The US Treasury Department along with the Ad Council recently launched a new credit education website, located at ControlYourCredit.gov, with the goal of helping young adults learn how to make good financial decisions and use credit responsibly.
The website invites visitors to “solve the great mysteries of credit” by checking them into room 250 of the dark and foreboding Bad Credit Hotel that conjures up images of a ’40s film noir mystery movie. In the process of making phone calls on a classic rotary phone, investigating a transforming Rorschach painting, and using clues found on scraps of paper to unlock a hidden safe, visitors find an interactive tool for calculating the cost of interest, information about their credit history, tips for dealing with debt collectors, and more.
While there is nothing revolutionary about the information contained within the ControlYourCredit.gov site, and the absence of any mention of credit reporting errors is unfortunate, the production value alone is worth a visit and only time will tell if this tactic will be effective in helping educate new credit users.
Especially during the holidays, retailers offer a “No interest and no payments for 12 months!” type sales pitch as a way for you to purchase that must have flat-screen television, bedroom set, or mountain bike without having to put any money down. For those strapped for cash, this seems like a perfect way to get what they want today and then pay for it down the road when, hopefully, their finances are in better shape.
What many people do not realize is that no interest, no payment agreements are frequently not the ideal solutions they may seem. Depending on the retailer and your ability to make timely payments once they come due, these types of agreements may result in you having to pay much more than you intended and can cause serious damage to your credit score.
To start with, even the most financially responsible consumer can see their credit score drop because they took advantage of a no interest, no payment sale. This is because in many cases you are opening a new line of credit with the retailer that, depending on if and how it is reported to the credit bureaus, may increase your credit utilization ratio.
Sometimes, credit problems can seem insurmountable. While the average consumer hopes to increase their credit score so they can shave a few percentage points off their mortgage rate or get a low interest credit card, there are many consumers whose credit rating essentially excludes them from the credit game entirely. They are being denied loans at any interest rate and the dream of owning their own home is nothing more than that; a dream.
It is people in this category that have lost hope and begin to look to illegitimate methods of credit repair. They start looking into credit repair clinics who promise a way to completely start over. Clinics who claim to be able to create a brand new credit identity and a brand new credit report - clinics that seem to have the perfect solution to a hopeless situation.
Most people realize that when something sounds too good to be true, it usually is. Even the people who fall for these credit repair scams probably know the clinics that provide these services are not to be trusted. But when faced with the prospect of having a repossession, foreclosure, or bankruptcy on their credit reports for years to come, they become desperate enough to do things against their better judgment.
Welcome back to Lexington Law and our credit webinar series. Today we’re going to talk about what makes up your credit score.
There are 5 different factors that we know of that build up your credit score. The largest and biggest one at 35% is your payment history. Next at 30% are your amounts owed. From there at 15% we’ll discuss your length of credit history. And then your 2 last components, at 10% each are: Types of credit in use and your new credit.
As anyone who has researched credit repair to any degree has heard, you absolutely have the right to repair your credit on your own. In fact, Dr. Randy Padawer, who co-wrote the best selling “FICO® 850″ seminar for The Motley Fool and acts as a consultant for Lexington Law, became a credit expert by becoming an uber-do-it-yourselfer when it comes to credit repair.
You have probably also read that you can dispute the questionable negative items in your credit reports for free. The credit bureaus even provide a form on their websites to make this process easy for you.
Something that you likely will not hear as often is that repairing your own credit is rarely as easy as it initially seems. On its surface, credit repair seems to be a simple process. You obtain a copy of your credit reports, identify the inaccurate items they contain, dispute them with the credit bureaus, and wait for the bureaus to perform their investigation. Of course, if it really were that easy, there would be no reason for Lexington Law or any other credit repair organization to exist.
*Important: While the testimonials and other information on this website may be exciting, Lexington Law promises only to perform the steps we've agreed to in each client's case and to charge each month only for steps already completed. As with any legal work, no outcome is promised. Your results may vary. **The number of items removed represents the combined removals for all three credit bureaus. For example, if a single questionable negative item is removed from all three credit reports, it is counted as three separate removals.
“Thank you for all the wonderful work your staff has done on my behalf. The creditors
that I wanted removed are no longer there... I couldn't have done it without you, nor would I ever want to.
You and your staff are truly professionals and I bow to you.”
