Category: Credit Repair

Realizing Your Credit Repair Resolutions in 2018

credit repair resolutions

It’s a new year once again and resolutions abound. Maybe you’ve decided it’s time to get in shape, or to make this the year you find your dream job. If you racked up a lot of debt over the holidays, improving your credit is probably at the top of your new year’s resolutions list for 2018.

If your credit score is in the low or poor range, improving it can feel like a daunting task, but there are some major benefits to boosting your score. Among the most notable, a better score will make you eligible for lower interest rates on credit cards and loans, in turn helping you to get out from underneath all of that holiday debt. A higher credit score can also factor into many other parts of your life that you may not even be aware of — including helping you to land that job.

So if you’re ready to make better credit a reality in 2018, here are some simple steps to begin boosting your score.

Check your credit report and score

The first thing you need to do before you can begin making meaningful strides to fix your credit, is to find out exactly what’s on your credit report. You are entitled to receive a free copy of your credit report from each of the three credit bureaus annually.

Once you have copies of your credit reports, review them thoroughly and note any items that you believe are inaccurate, or any old items that you believe should have fallen off of your report by now. Anything that is inaccurate and is negatively impacting your credit will need to be addressed, and you may need to initiate a credit dispute. By getting inaccurate negative items removed from your credit report, you’ll be on your way to increasing your credit score.

With a clear picture of all of your accounts and debts, you can use this information to take additional actions to fix your credit, including:

Reducing your spending to pay down debt

Credit cards with high balances are a key factor that will have a negative impact on your credit score. That’s because your debt and credit utilization make up to 30 percent of your credit score. This means that if you have a credit card limit of $1,000 and you are using more than $300 when your lender reports your outstanding balance to the credit bureaus then your score will likely decrease. Even if you’re making your minimum payment on time, you likely won’t see your score rise. If you want your score to improve, you’ll need to find some other areas where you can cut your spending this year and apply that money to paying down high balances. If you’re not sure where to start, list your debts from lowest to highest and start by tackling your lowest-balance accounts first. When you pay off the first account, apply everything you were paying to that card or account to the next-highest balance, and so on.

Make all of your payments on time

Making your payments on time is the most important thing you can do to improve your credit. In fact, payment history accounts for up to 35 percent of your credit score. While some late payments are not reported to your credit account — say, a utility bill that gets paid a week or more late — most other accounts are. Mortgage, auto loans, and credit cards report to the credit bureaus when a payment is 30 days late. You’ll also be hit with a late fee on many accounts that aren’t paid in a timely manner. That’s just more money out of your pocket and that payment ultimately ends up costing you more in the long run.

Determine whether or not you may need to establish credit

If you haven’t established any credit accounts or just have a couple, this can also reflect negatively on your score. Credit history is used to determine future creditworthiness because it provides a record of how you’ve handled credit in the past. It accounts for 15 percent of your overall credit score. If you haven’t established credit, you may want to consider applying for a credit card that has a low limit or even a higher interest rate than you’d prefer because without credit cards you have no revolving credit account history and no utilization ratio. These cards are often easier to qualify for and, when used wisely, can help you build credit and boost your score.

Carefully select which credit applications you submit

Each time you apply for an extension of credit a hard inquiry appears on your credit report. Research which creditor will offer you the best interest rate and the most appropriate line of credit. If you have three or more hard inquiries within a 12 month period, your score will likely drop.

Settle any defaulted loans

If you have any loan or credit card defaults on your credit report, these items need to be resolved as soon as possible. Defaults, foreclosures, or bankruptcies have a severe negative impact on your score and the process for removing them can be complicated. It’s a good idea to work with a legal credit repair professional to find the best course of action for resolving these issues.

Consider enlisting the help of a reputable credit repair firm

If you’re serious about improving your credit in 2018, working with a firm that is knowledgeable and experienced in credit repair is critical to achieving that goal. Lexington Law clients saw 9 million negative items removed from their credit reports in 2016 and learned how to better control their credit. Contact us today at 1-800-608-8004 for a free credit report review and consultation.

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How Does an Unpaid Credit Card Affect My Credit?

unpaid credit card

Sometimes life gets messy. You spend more than you should one month and realize you cannot pay your credit card bill. Maybe an emergency expense puts you in a tight spot. Or maybe you simply forgot to pay your bill. Whatever your circumstances may be, not paying your credit card can have a negative impact on your credit.

One, two, or a few missed payments

Missing one payment is not the worst thing that can happen to your credit, but you do need to take steps to fix it:

  • Call your creditor right away to explain the mistake. Often creditors are understanding if you do not have a history of being late on payments. Many will work with you to avoid or minimize the impact to your credit.
  • Pay at least the minimum due as soon as you can. Creditors can report payments that are 30 days late to the credit bureaus. Paying before then is best.
  • Be prepared to pay a late fee and interest on the unpaid amount, unless your creditor has made other arrangements with you.

