| By Greg Fisher, creditscoring.com
Stand by for sleaze.
The Fair Credit Reporting Act states
The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.
That initial sentence-- and the premise-- of the nation's credit reporting law was written decades ago, but today, the media thumb their noses at those words.
Experian says that changing accurate, negative information is grounds for kicking a creditor out of the credit reporting system, and that it might even be illegal (not that they understand what illegal is):
There are very strict laws governing what a business must do if it reports information to a credit reporting company. If a business were to intentionally do what you describe, it likely would be in violation of those laws.
Doing so also would be a violation of their contract with Experian and grounds for cancelling the business’s ability to report or receive information. Legal issues notwithstanding, the foundation of credit reporting in the U.S. is essentially the honor system.
The "Goodwill Adjustment": Examples of media suggesting your creditors lie to credit bureaus
So, here it is. You'll squirm when you read it.
- "If you do have a late payment, it's worth a call to the lender to see if they will remove this information from your records in a 'goodwill adjustment.'" email (creditscoring.com email to CBS)
- "But if you were late on a payment, you could ask the lender to remove it from your credit report. This is called a 'goodwill adjustment'... 'It is something that a lender possibly will do for some of their better customers,' explains AuWerter." email email
- "After bringing past due accounts current, contact the creditors who report late payments on your credit report and ask them to make a good faith adjustment to remove the late payment information from your credit report files." (alt) email
- MSN: "But it can't hurt to ask." contact email
- "If you already have a late payment on your report, you could try calling your lender and asking for a 'goodwill adjustment.' Also called an account 're-age,' the adjustment reports your account as current, rather than late." (on AOL.com) email
- "It's called a goodwill adjustment because a creditor does it as a gesture to help a customer, explains Reed Racette, director of creditor relations at the National Foundation for Credit Counseling." email email email email (?)
- "Ask the lender who reported the item to remove it -- a 'goodwill adjustment,' in industry parlance." (on Wall Street Journal web site) email email email
- MarketWatch from Dow Jones
- Realty Times: "A demanding, frustrated and rude approach will make it more difficult. The lender isn't required to remove dings for 7 to 10 years in some cases... 'The consumer should contact the collector and request a letter explicitly stating their agreement to delete the account upon receipt or clearance of the payment,' he said." email contact
- Physician's MONEY DIGEST: "Doctors can attempt to have these late payment notices removed from their credit record, thereby improving their score. One way is to request a "goodwill adjustment." Simply ask the lender that reported the late payment to remove it from your record—pointing out your good payment record, explaining why you paid late, and promising not to do it again." email contact email
- MarketPlace "Credit bureau 101" guest, author Jason Rich: "If you can get the creditor, you know, to take off a negative piece of information on your credit report, you know a credit card was totally unpaid, you neglected it--if you can get them to take that off, you're going to see a spike in your credit score pretty quickly, usually within, you know, 30 to 60 days." email email comment
Not media, but perhaps more influential
While not part of the press, the State of West Virginia gets a special mention. "If you've been a good customer, a lender might agree to simply erase that one late payment from your credit history." contact
Here are some pretty words on a law firm's web site: "Goodwill interventions... Appropriate for mild late-pay accounts, this non-confrontational intervention leverages your fiscal relationship with your creditor in an effort to positively impact the record and reporting of your credit."
And, finally, here's one example that turns the whole idea of truth on its head. Fair Isaac's message board rule states:
The only 'credit repair' discussions allowed in these Forums are ones that exchange information on how to legally and ethically correct/remove INACCURATE information from your credit report.
Or to put it another way, if you're looking to provide or receive 'credit repair' advice that includes tips on how to remove ACCURATE information from your credit report for the purpose of raising your FICO score, please go to one of the other credit forum sites where this is permitted.
And its User Guidelines state
FICO Forums is intended to provide helpful and useful tips for managing credit and understanding FICO scoring. This is not the place to exchange ‘credit repair’ advice that encourages consumers to provide untrue or misleading information to a credit bureau or lender for the purpose of raising FICO scores or otherwise improving credit ratings, credit histories or credit records. Such material may be edited or removed, and egregious or repeat offenders will be banned from future participation in FICO Forums.
But, the FICO score creator hosts any number of discussions about "GW letters" there. One is even led by a Fair Isaac employee and message board moderator:
USE A GW LETTER FOR ACCURATE DEROGS SUCH AS LATES AND PAID COLLECTIONS:
"Because of my exceptional payment history over the last X years, I would like you to consider removing the negative payments from my credit report."
Begging: An American tradition - Endless entertainment for Twain, Barnum, Rockefeller, Carnegie and friends.
The intimacy of the letters was exceeded only by their lack of originality: beggars from Des Moines, Brooklyn, and New Orleans wrote the same things, in almost the same order, pouring what they must have felt as unique heartbreak into relentlessly formulaic letters. They apologized for intruding, recounted their troubles, and pitched a deal.
from "Born Losers: A history of failure in America" by Scott A. Sandage (includes accounts of early credit reporting)
What influenced the press to say such a crazy thing
Where did they get the notion to have creditors lie?
Perhaps it was the FDIC's policy on "re-aging." Or, maybe they just slopped through something written by some guy (who is going through mental ethical justification gymnastics) on the internet, without vetting his silliness through their sense of legality, or even their common sense. A fool's game.
But that's speculation. To find out the intrepid journalists' source for the whole idea, use the direct approach. Ask them at the addresses above. If they say something like, "Oh, that's common knowledge," or "Everybody knows that, silly!," just keep asking who the cockroach is.