We are excited to announce that Lexington Law has released a brand new, user-friendly mobile app that makes it even easier for clients to track their credit repair journey. The free app is currently available on iOS and will be available on Android starting on August 20th.
This article was updated May 2018.
In today’s market, the opportunity to own an affordable home has become harder for many. Increasing real estate prices and rising interest rates have made once-attainable properties almost impossible to buy. However, this doesn’t mean purchasing a home is beyond your reach. There are just a few real estate regulations requiring homebuyers to meet minimum lending requirements before securing a mortgage. For some, that may require that they begin some personal credit repair. Whether you are a seasoned property owner or first-time buyer, follow the steps below to pave the way toward an easier process.
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.
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.
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 loans — Student 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.
Our clients saw over 4,800,000 negative
items removed from their combined credit reports last year.