow through.
Negotiation is a powerful element of the process because it has the biggest opportunity for impact. Taking a derogatory account that has a balance owed deleting that account and the amount owed all at that same time can and most likely will, have a dramatic impact on your credit score for the better.
I will be honest however, negotiating with creditors can be very frustrating and you must be emotionally detached as you do it. Don’t try to argue with them as they will always win. You need them to feel like you are working to solve the problem but you need them to help you too. Some will be very nice and others will be downright mean. It comes with the territory.
CPR is one of the only credit services organizations who actually picks up the phone and negotiates with creditors on behalf of a client. We do this because it gets the best results for the client.
If you have a question about negotiation you can submit that question from this site and one of our credit experts will reply via email within 24hours.
