A credit transfer, also known as an automatic credit sweep, is an agreement between a bank and a customer (usually a corporation) that allows all inactive or excess funds in a deposit account to be used to pay off short-term debt to a line of credit. This process is commonly referred to as credit repair, and it involves disputing all the elements of a credit report at once. Credit sweep providers often present this option as a legitimate way to fix credit issues, such as identity fraud. However, this practice is actually fraudulent, as the entity would need to gain access to your credit report and delete items illegally.
Even if the credit transfer is successful, the negative element, such as a collection account, will likely reappear the following month. Credit sweeps involve disputing all of the elements (or perhaps all of the negative elements) in one's credit reports, usually claiming that the accounts were the result of identity theft. This is done in an effort to sweep credit reports of all negative information. If you conduct a credit sweep that questions everything in your customer's credit history, but even if only one of the accounts has been opened by your customer, you are committing fraud.
If the credit transfer is successful, Credit Reporting Agencies (CRAs) must remove all negative information within four business days and prevent it from reappearing on your report. This will “eliminate all negative elements from your credit report”. However, even if credit sweeps were completely legal, it's worth noting that factual disputes don't take longer than a bad credit transfer (if the right tools are used). If you're in the lending industry, it's likely that you've been approached by customers who want to make a credit transfer.
It's important to understand what this process entails and how it can affect your customers' credit reports.
