How Personal Credit Affects Your Business

I was working with a new start-up located in Virginia. The owner, as with most entrepreneurs, had challenges on his credit report due to the 2008 melt-down. As I checked into the negative trade lines on his credit report, I was stunned by the amount of inaccurate and unverifiable information. These inaccuracies were holding him back from getting the type of financing that he needed in order to expand his business. As we started to challenge these inaccuracies, both with the three credit bureaus and with the original creditors, they started being removed from his credit report, which in turn increased his scores and allowed him to get conventional types of financing. This experience motivated me to write about credit and your credit rights as a consumer.

As you may know, I was an owner of a large collection agency and national subrogation company (insurance collections). I had over 500,000 debtors in my database and had heard all the excuses and seen all the collection tactics legally used by my corporation. I am ashamed to say that, just like the credit repair business, the collection business has some very unscrupulous companies collecting debt. Now that I am on the other side of the table, helping consumers learn their rights regarding credit, I would also like to share with you your rights as a consumer against the unwarranted collection agency. I get hundreds of complaints in my office every day about harassment by collection agencies and the illegal tactics used by such companies.

A great many people have collections on their credit reports. Most of us have had a time in our lives when a medical situation caused the bills to mount up, or have just had a web of circumstances that led to our accounts being sent to collection. It is not unusual. You may even have the will and volition to pay the debt, but not the means. Whatever the case, it is important to know your rights so that you are equipped with the knowledge to deal with these companies.

Let’s look at the Facts.


1. The consumer is protected under the Fair Debt Collections Practice Act (FDCPA). You can find your rights spelled out in detail online at
2. The original creditor is NOT governed under FDCPA; only the collection agencies are held to this act.
3. There are three sections to the FDCPA that collection agencies receive the most complaints about:
a. FDCPA 806 – Harassment or Abuse
b. FDCPA 807 – False or Misleading Representation
c. FDCPA 809 – Validation of Debt

Let me give you the “Cliff Notes” version of each section. Make sure you challenge the collection agencies on the following:

FCRA – Fair Credit Reporting Act – This is the law that protects consumers from inaccurate or unverifiable information being placed on their credit reports.

  • The Fair Credit Reporting Act allows lenders, under certain circumstances, to review credit histories for business lending purposes. This only applies to businesses that are sole proprietorships (Experian, 2012).
  • As a consumer you have the right to challenge any inaccurate or unverifiable information on both of your credit reports. If the three credit bureaus cannot prove it they must remove it within 30 days.

FDCPA 806 – Harassment or Abuse

• Threatening the reputation of an individual or the threat and/or use of violence
• Use of profane language
• Letting the telephone ring repeatedly, or engaging anyone in a telephone conversation with the intent to annoy, abuse, or harass.

FDCPA 807 – False or Misleading Representation

• Telling you they work for the State or a Federal Government Agency
• Telling you they are an attorney or represent an attorney when they do not
• Implying that nonpayment will result in an arrest, garnishment, lien, etc., when the collector has no intent or legal grounds to do so
• Telling the consumer they committed a crime in order to disgrace the consumer

FDCPA 809 – Validation of Debt

• Written notice of debt must be sent to you within five days of initial contact by phone
• You have 30 days from the time you receive the collection letter (Dunning Letter), to dispute validity of the debt and ask for proof
• Upon disputing the debt the collection agency MUST cease all collection activities until verification is mailed to the consumer

Keeping records of all phone conversations is imperative to winning your case. Keep all letters and correspondence received by the collection agency in a file. This will help you if you need to go to court. If the collection agency continues to try and collect the alleged debt without providing you validation you are then able to take them to small claims court in your local area and file suit for $1,000. Remember, the collection agencies count on the consumer’s ignorance of their rights. Although I, at one time, ran a collection agency, it is now my steadfast commitment to shed light on the dubious practices of the unscrupulous companies that take advantage of you, the consumer.

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Douglas Muir is an authority in business strategy, having successfully built several multimillion-dollar enterprises from the ground up. He is considered the start-up guru and speaks internationally on topics of entrepreneurship, innovation, and business growth. Muir teaches Entrepreneurship at the prestigious University of Virginia, both in the School of Engineering and in the Darden School of Business’s MBA program. As well as being a professor, he is the Assistant Director of the Business Minor Program in the School of Engineering. He is an expert in the Business Model Canvas theory of building businesses, and teaches this methodology to undergraduate students thirsty for entrepreneurship and eager to start their own companies. Muir has been interviewed by Gerri Willis of CNN and by Bloomberg Radio, and has been published and quoted in numerous publications including Business Week and The Scotsman Guide, a prestigious magazine for the banking, mortgage, and investor industry. Douglas was the host of The Doug and Eric Show on ABC, “Exposing the Hidden Truths about the Three Credit Bureaus and the Banking and Finance System”. He was featured in Kaihan Krippendorff's business tactics book, Hide a Dagger Behind a Smile, which described how Muir infiltrated the insurance industry and locked out his competition. If you’d like more information please feel free to contact me at