Introduction
I suffered from credit bureaus’ incompetence. They mixed my profile with someone who had the same last name.
I was 18 and started getting calls from collection agencies.
I had no idea what that meant. My immigrant parents didn’t know anything about credit bureaus. Schools never taught you how to deal with credit reports.
Eventually, they even started texting me. I replied that this person they’re looking for wasn’t me. I also explicitly told them to stop harassing me. And they actually stopped. Little did I know that even legitimate debt collection cannot contact you during certain hours. Those precise words were a true reflection of how I felt.
Fast forward several years, I opened a new bank account and the lady at the counter told me that there’s something wrong with my credit. Specifically, the two credit bureaus, TransUnion and Equifax, had different information. One of them has the correct name and date of birth, the other one had an incorrect name and incorrect date of birth.
I started calling them and was told to simply email a lot of personal information to a generic email address. The document they asked for included my social insurance number, my driver’s license, my bank statements, my passport, etc. I wasn’t and still isn’t a cybersecurity expert, but intuitively I felt that email wasn’t safe. As you will about to see, it turns out that I was right.
Counterintuitively, I asked the agent how I could mail documents if I don’t want to email them. She was surprised. I had to go to the Post Office to purchase all the necessities for a snail mail, and go print my documents at the library. The whole ordeal took much longer, and technically cost more money to implement.
However, the dispute was eventually solved.
Recently, I came across this in depth article written by Patrick McKenzie about how and why you must deal with the credit bureaus by mail. I was surprised that my young self somehow got this right and decided to go the old fashioned way. The author also gave you some boilerplate paragraphs to construct a proper letter.
My Reaction
Similar to Youtube reaction videos, I will quote the original post by Patrick, and mix in my commentary.
Do not use the following advice to correct a problem with an account which is factually yours. If someone has stolen your credit card number and used it to buy things, you should not send letters. Just call your bank; they’ll take care of it. For reasons beyond the scope of this post, that is a really well-understood scenario that banks are very customer-friendly about. The only thing we’re talking about here is accounts / debts which were never yours.
Was an account opened in your name without your consent? Great, you’re in the right place. The rest of this article assumes that you’ve either checked a credit report or been told by a bank that an account exists in your name which you didn’t open.
Americans can freeze their credits, but this isn’t an option in Canada. If you are concerned about identity theft or any identity mix up, you should monitor and correct any inconsistency as soon as possible.
My advice or Patrick’s advice won’t work if you indeed incurred debt.
Understanding the players
What is a tradeline?
[A trade line] is when the account was opened, a monthly balance history, and a monthly report of what state the account was in (paying as agreed, late by 30 days, late by 60 days, defaulted, etc).
It is the individual unit of information that makes up your entire credit report.
For example, your credit report could have the following sections
credit cards
recurring bills (e.g. phone bill)
address history
Inside the credit card section, there could be multiple credit cards. The report would include the last 4 digits of a card, date opened, and the payment history. This credit card’s section would be a trade line. It it very important that you know this language. You will present yourself professionally.
There are three big credit reporting agencies (CRAs) in the US: Equifax, TransUnion, and Experian. Their business model is keeping records, organized on a per-person basis, about debts. They sell this information to banks for the banks to use in underwriting processes. They also sell credit scoring, a product which gives the bank a single number (or small set of numbers) to evaluate your creditworthiness.
The acronym CRA in this post stands for credit reporting agencies. Canada only has two: TransUnion and Equifax. CRA in the context of this post isn’t referring to Canada Revenue Agency.
They are the OGs of the information business. Many more social media users are more aware of privacy issues. If you think Facebook has a fragile infrastructure, credit bureaus are at least 10 times more problematic.
CRAs do not collect debts. Debt collectors (or original creditors, or lawyers hired by either of the two) collect debts. The interplay between debt collectors and CRAs is subtle: because many banks (and insurance companies, and landlords, and other institutions) make decisions partially based on credit scores, debt collectors can de-facto threaten to harm your future interests by reporting debts against you to the CRA in the present.
Never pay a penny of a debt which isn’t yours. Paying waives your legal rights, because the system assumes that nobody would pay something they didn’t actually owe
Debt collectors are separate institutions. We will deal with them separately.
Obviously, do not pay for a debt that’s not yours. Do not panic because this whole ordeal will take a while to resolve.
Understanding a CRA’s incentives
Assume the CRAs will do the bare minimum to comply with the law, always. They are among the most odious and user-unfriendly institutions in the United States.
The same can be said about the CRAs in Canada. In the intro, I mentioned that I thought sending all of my personal info into a generic email address or a web form with a 90s style UI seemed sketchy. It is indeed sketchy. As we will see later, mailing is actually more secure than their godawful websites.
You should never call a CRA, ever. They have phone centers staffed with people whose only job is getting you off the phone. They have very limited availability to help, for the same reason that the phone center for Walmart does not have anyone who can help a shoe. You will deal with CRAs only in writing.
