Lexington Law Credit Repair Blog

Years ago, my wife and I decided that in order to save some money I would do all of the construction work to complete our unfinished basement. In preparation for this work, I purchased a self help book on framing. I eagerly read the book and deemed myself prepared to frame my basement. With my trusty tape measure in hand, I measured and cut the two by fours and nailed them together with pride. After several hours of work, I began installing sections of framing throughout my basement. To my dismay, I found that some framed sections were too short, other sections were too tall. I had framed sections that were anything but straight. I even discovered the nails I used were not the correct nails for framing (a nail is a nail right?). Upon seeing my work, my wife immediately demanded that I hire a contractor to fix and then finish the job. I did just that, I hired an experienced contractor and now have straight walls in my finished basement.

Many of us try to take on the most important issues in our lives on our own. I tried framing but my framing problem is trivial compared to the problems that can arise with credit reporting. Instead of “going it alone” why not have experienced help to assist you with credit worthiness? Credit repair can be difficult and time consuming because of the complexity of federal laws and the varying circumstances of individual cases. While some cases may have a timely and easy conclusion, others may require that you navigate the difficult maze of requests and responses that are often put in place by the credit bureaus. Sometimes, you may get a response that is unexpected or that hinders your credit repair strategy leaving you with less than desirable results.

Lexington Law Firm has nineteen years of experience in the area of credit repair. We have assisted thousands of clients with the removal of questionable and incorrect items from their credit reports. These removals in turn have assisted many of our clients’ lives. We have found that our several approaches from dealing with the credit bureaus to dealing with your creditors have been effective.

Don’t try to tackle credit repair yourself when you can have experienced and professional help with Lexington Law Firm.

John Health, Directing Attorney

You are most likely weighing the pros and cons of a short sale vs. a foreclosure. If you, like many other Americans right now, are coping with a challenge to meet your mortgage payment. This may be due to one or a combination of these common struggles: 1) job loss, 2) increasing rates if you are in an ARM loan, and 3) decreasing home values. It is most likely that you are deeply concerned with how either of these ugly terms will affect your credit score and which one may be the better choice of the two burdens. Instead of being intimidated, you are at least getting educated on your choices and the consequences. Though the reality of a short sale or foreclosure is not positive, researching what you will face is a good start to finding the best solution to your individual situation.

With a short sale, lenders typically take a loss on a loan that reflects the difference between what you owe and what the property actually sells for. They must be willing to accept this level of risk, and may execute one of two actions in a short sale: A) Sue you, the homeowner, for the difference; reflecting on your credit as a deficiency judgment which could profoundly impact your credit score in a negative way, or B) if they choose not to sue, they very well could absorb the loss, show it as a tax write off, and the IRS would see this as income sent your way. You would then be taxed based on the difference of the lender’s loss. This could prove to be extremely costly; however there would be no deficiency judgment showing on your credit.

Maybe your mortgage payments are current and you could proactively foresee any issues with your ability to continue to make them. Partnered with being current, if you have available assets to pay the difference within your short sale, then there should be no need for negative dings to your credit. Since you are in control of the sale, on top of your mortgage payments, and could pay the difference out of pocket, this may not be handled as an actual foreclosure. Hence this would be the ideal situation.

Now, a foreclosure is exactly what it is. You have fallen behind in your mortgage payments; you cannot sell your home due to housing market conditions and have chosen to walk away. A completed foreclosure can stay on your credit for up to 10 years and can literally sink your credit scores. Your credit score could potentially drop anywhere from 100 to 400 points; severely impairing your credit. If you are forced into a short sale, behind on your payments, and are unable to pay the difference, this “short sale” could reflect on your credit just the same as a foreclosure would.

Either situation that confronts you, whether it is after your foreclosure or a deficiency judgment from a short sale, the key to recovering from this successfully, is the determination to improve your credit once the damage is done. With your positive actions, commitment and patience you can fix your credit, and the dream of becoming a homeowner once again could someday become a reality.

It seems like a logical step. You say to yourself, “I want to fix my credit, so I will pay off some of my credit card debt.” You take your savings and apply it to your balance. You sit back and wait for your credit score to go up. It’s guaranteed, right? Not always.

According to ABC News with the collapse of the economy, credit has been more difficult to come by, and banks are feeling the pressure of the easy credit they once handed out freely to their customers. Well, it has now become the customers who are feeling the pressure. Many people have experienced what is called the “follow me down” phenomenon while attempting to fix their credit. When a customer pays down his balance, “follow me down” reacts by decreasing their card’s spending limit. While paying down debt should help this customer’s credit score, the result of the phenomenon is a credit score decrease due to the cut in the credit card’s spending limit. Providers like Chase and Citibank have been cited by consumers in recent months for taking part in this practice.

