Month: September 2017

The Erosion of Credit Score Knowledge

credit score knowledge

While we are bombarded daily in TV and internet ads by what seems to be a record number of new ways to get information about our own credit scores, Americans’ understanding of how the world of credit operates is apparently on the decline.

According to a recent survey co-sponsored by the Consumer Federation of America, results suggest that general knowledge and awareness of the ways that credit shapes our consumer lives and impacts our ability to make purchases has slightly decreased in recent years.

The survey, which asked 1,000 adults across the U.S. a series of questions quizzing their understanding of how creditors use credit reports to establish interest rates or preferential treatment for customers, indicated a strong disconnect, particularly among low income groups.

Credit’s Bigger Role in Our Lives

Most noticeably, those surveyed repeatedly said they did not realize that non-credit-related service providers such as power utilities or cell phone providers used personal credit reports to approve service plans or even guide rates and prices for products.

Many consumers also indicated they did not realize that a low credit score could increase their total loan charges on an automobile loan by as much as $5,000 (where awareness dropped from 25 percent to 18 percent), or that consumers themselves need to check the accuracy of their own reports from the three major credit bureaus.

And while a smaller percentage of female respondents (54 percent) than male respondents (61 percent) said they considered themselves to have good credit knowledge, women overall demonstrated better understanding of the ways that credit impacts their lives.

Survey respondents did show a good knowledge of the major factors that go into building their credit reports, including missed loan payments (91 percent) and high credit card balances (86 percent), as well as the importance of making payments or keeping those balances to build their score.

More Credit Score Awareness, on the Whole

The survey’s authors note, however, that Americans do seem to becoming increasingly better acquainted with their own credit scores, with more people taking advantage of the many avenues to view, track, and even use professional services to repair their credit.

The percentage of people who said they’d pulled at least one copy of their own credit report in the last year is on the rise – just 49 percent said they’d done so in 2015, but the number is now closer to 56 percent.

That’s a helpful development, as more and more people are beginning to see that taking charge of their own credit history and making steps to verify the details on credit reports can indeed lead to better opportunities, not just from credit cards or banks, but also when it comes to leasing apartments or even applying for new employment – as many employers now run credit checks as part of the job application process.

For anyone interested in getting some additional help to begin moving toward a 690 credit score, a key benchmark on the road to very good credit, maybe it’s time to get in touch.

You can carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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4 Ways to Build Credit without a Credit Card

build credit

Guest Article By: Alayna Pehrson – Digital Marketing Strategist at

If you haven’t heard already, your ability to build good credit over time can make or break your financial success. Simply put, building good credit is great for your personal lifestyle and the economy. The better your credit, the more you can receive financial benefits and opportunities, including lowered interest rates and loan approvals, so good credit should be at the top of your financial wish list.

If you’re like most people, you’ve probably realized that one of the easiest ways to build credit is through a credit card. Indeed, Statistic Brain claims there were approximately 1,895,834,000 credit cards in the U.S. along with 199,800,000 credit card holders during 2016 alone. Although signing up for a credit card may be the main way most Americans learn to build credit, it isn’t the only way to build credit.

  1. Check the Credit Report

If you want to build credit, but don’t want a credit card, a good place to start is your credit report. Even if you don’t have an extensive credit history, your credit report is a free way to see what, if anything, is already recorded; it’s your baseline. For example, multiple savings and banking accounts may appear on the report along with any past loans. These can all have an impact on your credit score. When you understand what is recorded on their credit reports, then they can begin to make proper credit-building plans.

  1. Make On-Time Payments

Payment history makes up 35 percent of an overall credit score, and that includes whether or not you pay your credit card bills. And this doesn’t just apply to credit card bills, but also to all recurring expenses like rent, utilities, and even cell phone bills. These recurring bills might be reported to a credit bureau if they are not paid on time. In the absence of credit card statements, some businesses will allow for individuals to send their rent or other recurring payment histories to a credit bureau in order to build positive credit.

  1. Apply for a Credit-Builder Loan

Credit-builder loans are typically a starter option for those looking to build credit without getting a credit card. These loans are occasionally offered by banks and credit unions and usually have low interest rates. People who take out credit-builder loans typically borrow a relatively small amount, often a $1,000 or less on the loan, and they pay it off in 12–24 months. This credit-building technique only works if the borrower can make payments on time. Again, this goes hand-in-hand with how much payment history truly affects a credit score.

