Did you know that 79 percent of credit reports have errors on them? This statistic shouldn’t be taken lightly because credit mistakes have serious implications. Inaccurate credit scores can hinder someone's ability to be approved for a mortgage, buy a car, or even secure a job.
Luckily, credit repair specialists can help straighten out credit errors by sending debt validation letters.
Validation letters are sent to creditors or collection agencies requesting proof that debt on your client’s credit report is valid and/or within the statute of limitations for collecting the debt. If a creditor or collection agency cannot prove a debt is valid, or if it’s outside of the statute of limitations, the debt in question must be removed. And as a result, your client’s credit score will improve.
With a bit of education, the help of specialized software, and a plan, the debt validation process is simple, scalable and effective. All you have to do is follow this simple checklist to learn how to write, send and monitor a debt validation letter.
Step One: Assess Your Client’s Situation
The first step in a relationship between a credit repair specialist and client should be a discussion about the client’s ultimate financial goals. Are they trying to improve their credit score so they can qualify for a home loan? Is there credit score impacting their ability to get a job?
These questions help set the framework for both your credit repair plan of attack and how to best craft the message in the debt validation letter.
Your job as a credit repair specialist is to reveal the client’s current credit score and help them understand the course of action you will take to improve it. Clients can access their credit report for free by signing up for a credit monitoring service, or if they haven’t accessed a credit report in a year, they can take advantage of the FTC’s mandate for one free credit report every 12 months from each of the three credit bureaus.
Step Two: Run a Simple Audit
Avoid tedious administrative work and run the Credit Repair Cloud Simple Audit feature. The one-click process helps identify a client’s credit issues and pinpoint the proper debt to include in a validation letter.
To run a credit audit:
- Use the copy of your client’s most recent credit report obtained in step one
- Upload your client’s credit report into the Simple Audit tool and click ‘go’
- Review the itemized audit and share it with your client
Eliminating the manual process of poring over each client’s individual credit history helps you scale your business faster without skimping on service.
Step Three: Write the Debt Validation Letter
Once you’ve pinpointed debt that needs verification from step two, it’s time to start drafting a letter to creditors. The primary goal of the debt validation letter is to make the creditor prove a debt actually belongs to your client.
Remember, if a creditor or collection agency can't prove it, they must remove it!
- Never question more than five items per month
- Only dispute two or three items to avoid being deemed frivolous by the three credit bureaus
- Work from a sophisticated and time-tested template to improve your effectiveness and value to the client
To help automate your process, software solutions like Credit Repair Cloud can help organize your clients, identify items to dispute, and automatically insert them into templates for you.
Step Four: Send Letters Strategically
After your letter has been carefully crafted, it’s time to get the request to the correct location. The following addresses are the best to use when sending a debt validation letter to one of the three bureaus on your client’s behalf:
Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30374 - 0256
P.O. Box 4500
Allen, TX 75013
TransUnion LLC Consumer Dispute Center
PO Box 2000
Chester, PA 19016
Always send a validation letter through a physical mail service as opposed to email. Also, it’s wise to purchase certified mail receipts so you can track the status of a letter and receive a confirmation when a letter has been accepted from the courier.
Once a letter has been successfully delivered, you can use Credit Repair Software to schedule calendar alerts to remind you to follow up with clients and creditors.
Step Five: Address the Response
You will receive a response to your debt validation letter expressing whether it is provable debt or not. If the creditor bureaus are unable to validate the debt, it must be promptly removed from your client’s report.
If any of the debts in question come back as verified, you can:
- Negotiate an accurate item’s deletion
- Send a second round letter disputing the verification
If you’d like to dispute the verification, read our article about how and when to send a second-round dispute letter.
Ready to start making a difference for your clients? Download our free debt validation letter template so you can start becoming a credit hero today.