Missing one payment can be easy enough to rectify, but what if you miss more than one payment? The consequences can be far more serious:

  • You may be charged additional late fees and interest.
  • Your interest rate could go up.
  • Delinquent accounts that are 60 to 90 days past due will likely be reported to the credit bureaus, further lowering your credit score.
  • Your account could get sent to collections.

It is also important to understand that credit mistakes affect credit scores differently. For example, late or missed payments can actually drop more points from a good credit score than a bad one. Knowing your score at the time of the delinquency can help you anticipate how much it might be affected.

Six months or more of missed payments

After six months (180 days) past due, your credit card issuer must write off the debt, sending your account to debt collections. The amount you owe increases as well because you will be responsible for six months of late fees and interest on top of the balance. You may also have to deal with aggressive debt collectors seeking payment.

If you truly cannot pay off your balance in full—including all the financial penalties incurred—then you could face lawsuits or a bankruptcy. Debt management is one alternative process that allows you to pay your debt over a longer period of time. Debt settlement is another option to tackle excessive debt by paying a lump sum portion of your debt and the rest being forgiven. No matter how you deal with your debt, being delinquent for six months or more will cause significant damage to your credit score.

If your credit card remains unpaid long enough, the statute of limitations becomes an important factor. Generally, the statute of limitations is a period of four to six years after your last debt payment. During this time, creditors and debt collectors can sue you or try to collect your debt. After the statute of limitations has run out, however, the debt does not automatically disappear. For instance, a persistent debt collector may even try to convince you to pay a time-barred debt. Being aware of the applicable statute of limitations may help protect your credit future from your past problems.

Mitigating credit problems

Before you reach the severity of the six-month mark, pay off what you owe as quickly as you can to avoid more interest, late fees, and damage to your credit. If you are a few months behind, contact your creditor to explore payment plan options. If you do have a delinquent account that went into collections, check to see if the information is old enough to be removed.

Lexington Law can help fix damaged credit and address problems on your credit report. Carry on the conversation on our social media platforms.

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 – Beyond the Credit Bureaus; Why Creditors Matter

creditors and credit bureaus

Consumers should expect the highest level of personalization when choosing a credit repair service provider. In fact, credit repair services should guarantee individualized support since the purpose of credit repair is to advocate on the behalf of the consumer’s interest. However, most providers fail in this aspect because they leave out a huge piece of the credit repair puzzle – the creditors.

Know your consumer rights

The Fair Credit Reporting Act (FCRA) is the centerpiece of all credit repair strategy. This piece of federal legislation protects the accuracy, fairness, and privacy of consumer information held by the credit bureaus. Many credit repair services exercise the rights ensured by the FCRA on a consumer’s behalf and stop there — much to the consumer’s detriment.

You might be surprised to know that credit repair is much more than disputing just the credit bureaus. Other federal statutes, such as the Fair Credit Billing Act (FCBA) and the Fair Debt Collections Practices Act (FDCPA), can tip the scales of credit repair in favor of the consumer even more. Credit repair services that integrate these additional federal statutes offer a more thorough solution by addressing credit issues from several angles in a much more effective, holistic approach.

Ask creditors the tough questions

There is a misconception that the credit bureaus are the ultimate authority over consumer reports, but this is not the case. Credit bureaus are privately owned and compile your credit information from various reporting sources, such as creditors and public records. Then they use the compiled information to assign a credit score — in other words, credit bureaus report credit information, they do not create it. Therefore, if you only target credit bureaus to repair credit, you do not get to the root of the problem. Any serious credit repair initiative must start at the source: the creditors.

Credit information can technically be accurate, but still unfairly reported by creditors. Whether its usury APRs, exploitative late fees, inexplicable surcharges, unethical debt collection practices, etc., consumers have a right to challenge creditors. Look for credit repair services with legal expertise that offer creditor interventions, which ask creditors tough questions about their practices. This process offers consumers the best chance of restoring their credit reports and increasing chances of approval for future credit.

Factors for approaching creditor interventions

Credit repair service providers will approach creditor interventions differently depending on several factors. These factors may include:

  • Type — what type of credit accounts are on the report? A thorough snapshot of the accounts will help uncover discrepancies.
    • Examples: auto loans, mortgages, credit cards, bank loans, etc.
  • Severity — what negative items are bringing your credit score down; is the degree to which these items affect your score fair?
  • Identity theft — this is a leading cause of credit report errors. Over 17 million Americans are affected by identity theft each year, but fraudulent activity can be removed. The process may be expedited with the help of legal credit repair professionals.
  • Life situation — life circumstances can negatively impact credit, and it’s not always your fault. Major or unexpected life changes can cause late or missed payments. While these things cannot always be removed from a credit report, they should be part of the conversation when it comes to repairing your credit.
    • Examples: Divorce, military service, illness, etc.
  • Mishandled student loansStudent loan servicers have recently received criticism for fraud, filing mistakes, flawed processing, and other activities that have caused consumer credit scores to tank. In some cases, these lender errors can be remedied by a credit repair service.

