Month: December 2017

5 Smart Things to Do With Your Tax Refund

tax refund

We are coming up on that time of year again. No, not the holidays – I’m talking about the 2018 tax season.

Trends from the last 10 years show that on average, about 80 percent of Americans receive a federal income tax refund each year, averaging around $2,800.

That’s no small sum, and if you are due a refund in 2018, it’s not too soon to start thinking about what you will do with the extra cash. While it’s tempting to think about a luxurious vacation or a new flat-screen TV, it might be wiser to put your tax refund toward some budget-friendly, credit-friendly alternatives.

Here are some smart money moves you can make with your 2018 tax refund:

  1. Bolster your savings

According to a 2017 GoBankingRates survey, 57 percent of Americans have less than $1,000 in their savings, and 39 percent have no savings at all. A general rule of thumb when it comes to savings is to set aside enough to cover at least three to six months’ of expenses in case of an emergency situation (like unexpected job loss or a medical emergency).

In 2018, consider stashing away a chunk of your tax refund in a high-interest savings account. Not only is your money safely tucked away in case you need it, it continues to grow.

  1. Invest in the market

Investing in the stock market is a riskier move than opening a savings account, but if you already have a decent savings cushion, investing could be a worthwhile option. The stock market generally offers much higher returns on your money over the long term (although it’s not always consistent). There are a lot of investing options depending on your financial goals and risk tolerance, such as individual stocks and index funds.

  1. Invest in yourself and your family

If you have been looking to improve your career prospects, now might be the time. Consider furthering your education through online courses, new certifications or other professional development opportunities. You could also use your tax refund towards startup costs for your own small business. Or, if you have kids, you may want to consider starting a college fund if you haven’t already.

  1. Buy insurance

You never know when you will need the protection that insurance offers. If you have holes in your insurance coverage, whether life, home, auto, or medical, consider filling them now. In many cases, you can do so for a relatively low cost. For instance, for about $200-$400, you can purchase an umbrella liability policy that protects you in case someone is injured in your home or car.

  1. Pay off debt

Before you do anything else with your tax refund, your first priority should be paying off any high-interest revolving debt you’re carrying. If your tax refund will not cover the whole amount of your debt, you can at least make a dent in it. If you are paying 18 percent interest on credit card debt, collecting minimal interest on money sitting in a savings account doesn’t make much sense. Plus, if you need to fix your credit score, paying off your debt is a major step towards repairing your credit.

Investing your tax refund wisely can be a big step in improving your financial and credit situation for the future. If your credit has been damaged in the past and you’re in need of credit repair company, the legal professionals at Lexington Law Firm can help. Contact us today to learn all of the ways we can help you improve your credit.

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The Repossession Process and How It Affects Your Credit

repossession and credit

Repossession is pretty much a worst-case scenario when it comes to credit. But how do you find yourself in this predicament? More importantly, how can you avoid repossession — even in light of financial hardship? Luckily, with a good understanding of the repossession process and few money-saving tips in your back pocket, you can avoid the scenario of defaulting on a loan and preserve your credit score along the way.

Repossession Process

First, it’s important to note that repossession is not a uniform process. The laws and procedures of repossession depend on state legislature. Visit the Attorneys General website of your specific state for a thorough overview of the law. State law can impact important repossession elements such as whether you are given a notice or not, grace period length, and auction processes.

A bank or lender may repossess property bought with a secured loan, such as a car or house, if you are delinquent on bill payments for a predetermined amount of time. Repossessed property is then sold or auctioned to make up the amount you owed. In most cases, the property is sold way under market value, and you will still be responsible for the remaining loan balance after the sale.

The remaining loan balance is called a deficiency, and if you are unable to pay it, the bill could be sent to a collection agency. The collection agency can sue you in court and get a judgement against you, which may lead to wage garnishment.

How Repossession Affects Your Credit

Not only will repossession set you back financially and result in a loss of property, but it is basically proof of your inability to pay off a loan. Lenders assess the likelihood of you repaying a loan by checking your credit score. Something as dramatic as repossession will knock many points off your credit score, which will be hard to earn back. Even if the debt is paid in full, credit bureaus will continue to report the repossession on your credit reports for seven years.

Unfortunately, the negative credit ramifications of repossession may not stop there. After the repossession, the collection actions and judgements from the deficiency may be reported to the credit bureaus. Also, leading up to the repossession, the long history of 30, 60 and 90 day late payments to get you to that point may be on your credit reports. These can ding your credit score by up to 100 points.