Paying off debt should not have a negative impact on your credit score. Avoid the “follow me down” phenomenon by taking steps to protect yourself:

The economy has taken some hits, but don’t let the same thing happen to your credit score. An attempt to fix credit should be praised, not punished. Beware of the dangers of the “follow me down” phenomenon and use the tools above to avoid it.

Credit Score Guidelines in the ever changing housing market, if you want a mortgage, it can help for you to know your credit score.

So you are ready to take that challenging step to refinance your current mortgage or purchase your dream home; but do you know what your credit score is and how it will stand up to Lender’s current guidelines? With the obvious strain on the housing market today, Lender and Investors are really cracking down on the level of credit risk they are willing to accept. When you seek out a mortgage, each Lender that you go to will pull your credit report, and you are entitled to receive a copy of this so that you can see where your score ranks and how it will hold up in their approval process.

Lenders will assess the content of your credit report within their underwriting department to determine how much risk would be involved in financing your particular mortgage. Each lender has specific programs available according to your credit score, income and your overall ability to repay the mortgage. These programs have a certain set of guidelines that must be followed in accordance with government regulations.  For example, Fannie Mae has recently raised their minimum credit score requirement from 580 to 620. They now consider any credit score under 620 to be high risk and may question the customer’s ability to repay the mortgage without the possibility of default.

When these large agency investors, like Fannie Mae, have their set minimum credit score requirement it needs to be made aware that most other mortgage lenders may not agree that those minimum requirements are strict enough for them to comfortably lend on. So these individual mortgage lenders will set their own criteria called credit overlays to determine what is acceptable for their lending practices. Meaning, FNMA could accept a credit score of 620, but your local bank may only be willing to provide a mortgage product with a credit score of 660 or higher. Again, the question arises how your credit score fits into all of the mandatory regulations.

If you find that your credit score is outside of your lender’s guidelines, then you can research what steps you could take to better your mortgage financing situation. It is possible obtain a rapid rescore with the credit bureaus, if you find that something may be showing incorrectly on your credit report or you want to pay down a balance on a credit card or pay it off entirely. When reporting these actions to a credit agency with the appropriate documentation, they may be able to get the creditors to update the information on your credit report with the possibility of raising your credit score.

In conclusion, make yourself well aware of your lender’s guidelines and where your credit score fits in to accommodate your mortgage needs. Take the steps necessary and available to you to possibly improve your credit score by paying a balance off or down and/or attempt to remove inaccurate negative information reporting on your credit report. If this is all just too overwhelming, it may also be a great idea to seek out help from a legitimate credit repair service company that is familiar with the actual laws that pertain to what it might take to update your credit score in a positive manner. Having a head start with where your credit score stands and getting educated on the ever changing housing market regulations could help you get the appropriate mortgage financing you need.

Many people feel hesitant after declaring, “I want to fix my credit.” It’s easy to wish for a better credit score, but common mistakes on the path to fixing credit can actually lead to a more lengthy process. Read on to discover some common scenarios.

1. “I’ll wait to rebuild my score.” While it seems logical to wait until your credit issues are resolved before taking additional steps to improve your score, you are missing out on a great way to fix credit. Be proactive about paying down your debt and looking for new ways to diversify your credit portfolio.

2. Closing old accounts will help fix my credit score.” Credit longevity is a good thing, and accounts that have been in good standing for several years can only help you. By closing your oldest account, your credit history will appear shorter than it actually is.

3. “I want to fix my credit; I should charge more on my credit cards.” Spending more does not equal better credit. In fact, maxing out your credit cards will hurt your score. The best way to use consumer credit to your advantage is to keep your credit card balances below their limits; ideally, aim for 25 percent or less.

4. “I don’t have time to deal with the long process of credit repair. I’ll bet there is a quicker option online!” Indeed there is, but be cautious. While there are reputable online companies aimed at fixing credit, do your homework before signing up. What are their credentials? How much experience do they have? Are there hidden costs? Find the answers to these questions to make sure you have an advocate, not an adversary.

5. “Keeping track of every credit-related email and letter is not that important.” Wrong. Keeping current records of the correspondence between yourself and the credit reporting companies is crucial. By law, these companies have 30 days to respond to disputes, but don’t rely on them to stay within this timetable. Have your dispute letters notarized at the post office to provide proof of the mailing date. You may need this documentation if you don’t receive a response.

The smart way to fix credit is the organized way. Before taking any steps to repair your credit, do your research. Find out which actions can help you (and hurt you) the most. Keep thorough records of your conversations and correspondence with the credit repair companies. “I want to fix my credit” is an assertive statement; let your actions follow suit.