When it comes to fixing bad credit and collections, you have a very important right as outlined in the Fair Debt Collection Practices Act: The right to have a collection account “validated.”
As designed by the FDCPA, the process of validation is much different than the concept of verification. Verification centers on a credit bureaus ability to verify information and this leads to a cursory examination of the account. During this examination, the consumer will decide whether or not the creditor was right or wrong to present certain information about the consumer.
When a collection agency is asked to validate a debt, by contrast, the process can get pretty involved. The collector must prove that the debt is your responsibility, and also that they have the legal right to collect it from you. Furthermore, the collector has to cease all collection activity until they provide this evidence to you. If the agency can’t validate the debt, it must end its attempts to collect on the debt and stop reporting the collections account to the credit bureaus.
It is important to point out that these rights apply only to your issues with collection agencies. These rules do not apply to the original creditor. The reason for this is that the records of collection agencies have a tendency to be less than reliable. In some instances, they have been known to chase after the wrong people to collect debts. Other times, the owed amount reflected is way off from the accurate figure. It is the validation process that is intended to protect consumers from such scenarios.
To validate a debt, the collector needs to present documentation – obtained from the original creditor – proving that you do indeed owe the money. Validation can be a powerful weapon in your fight to clean up collection actions on your credit report. Many times collectors don’t have the documentation required, especially if the debt has been passed around from one collection agency to another, as often happens. Frequently, they have little more than a computer printout to back up their claims, and the Federal Trade Commission has made it clear that such a “mere itemization” isn’t sufficient proof to constitute a validation of a debt.
It is also interesting to note that the validation process not only can eliminate collection accounts that belong to someone else, they can eliminate your own debt accounts. To some, this may prove to be a surprising statement but it really makes a great deal of sense. How can it be true if the information presented on your collections account is accurate?
You will find that sometimes – not always, but sometimes – you can get accurate information removed from your file, especially if it has to do with an old collection account. Now, the bureaus and Fair Isaac will tell you that this isn’t “playing fair” – that the integrity of the credit system depends on credit reports reflecting the most complete picture possible, including all available negative and positive information.
Michael A. Saunders has an MBA from the Stanford Graduate School of Business. He edits a site on fixing credit and is president of Information Organizers.