How to pick the right credit repair service

The credit reporting industry is very complex. So while consumers can dispute credit discrepancies on their own, professional credit repair services are designed to offer a high level of expertise to ensure credit reports are fair, accurate and substantiated. A reputable credit repair service will offer the most personalized solution possible and will help you approach the credit bureaus as well as your creditors.

Lexington Law Firm is a leading credit repair service provider that asks creditors the tough questions and approaches every case with a level of expertise unparalleled by any other provider. Lexington understands how to leverage consumer protection statutes effectively, legally, and ethically. On average, clients see 10.2 negative items (24%) removed from their reports within four months (results vary). The attorneys at Lexington Law believe creditors should prove the items on consumers’ credit reports are not only accurate, but fair and fully substantiated. Explore Lexington’s service levels to find the right credit repair solution to fit your needs, and leave the rest to the legal experts at Lexington Law Firm. You can also 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.

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How to Turn Credit Repair Into Cash (And Where to Spend It)

rebuilding credit

Consumers don’t like hypotheticals. For better or worse, we rely on tangible results to motivate us into making changes. If you’ve been contemplating credit repair, you’re probably wondering, “What’s in it for me?” Read on and you’ll be glad you asked.

The truth is simple and easy to overlook: Credit score points equal cash gained or lost in interest. Let’s look at financing a new car as an example. Suppose you need a $25,000 auto loan. You’ve struggled with late medical bills and a home foreclosure in the past, and your current FICO credit score is 582. According to MyFICO, you can expect these interest rates based on your score:

Image Source: MyFICO

A low credit score means you’ll qualify for a loan with a whopping 15.22% interest rate attached, whereas raising your score to 720 or higher would reduce your rate to 3.597% and save you thousands of dollars over the life of the loan. So, what could you do with an extra $7,596?

Pay Off Debt

Perhaps the best thing about credit repair is the snowball effect; the better your credit score, the more you’ll save in revolving and fixed interest rates and insurance premiums. If you don’t see automatic changes, you can refinance fixed loans and contact your revolving credit lenders to lower your rates. If you live in a state that allows employers to run credit checks on job applicants, good credit could even help you secure a well-paying position. The sum of these benefits is an opportunity to pay off existing balances on your credit cards, medical bills, and other debts that affect your credit utilization ratio, or the amount you owe vs. your total credit limit. Utilization accounts for 30% of your FICO credit score, and the lower your ratio, the better your credit score.

Save for Retirement

The average cost of retirement today is $738,400 according to a 2017 Merrill Lynch survey. While three quarters of $1 million may seem like plenty of savings, it averages out to $24,613 in income per year for 30 years of retirement. Ouch.

Time is a huge benefit in retirement savings. Suppose you put your $7,596 in savings in a retirement account that earns a 7% annual return. Even if you contribute nothing else, your initial investment will grow to $81,099 after 35 years. If you contribute just $100 per month during that time, your savings will increase to $258,595.

It doesn’t take a large investment to produce a worthwhile reward. Saving money with good credit makes your day-to-day life easier, and it could fund your retirement down the road. Consider funneling your savings into long-term investments. You can’t afford to waste time.

Pay for College

Whether it’s for you or your little one, investing in a 529 savings plan will help you finance a college education without the burden of taxes. Like retirement funds, 529 funds are invested in stocks, bonds, and mutual funds to grow your investment—and there are no limits. You’ll also pay no taxes as long as you use your funds for qualified education expenses (more on that here).

Buy a House

Credit and cash go hand-in-hand when it comes to buying a house. Not only do you need excellent credit to secure the best mortgage interest rate, you’ll need a down-payment to qualify for a mortgage.

For instance, suppose you want to buy a house for $135,000. Unless you qualify for an FHA or VA loan, most lenders require a minimum of 10% down—$13,500 in this case—to qualify for a mortgage. Use a few years of credit score-related savings to secure a long-term investment. 

Plan a Vacation

Wouldn’t it be nice to take a vacation without worry? If you’re simply long overdue for a break, transform your FICO credit score improvements into rest and relaxation. Consider using a portion of your savings to plan a getaway based on affordability (with no credit card required). A much-deserved break will motivate you to keep the cash rolling in by maintaining the best credit possible.

If your your credit is affecting your ability to get the things you want, learn how you can start repairing your credit here

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