  1. Become an Authorized User

A popular method that many parents use to help their children build credit is adding their children as authorized users onto their credit cards. Basically, authorized users receive the credit-building benefits of credit cards without actually opening a credit card account. This tactic only works, however, if the person with the card is a responsible card user. For instance, if the primary cardholder makes credit payments on time, understands how credit works, and has a good credit score/history, then the method will most likely succeed. Most parents take advantage of this method simply because they deem themselves responsible enough to add their children’s names on their credit cards. If done responsibly, this option can significantly help a non-credit card user build credit.

Preparing for the Future

Although building credit using the methods mentioned above may be significantly less common than using credit cards, these methods still result in the building of good credit. With similar credit-level results, it is fairly easy to see why many Americans would steer clear of using credit cards. After all, there are many who are still wary of credit cards because of the stark reality of debt-related consequences.

If you, by chance, fail to see your credit build without a credit card and you’re stuck searching for a faster/easier way to achieve positive credit, choosing credit repair services might be the smart option. Credit repair is designed to give credit-raising opportunities to those who fall south on the credit score scale. Consumers that take advantage of online resources when they are conducting credit repair research will ultimately have a better understanding of credit and how credit repair actually works. Overall, the more someone knows about credit, the better off they will be when it comes to building and maintaining their own credit.

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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Why Do I Need Identity Theft Insurance?

Identity Theft Insurance

We live in slightly paranoid times. It’s one of the side-effects of being so aware of what’s going on in our communities, our country, and our world, thanks to real-time news and a constant deluge of social media updates.

But if you’re like many who now feel compelled to shred every piece of junk mail, shield your screen while typing in your PIN number at a check-out stand, or delete any suspicious emails, you’re not alone in beginning to understand the scope of identity theft.

A study conducted this year by Javelin Strategy and Research for the Insurance Information Institute revealed that identity theft scammers stole $16 billion from a record 15.4 million American consumers in 2016 alone.

The previous year, identity theft impacted 13.1 million individuals, and researchers say that since 2010, identity theft has cost the country more than $100 billion.

Big Money, Real Problems

The scope of identity theft’s impact has made many consumers consider their options when it comes to identity theft insurance, one of many services provided by professional companies engaged in real-time credit monitoring and repair.

Identity theft dangers lurk everywhere, especially online, unfortunately, as a result of our increasing use of mobile technology for shopping, banking, and general everyday convenience.

While old-fashioned identity theft still occasionally occurs through discarded or stolen mail or improperly disposed bank records or credit card bills, the digital age means it’s actually easier for thieves to access your most important financial information.

We think very little of giving out credit information for online purchases or uploading our credit cards for use in the new wave of tap-and-go digital banking services, but a lost or stolen cell phone can now be an instant pipeline to all of our critical financial details.

Even a voice-activated digital assistant like Alexa or a similar service can create a potential pipeline for hackers to use to capture your information.

Online scammers have also become more aggressive in sending out incredibly authentic looking emails from legitimate looking addresses, asking us to reconfirm our banking details or provide address updates. They’re spam, and for those who fall victim, it’s often up to a credit fixer to help try to repair the damage.

Proactive Steps

It’s too late for most of us to retreat from the digital world, but we can certainly get a helping hand in keeping our data safe.

And identity theft insurance can also provide some peace of mind for those who fear the very real impact of identity theft, not to mention the nightmarish process of closing accounts, reconciling illegal purchases or dealing with the very serious implications identity theft can have on our credit reports and our credit scores.

Are you in the market for professional services to help with a credit fix? We can help provide information and real results.

You can carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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Credit Repair Education and Where to Find It

credit repair education

The first step toward better credit is realizing you need some help. And now that you’ve made that successful first step, where can you go to learn more about credit repair, its costs, its effectiveness, and what role you can play in turning around your credit story?

It turns out there are lots of comprehensive credit repair education resources available, both in the form of print and online books and guides, as well as a wide variety of expert blogs. There are also credit repair classes and credit repair courses that you can take to become more aware of your credit behavior and that can provide a path to a vastly improved credit score.

A Good Read

A quick visit to reveals a bewildering array of credit repair books that promise to make you an overnight, do-it-yourself master of credit repair. Let us suggest a less fly-by-night approach and instead become familiar with recognized financial experts such as Dave Ramsey and the newest edition of his bestselling Total Money Makeover – hands-on, real-world suggestions for investing, financial management, and credit-building behavior.

The same can also be said for Cherie Lowe’s Slaying the Debt Dragon or Regina Leeds’ One Year to an Organized Financial Life: Both speak from experience about digging themselves out of debt and repairing their credit through sound financial practices.

