Lexington Law Credit Repair Blog

Credit repair scams are everywhere, from TV commercials to Internet ads. With so many out there, it is difficult to discern which credit repair companies are legitimate and which participate in fraudulent schemes. Before you hire someone to help repair your credit, consider the following six signs of credit repair scams:

1. The company asks for up-front payment. This tactic is perhaps the most common credit repair scam, and it is also illegal. Under the Credit Repair Organizations Act (CROA), credit repair companies cannot accept payment before performing the work they’ve agreed to complete.

2. You are not advised of your rights. All credit repair companies are required to inform you of your right to repair credit on your own. They must also provide you with a copy of the “Consumer Credit File Rights Under State and Federal Law” in addition to a services contract that outlines your rights and responsibilities.

3. You are discouraged from contacting credit reporting companies. The three major companies, Experian, TransUnion and Equifax are responsible for handling dispute letters filed on your behalf. Just as you have a right to repair your own credit, you also have a right to contact those who change it.

4. The company claims they can erase all bad credit. While it is your credit repair company’s job to help erase negative items that are false, no one can erase bad credit from your record if it is legitimate.

5. You are encouraged to assume a “clean identity.” Scams often advocate credit repair by asking customers to obtain an Employer Identification Number (EIN) from the IRS. While this is not unlawful on its own, it is illegal to use this number to replace your Social Security Number.

6. The company claims FTC endorsement. The Federal Trade Commission (FTC) is an independent government agency designed to protect consumers. The FTC does not support or endorse any credit repair company.

Credit repair can be a stressful and daunting process. You may be desperate to repair your credit, but don’t make yourself vulnerable to credit repair scams. Know your rights and if you choose to get help, find reputable credit repair companies that will work with your best interests in mind.

In this tough economy and the number of potential employees competing for jobs, making sure that you have a competitive edge that can help get your foot in the door is becoming more and more important. A number of job applicants don’t realize that their bad credit score can impact whether or not they get a job.

Wall Street Journal recently reported that:

“Some 47% of employers say they check the credit history of applicants for certain positions, according to a survey by the Society for Human Resource Management of more than 430 organizations in late 2009. That’s up from 42% of employers in 2006. Just 25% of employers in 1998 said they regularly or sometimes checked applicants’ credit histories.”

In the case of your credit report, what you don’t know can hurt you. If you are currently in the job market you may want to make sure that you have a clean credit report. If you don’t, you may want to look into credit report repair and learn other ways to help improve your credit.

You are deeply in love and planning your fairy tale wedding, but have you taken the time to understand how you will manage credit and finances after the wedding bells have rung? It is common knowledge that over 50% of marriages end in divorce; the number one reason for divorce is financial issues and bad credit.

Discuss with your significant other your credit and financial situation before you get married. You will be glad you did. You can avoid surprises by doing the following:

1. Gather your credit reports and check for credit report errors. Are there inaccurate items on your credit reports? There are three main credit bureaus that each generate their own credit report that you will want to check: Equifax, TransUnion, and Experian. If there are credit report errors, work on getting those removed. If you apply for any loan together, you aren’t just marrying your spouse, you are also marrying their credit. If you are planning on buying a house right after you get married, you will be better prepared to plan what you need to do to improve your credit to meet your financial goals as a couple.

2. Discuss money and credit goals. You might discover you have different credit scores with different expectations of what is reasonable. Do you both see a big house in the future? Fancy car or minivan? Discuss what is important for you in your financial future and credit history together; make sure that you set a plan in motion so that you can obtain these goals together.

3. Make a budget and stick to it. If you have bad credit, spending less than you earn is a good way to start improving your credit. Set up automated payments, pay down high credit card balances and do whatever it takes to fix your credit so that you can meet your financial goals.

Although credit may seem like a sensitive topic, you will be glad that you started to fix credit before the wedding, you may be able to meet your financial goals as a happily married couple with an equally bright credit future together

According to a recent ABC News article, some homeowners are discovering that their credit score is being impacted and even lowered due to their signing up for the Obama administration’s “Making Home Affordable” loan modification program. The concern over the decrease in the credit score is that this happens even when the homeowner is paying their mortgage on time vs. delinquent borrowers showing a decrease to their credit score after they have fallen behind on their loans.

Essentially, the request for the loan modification is reported to each of the credit bureaus. The impact is even greater for those who are not approved for the program, as this mark stays on their reports without a resolution. Those that are accepted have a notification sent to the credit bureaus acknowledging their acceptance and the modification. This does not hurt nor does it improve their credit score.

Click here for a free guide to understanding your credit score.

Sure, you understand the importance of paying your bills on time, and you may have a mountain of them, from everyday expenses to long-term debt. If the economy of the last few years has taught us anything, it’s that stability is the foundation of a solid financial stance. Even so, rising costs and plateauing salaries have gotten the best of some in recent months. If you are among the many people who have been hit by financial hardship, now is the time to assess your situation and determine how it affects your future. Cleaning up your credit could save you thousands in the long run.

How Does It Add Up?

The number one reason to clean up credit is future costs. Why spend more money if you don’t have to? Consider someone with a credit score that is below 620 that receives an interest rate of 12.5% for their $300,000 mortgage. This means their mortgage payments would be $3,097 which is approximately $1,114,920 over the life of the loan.

Now consider someone with a credit score of 735 with an interest rate of 6.1%, or $1,800 a month in mortgage payments. This equals out to approximately $653,760 over the life of the loan. Not only does a better credit score save you approximately $1,297 a month, but it will also save nearly $538,840 over the life of a 30 year fixed mortgage loan. As you can see, the drawbacks of a low credit score amount to much more than it can seem.

Test this out on a mortgage or car loan using the calculator available here.

I Want to Fix My Credit: Now What?

If you want to fix your credit score, start right now. Review the items that impact your credit score and look for ways to improve each one. Catalog your monthly bills and sign up for auto-pay if it’s available. Pay down your credit card balances. Pay off a loan all together if you’re able, allowing you to improve your debt to income ratio. Bottom line: be an active participant in the task of cleaning up your credit score and monitoring your progress. It’s never too late to repair past financial pitfalls and reclaim a solid stance.