These days they have streamlined online applications for writing to them, but I suggest that you only send them paper letters. This is a really weird thing for a technologist to suggest, but when you send paper letters, you can establish and own a “paper trail.”
It was definitely my experience. The agents on the phone sounded burned out and indifferent. They only provide short responses like a yes/no.
Why can’t you have a paper trail if you use their websites? Once you hit submit, they do not send you a record of your response. The forms are also designed in a generic way. Certain fields may not be applicable to you, and they won’t let you proceed unless you fill the mandatory fields out. A professionally written letter, on the other hand, could explain your particular situation and bypass any information that’s not relevant to your case.
Presenting like a professional
[Customer Service] department is scored on number of tickets resolved per hour, and each rep’s incentives are simply to classify you as something requiring no followup and get you off the phone
The phone is like a gateway drug into solving this whole credit report issue. Ask very definitive questions, such as the address of the credit bureau, if that helps you. Any questions that begins with “how do I” will likely receive a non-answer.
Your bank’s customer support representatives are taught to evaluate whether someone looks like they’re competent and collecting a paper trail. If they are, the CS rep is supposed to stop touching the case immediately and instead escalate them to a supervisor or to the legal department. … is notscored on cases resolved per week. They are scored on regulatory incidents per quarter.
Presenting your case in a professional way will immediately bypass the call centre or other low ranking clerks. They probably never had the authority to make the changes you need, even if they understood your problems.
Form letters and the inadvisability thereof
So the regulators offered the CRAs an olive branch: they’re allowed to close without actioning any case which involves a form letter.
This is bad news for us. Essentially, if a credit bureau finds your letter too generic, too ambiguous, too hard to follow, they will just close your case.
Write clearly and concisely. You want to outline relevant facts and omit long, windy narrations of e.g. how you were feeling when you discovered that your identity was stolen.
Let me quote an internet celebrity. Facts don’t care about your feelings. In this case, the CRAs don’t care about your feelings. Here’s Patrick’s example paragraph you could use in your letter:
On August 5th, 20XX I accessed my credit report from Experian, numbered 1234567. It shows an account with your institution in my name, with account number XXX123. I am unaware of the full account number. I have no knowledge of this account. I did not open it or authorize anyone to open it.
Patrick was a ghost writer for CRA letters. Here’s another tip from him.
I never phrase an initial letter with “I demand you…” because I’m a professional. Angry people demand; professionals “require.” If you’ve asked me to pay money that I don’t owe you, I “require” you to stop doing that.
The CRAs are required to take actions within a timeline. Different types of cases have different deadlines. You simply need to make them aware that you know they are legally obligated to take actions.
The clock(s) start typically counting when the bank or CRA has a specific, written complaint, so you want to both make sure your initial letter constitutes that and signal that you are aware they are now on the clock.
Example paragraph with implied timeline:
Please correct this tradeline and confirm this to me in writing within the timeframe specified by law. If you cannot correct this tradeline, provide me with your written justification for why your investigation concluded that this tradeline was accurate.
This will get your case over to the legal department. It will likely be reviewed in depth instead of the usual bureaucratic laziness.
Who do I write first?
Patrick suggested that you file a police report. In his example, he’s referring to a bank account getting opened without your knowledge or consent. This is certainly a much bigger problem than mixing up spelling of your name. I am not aware if the process would be similar in Canada.
Where exactly should I address letters?
Following the same bank account example, you need to figure out where to address your envelope.
Don’t waste your postage by addressing it to some general customer service department.
Debt Collectors
Patrick suggested that you do not talk to them on the phone. Instead, write letters to them.
I personally don’t think it’s worth your time, printer, and postage to write to debt collectors before you have collected enough evidence from the CRAs or the bank in the example.
This is what you can write to debt collectors after you have corrected everything with the CRAs.
Bank of Bigness has confirmed that that account was never mine. I have attached a copy of the correspondence for your records. Any collection activity is illegal. Selling the debt, which you now know to be illegitimate, is illegal. Reporting it to the CRAs is illegal. Instruct the CRAs to remove it from my credit reports immediately, cease all collection activity, and ensure you do not sell it. You are allowed one additional communication, delivered via the US Mail, to confirm that you have complied with your legal obligations.
Do I need a lawyer?
My answer is no. Most of us have rather trivial issues, and don’t have the budget for a lawyer.
Conclusion
I swear this is true. Shortly after I came across this blog post and thought about writing a commentary on this topic, the old issue I described in the beginning came back. Now, I need to tend to my own credit report inconsistencies.
The credit bureaus are old and incompetent. Never assume they have your best interest.
Highlights from Patrick’s Original Post
Keep all you documents and correspondences forever. Never trust that the issues won’t come back. Their archaic systems might bring things you have already corrected back to your report years later. That’s exactly what’s happening to me.
Do not expect anything to be solved via phone calls. The only objective an agent has is to get you off the phone in the shortest amount of time possible. If your first letter wasn’t answered, follow up with another letter.
If you’re American, freeze your credit. If you’re Canadian, unfortunately there isn’t such a service.