A repossession signals to future lenders that you are a high risk of defaulting on a loan, which compromises your chances of ideal rates, or even approval, for future loans and credit. Therefore, it’s a good idea to avoid repossession at all costs.

How to avoid repossession

Financial hardship isn’t always something you can control. With this in mind, the best thing you can do to preserve your credit in light of an impending repossession is to be proactive:

  • Sell your car — If you are close to repossession on a car loan, it’s best to get ahead by selling the car on your own if possible. Cars that are repossessed and auctioned off go for a far lower price than a car sold independently. If you are late on payments you will have to use the sales profit to get right with the loan before you can get the title to give to the new owner.
  • Simply ask for a break — This one might sound crazy, but sometimes merely asking your bank to skip a payment to get back on your feet can work. Interest will continue to accrue, and you will essentially just be delaying the inevitable, but banks will generally allow you to skip two payments in order to play catch-up if you really need it.
  • Refinance — If you have pretty good credit, you might be able to refinance the loan. You could end up paying on the loan longer but paying less each month. Of course this option is contingent on your existing credit score.

If you need a credit score makeover, consider partnering with a professional credit repair service to review your credit reports and ensure your reports are fair and accurate. It can also help you resolve inaccurate or unfairly reported items. This can boost your FICO score and help obtain that much-needed loan refinance.

Don’t let repossession loom over you and potentially ruin your credit score. If you need help, Lexington Law Firm’s credit repair services can help. Lexington Law has a proven history of efficiency — removing an average of 24 percent of negative report items for its clients within the first four months (results vary). Contact Lexington Law Firm to learn more about getting your finances back on track with professional credit repair.

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4 Things Identity Thieves Can Do With Your Social Security Number

identity theft and social security number

Identity theft is on the minds of many Americans these days. With a number of recent data breaches, consumers are being extra cautious about how and where they share and use personal information.

While the breach of any personal and financial information can wreak havoc on your credit — and your life — no other personal information is as sensitive as a social security number. That’s why a compromised or stolen social security number can be so devastating.

Your social security number is your main identifier. It enables you to do everything from getting a job, to being paid for said job, and paying your income taxes. Once it has been compromised, it can put you at great risk.

While compromised credit cards and bank accounts can be closed and new accounts reissued, it’s not quite as simple with a social security number. Getting the Social Security Administration to issue a new social security number is no easy feat either. There are very few circumstances under which new numbers are actually given. Even in cases of identity theft, the SSA generally only issues a new number after all other attempts to remedy the issue have been exhausted. Therefore, it can take years to recover from identity theft when a social security number has been compromised.

How Thieves Steal Social Security Numbers

There are a number of ways for identity thieves to get their hands on your social security number. Data breaches are one major way, and are unfortunately becoming increasingly common. The 2017 Equifax breach exposed more than 143 million social security numbers when cyber criminals exploited a vulnerability on the credit bureau’s website. In addition to social security numbers, birthdates, addresses, driver’s license numbers, and credit card numbers were stolen.

Of course, there are other methods for criminals to obtain this personal information, including sifting through trash to recover personal documents that contain identifying information. It’s important to be careful how and where you dispose of documents.

It’s also important to note that there are rarely legitimate reasons to divulge your social security number. Intake forms for a number of services often ask for this information, but that doesn’t mean you’re required to provide it. Most Americans assume they are required to give their social security number when a doctor or dentist requests it, for example, but that is not the case. For basic medical services, your insurance coverage identification number is typically sufficient. Before you readily give out this information consider if it’s really necessary to do so. And keep in mind that the fewer place you share your social security number, the lower your risk of it being stolen.

No matter how your information is obtained, it can easily be sold by criminals on the dark Web. Then thieves can use the information to obtain new credit in your name.

There are four ways identity thieves use your social security number that could potentially ruin your credit and wreak serious havoc on your life:

  1. Opening up new accounts – Your social security number is the main piece of information required when applying for a bank loan, credit card, or opening any new financial account. With that information in hand, thieves can pretty easily get credit cards or loans in your name that they can use and abuse. By maxing out credit limits and defaulting on payments they’ll do major damage to your credit score and severely impair your ability to get any type of loan in the future.
  2. Filing fraudulent tax returns – Fraudulent tax return filings are on the rise. Identity thieves use social security numbers to file taxes and claim the refunds due their rightful owners. The Internal Revenue Service said $227 million was lost to fraudulent refunds in 2016. If you or your tax preparer attempt to file your tax return and it is rejected as a duplicate, that likely means you have been the victim of tax return fraud.
  3. Obtaining medical care or prescriptions – Your social security number gives thieves access to just about any and everything that belongs to you. That includes your health insurance coverage. A thief that undergoes treatment in your name can alter your medical record, resulting in potentially dangerous consequences. Additionally, thieves can seek emergency care for the purpose of getting their hands on prescription drugs, including narcotics or other drugs that can be dangerous in the wrong hands.
  4. Stealing your benefits – With your social security number in hand, a thief can access your Social Security or unemployment benefits. They can quickly drain those resources, preventing you from collecting those funds when you need them.