If you’re looking for a helpful online resource, check out Credit Revolution, a free e-book written by three of the biggest figures in the credit repair world, revealing many of the behind-the-scenes secrets of credit repair.

An Abundance of Online Sources

The web is full of blogs, podcasts and sites providing credit repair resources, but again, it takes a careful eye to spot those that are often product placement, versus those with a holistic view of real credit repair.

For wide but knowledgeable advice on the best steps to credit repair, consider the online suggestions of figures such as Clark Howard, Paula Pant’s Afford Anything podcast, or Money Girl with Laura Adams, all of which can provide helpful strategies for credit improvement.

Another useful source is the Credit Insider Guide, a written-by-lawyers collection of online material about the realities of credit repair, and how a professional firm might be a best step in turning your credit issues around.

And for the millions of Americans who are burdened with student loan debt, turn to The Student’s Guide to Credit, an online guide which can help you understand the long-term importance of keeping on top of your loan obligations.

Sign Up for Credit Repair Classes

Finally, consider signing up for a credit repair class, especially one offered through a local community college or community center. The web is full of offers for credit repair courses, but working with a local professional is a much safer bet, as they’ll be able to provide direct and unbiased information, rather than a product pitch. The lessons you learn will go a long way in helping to build a better financial future.

Looking for other credit repair resources? We offer a wide range of tools and professional services that can help boost your credit score.

You can carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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Why Low Credit Utilization is Key to a Good Credit Score

Good Credit Score

Credit scores aren’t as cut-and-dried as you may think. In fact, there are many factors that go into determining your score, and knowing the weight that is placed on each can help you better understand how to clean up your credit, or how to keep your credit score from falling in the first place.

Your FICO score, the most common score used to determine creditworthiness, is comprised of five factors, with your level of credit utilization accounting for 30 percent. We’ll talk about that more in-depth in a minute. But first, let’s briefly outline the other four factors, and the weight of each when it comes to determining your overall credit score:

  • Payment History (35 percent) – This is the most important factor in your credit score and any record of late payments will have a negative impact.
  • Age/Length of Credit History (15 percent) – The longer you’ve had credit established, the better for your score.
  • New Credit/Recent Inquiries (10 percent) – While occasional inquiries or opening a new account won’t negatively affect your credit, having many inquiries or opening a number of accounts within a short period of time represents a risk and can lower your score.
  • Credit Mix (10 percent) – This factors in the number and types of accounts you have in use. Types of accounts include credit cards, retail accounts, installment loans, finance company accounts and mortgage loans.

Understanding Credit Utilization

Credit utilization is the second-most-important factor behind payment history when it comes to calculating your credit score. To determine this part of the equation, credit bureaus look at your balance-to-limit ratio.

When scoring your utilization, FICO takes into account both individual card usage and total card usage — or the total of all of your credit card balances compared to your overall credit limits. High utilization in either of these categories can cause your credit score to drop. That’s because the credit bureaus view high utilization as a risk that you may be more likely to default on your credit repayment obligations.

Your balance on any given credit card generally should not exceed 30 percent of your credit limit. Staying below 30 percent can make a positive impact on your credit report because it shows that you’re only using a small portion of the credit available to you.

To calculate your own utilization on each of your cards, divide the balance by your credit limit, then multiply by 100.

The best way to keep your credit utilization in check is to pay your balances in full each month. Making payments before the due date can also help. Because credit card information is updated to the credit bureaus based on billing cycles, your credit score may not reflect your most recent balance or credit limit. Instead, the information as of your account statement closing date will be used in calculating your credit score.

Non-usage can hurt, too

While maintaining credit utilization of less than 30 percent is crucial in order to clean up credit reports, it’s also important to understand the role non-usage of open accounts plays in determining your credit score. Overextending yourself on credit will certainly drag your score down, but a lack of credit use can also have a negative impact. A lengthy period of inactivity on your accounts can lower your score, or make it difficult for the credit bureaus to calculate your score at all.

With payment history being the most heavily weighted factor in determining your credit score, it’s important to remember that using your credit after an extended period of non-usage won’t immediately boost or establish your score. Most credit scoring models require several months of usage to calculate a score.

When it comes to credit utilization, being smart about it and never overextending your limits will give you the best chance of maintaining a good credit score, or raising a low credit score.

Understanding all of the factors that affect your credit can be difficult, and if you’re in need of credit repair services, Lexington Law can help. We understand your credit report and can help you leverage your rights to ensure that your report remains fair and accurate. Contact us today for your free credit report summary and consultation.

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