Lexington Law Credit Repair Blog

For victims of identity theft, the experience of losing a good credit score can be crippling. The lasting effects are just as bleak as those with bad credit; identity theft victims also face the potential of denied loan applications, lost opportunities, and high interest rates.

Despite the unfortunate circumstances that surround identity theft, credit repair is an option – just not an easy one. Many people spend countless hours and thousands of dollars attempting to improve their credit score and restore their good name. However, this doesn’t mean you should give up. Good credit is important, and there are ways to fight for it.

What should I do first?
According to the Federal Trade Commission, there is a long list of steps to take after realizing that your identity has been stolen:

1. Contact one of the consumer reporting companies (Equifax, Experian, or TransUnion) immediately. They will place a fraud alert in your credit file and notify the other companies to do the same.

2. Obtain and review your credit report. Make note of any charges you did not make and call to ask your creditors (e.g., your bank, retail stores, etc.) to freeze or cancel your accounts. In future months, you should continue to check your credit report periodically to make sure no other fraudulent accounts have been opened in your name.

3. File a report with your local police station. Ask for a copy in order to verify the date and time it was filed.

4. File a complaint with the Federal Trade Commission. This will help the police to track and hopefully locate the person or people who have committed this crime.

How do I repair my credit?
Even after taking the necessary first steps, the process of cleaning up your credit is long and difficult. In order to have fraudulent charges removed from your credit report, the Fair Credit Reporting Act (FCRA) requires you to contact both the consumer reporting company and your creditors. You must supply them with a copy of your Identity Theft Report and a letter highlighting the fraudulent charges. From there, the consumer reporting company will decide whether to block and expunge the charges from your record. If, however, they choose to deny your claims, the charges will remain on your credit report and you will be responsible for paying off charges you did not make. If this happens, you will be forced to go through a frustrating dispute process to further prove that your Identity Theft Report is accurate.

Need Help?
If you don’t want to handle this process alone, ask for help. Credit repair companies handle identity theft cases on a regular basis and are equipped with the expertise needed to represent you during an often stressful and emotional time. As the victim of a crime, you should not be forced to spend your time defending yourself and your innocence. Focus on your life and let experts focus on your credit score.

The news is filled with talk about loan modification and President Obama’s Making Home Affordable plan, and in a nation where over 3 million people are past due on their mortgage payments, a solution to their woes is something worth talking about. Loan modification is being pitched as a way to help troubled homeowners reverse their progression toward a short sale or foreclosure.

While loan modification may be a perfect recourse for some, it should be noted that not all homeowners will qualify for a loan modification and even then, some who do would be better served pursuing a different option.

In order to qualify for a loan modification your mortgage must have originated before January 1, 2009, you must live in the home, your monthly mortgage payment must be more than 31% of your pretax income, you must prove financial hardship, and the amount you owe on your home cannot exceed $729,750. If you do qualify for loan modification, your loan servicer will reduce the interest rate on your mortgage until your monthly payments drop below the 31% threshold. This new interest rate can go as low as 2% but if that is not enough to get below 31% they may extend the life of the loan or offer to defer a portion of the amount you owe until the loan matures.

continue reading “Loan Modification Might Not Be an Option” »

The statistics on the number of marriages that end in divorce are varied and open to interpretation, but what is certain is no one who enters a marriage with the person they believe to be their perfect match plans to experience the agony of dissolving the union.

As exhilarating as it is when you think you have found the person you will spend the rest of your life with, the realization that it is not meant to be is just the opposite. And if it wasn’t enough that the lifestyle two people have worked so hard to create is torn apart, a divorce can also wreck havoc on a person’s credit score. After the emotional and monetary sting of a divorce has started to subside, many people find they have also lost their good credit rating along the way.

The credit reporting system leaves much to be desired when it comes to accounting for a divorce and this is what makes a divorce one of the five credit killers according to the book “Credit Revolution: Path of the Smart Consumer.”

continue reading “Sometimes Credit Repair is Required to Clean up your Credit Score after a Divorce” »

Most people realize their credit score affects their ability to get approved for credit. A lower than average credit score is a warning sign to lenders that you are more likely than most to be late on your payments or default on a loan altogether. Based on this assumption, lenders will either charge you a higher interest rate to account for your high credit risk, or elect to deny you credit outright.

Many of the people trying to clean up credit are looking for a way to improve their credit score for this reason. They are working to get into a new home, purchase a car, or refinance their existing loans, and they realize that by improving their credit score they will increase their chances of accomplishing these tasks and may end up saving thousands of dollars in interest payments.

The benefits of having a good credit score, however, don’t end once you leave the loan officer’s office. Below are 3 more reasons why it is important to keep your credit reports clean.

continue reading “3 Lesser Known Benefits of Having a Clean Credit Report” »

The credit reporting system isn’t perfect. Just ask Ken Clark from Little Rock who was turned down for a vehicle loan and accused of being a con man by the auto dealer because his credit report was marked “deceased”.

Credit reporting errors like these are surprisingly common, and this makes sense in a system where so much information is exchanging hands everyday. Even errors with a “one in a million” chance of happening will happen 3,500 times every month when you factor in the 3.5 billion pieces of account information the credit bureaus receive from lenders per month.

Then factor in systemic flaws in the system and credit errors are much more common. For example, the algorithms used to match loans to credit files use partial matches in some cases. Because of this, someone else’s loan could end up on your credit reports if your name and Social Security numbers are very similar.

continue reading “Fixing Your Credit Becomes Necessary in a Broken Credit System” »