Be proactive

Identity thieves are often very clever and can operate for many years using your social security number. If they’re using your identity for smaller, less obvious crimes that running up a bunch of credit card debt, their crimes can be more difficult to detect.

Being proactive by regularly monitoring your credit report is the best way to identify fraud and identity theft. Your credit report and credit score can help you to quickly detect fraud and put an end to it. If you see new accounts or public records you did not initiate, you’ll need to act immediately.

Remedying cases of identity theft is overwhelming and time consuming. If you believe you’ve been a victim of identity theft, it’s a good idea to contact a legal credit repair specialist to help you. At Lexington Law, our legal experts can help you understand and exercise your legal rights to remove inaccurate and fraudulent items on your credit report and to ensure that it is fair and accurate. Contact us today for more information.

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Top 3 Scams to Avoid This Holiday Season

Holiday Scams

‘Tis the season — the season for scams.

With more holiday shopping taking place online each year, more online scams are popping up than ever before.

Victims of online scams are at risk of fraud, identity theft, and serious harm to their credit. The FBI reported that total loss from cybercrime in 2016 exceeded $1.3 billion.

That’s why each year, everyone from the FBI to politicians to the Better Business Bureau issues warnings for consumers be on high alert for such scams.

Here are some of the most common ones to avoid this holiday season:

  1. Email and social media scams

You’re probably getting bombarded by marketing emails right now, but be careful what you click. Scam emails may well sneak into the bunch. Some emails will try to direct you back to scammy websites, which could then try to trick you into buying fake products from them in order to give up your banking information.

Another common email scam involves scammers masquerading as a tracking service like UPS or FedEx. They send you phony information about your “recent orders” and ask you to download an attachment or click a phishing link. These could contain malware that scammers use hack into your personal data.

If you’re unsure if a tracking email is a scam, call the company’s customer service line — but only use the number located on its actual website, not one you found in the email.

Also, be cautious of social media promotions or contests. Scammers will sometimes use this method to get you to fill in fake surveys, and then steal your personal information.

  1. Fake charities

Charitable donations tend to spike around the holidays each year. Unfortunately, so do the scams looking to take advantage of the spirit of giving. Fake charities are so common that they regularly appear on the IRS’s annual list of “Dirty Dozen” scams.

Fake charities often design themselves after legitimate organizations, using similar names and page layouts to fool you. You can check if an organization is legitimate on the IRS website. Don’t give out personal information to anyone claiming to represent a charity and solicit donations. And when you do make donations, use a credit card or check rather than cash or wire transfer. They’re easier to recover if the charity ends up being bogus.

  1. Scam job postings

Our spending tends to increase over the holidays, so the idea of making a little extra pocket money may be appealing. But be cautious. Some seasonal employment is completely legitimate, but some postings are created by scam artists who are also trying to get a little extra pocket money — yours.

If a prospective “employer” expects you to spend any cash up front, whether on job training, a start-up kit, or your own inventory — beware. Jobs are supposed to pay you, not the other way around.

If you do become the victim of identity theft or fraud as a result of scammers this holiday season, and your credit takes a hit as a result, Lexington Law can help you with credit disputes and credit restoration. Contact us today to find out how we can help.

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How to Avoid Paying Credit Card Interest

credit card interest

Guest article by

Technology has advanced at nearly light speed over the last few decades, causing the bulk of the industrialized world to go from analog to digital almost overnight. And while it seems no industry escaped being caught up in the flood of digitization, few have been as completely enveloped as finance.

In many ways, consumer credit has shown some of the most obvious signs of the new digital era. Indeed, between the rise of online banking, the finance-app revolution, and plastic replacing cash as king of purchases, the consumer credit world of today looks very different from its ancestors of just a few generations ago.

But for all the convenience brought on by new technology, some old problems remain. The credit card is the perfect example. Credit cards allow you to make purchases in-store or online with a simple swipe or insertion into a chip reader, often providing profitable purchase rewards in the process.

At the same time, all that contemporary convenience can come with some antique strings, primarily in the form of interest fees. With the average credit card charging double-digit interest rates, your futuristic payment method could end up costing you hundreds in old-fashioned interest fees if you’re not careful. Thankfully, several methods exist for avoiding those outmoded interest charges and making the most of modern payment technology.

Pay In Full During the Grace Period

One of the easiest ways to avoid paying interest fees on your credit card purchases is to simply pay off your balance before you’re charged interest. For most credit cards, the time between when you make a charge and when the bill for that charge comes due is known as the grace period. So long as you pay off any charges before the end of the grace period (i.e., your bill’s due date), most credit card companies won’t charge you any interest on those charges.

For consumers seeking unsecured credit cards for bad credit with no deposit, utilizing a credit card’s grace period can ensure that high APR is all bark and no bite. Even if you have a low-APR credit card, interest fees can add up quickly on large balances.

An important thing to remember when it comes to grace periods is that they typically only apply to new purchases. That means other transaction types, such as balance transfers and cash advances, generally don’t qualify for a grace period and will start to accumulate interest charges as soon as the transaction hits your account.

Additionally, failure to pay off your entire balance before the end of the grace period means you’ll be charged interest as usual per your average daily balance over the course of the billing period. So, even if you make more than the minimum payment, you’ll be charged interest on your balance unless you pay off the entire amount.

Transfer Your Balance

If you’re already stuck with a balance on one (or more) of your credit cards and have been, or will be, charged interest on that balance, you can potentially avoid paying more interest fees by transferring the debt to another credit card. Called a balance transfer, this process literally transfers your debt from credit card to another credit card — preferably, one with a lower interest rate.

Since credit card issuers like balance transfers, many companies have started offering introductory offers designed to draw in these customers, and qualified applicants can find introductory deals for 0% APR on balance transfers. Even better, the intro offers provided by the best balance transfer cards allow you to carry a balance interest-free for 18 months or more.

Keep in mind that introductory offers are temporary by nature, and your 0% APR deal will expire at the end of the offer period. Once your offer ends, any remaining balance from your balance transfer will be subject to the default balance transfer APR, which is typically the same as — or higher than — the card’s new purchase APR. You can find the balance transfer APR listed in your cardholder agreement.

Another thing to consider before making a balance transfer is the potential balance transfer fee. The receiving credit card (the card to which you transfer your balance) will typically charge a balance transfer fee for the service, which usually runs between 3% and 5% of the total transferred amount. Depending on your interest rates and balance, a balance transfer can easily be worth the fee, but do the math for your own situation before proceeding.

Consolidate Your Credit Card Debt

While balance transfers can be a great option for reducing — or avoiding — credit card interest fees, they may not be an option for everyone, particularly for consumers whose credit won’t qualify for a quality balance transfer offer. In this case, the best way to lower your interest rate may be to consolidate and refinance your credit card debt with a personal loan.

Credit cards operate on a revolving credit line, which is designed to provide consistent, reusable, short-term financing. Due to their potentially volatile nature, credit cards tend to have high interest rates. Personal installment loans, on the other hand, are intended to be longer-term financing, and are repaid through a series of predetermined payments. Since loans have a certain measure of built-in profit (and security), they often have much lower interest rates than credit cards.

This means that, even with less-than-excellent credit, many consumers can find a personal loan with a much lower interest rate than they’re being charged by their credit card companies. That’s not to say you’ll wind up in the single-digits with a personal loan; you probably won’t, unless your credit is excellent. However, even a relatively hefty 15% interest rate on a personal loan is a fair sight better than the 25% likely being charged for a credit card at the same credit range.

A great way to make the most of your consolidation loan is to make multiple loan payments each month (i.e., paying more than you’re required to pay, and not splitting your required payment into two). Not only will this ensure you’re never late, but it will also allow you to pay off your debt faster and will cost you less interest over the life of the loan.

The Most Expensive Interest Payments Are Late Ones

No matter which method you choose, always make sure you make at least the minimum required payment each month by the due date. Late payments come with late fees, which can negate any cost savings from lowering or eliminating your interest rate.

Additionally, late payments won’t qualify for the interest savings of your card’s grace period, and may result in a penalty APR or void an introductory APR offer. And that’s not to mention the potential damage a delinquent payment can cause to your credit scores; your payment history is worth 35% of your FICO credit score, so each late payment can mean a significant credit score drop.

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