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Know Your Right to Fair and Accurate Credit: How to Fix Credit Errors After Data Breaches and Identity Theft

UPDATE: This article was updated 3/2/2018

On Thursday, March 1st, 2018, credit bureau Equifax announced that an additional 2.4 million Americans were impacted by last year’s Equifax data breach. The company disclosed that the information stolen from these additional consumers was their name and partial driver’s license number. The attackers were also unable to get the state where the license was issued, the date it was issued, or its expiration date.

The previously reported breach of the initial 145.5 million Americans from May – July of 2017 resulted in the compromise of social security numbers, birthdates, names, driver’s license numbers and addresses. This brings the total to about 147.9 million Americans who have been impacted by Equifax’s data breach, which remains the largest data breach of personal information in history.

Despite millions being affected by this breach, a new survey reveals that half of U.S. adults have not looked at their score or taken steps to find out whether their information is at risk. This inaction could potentially lead to damaged credit records and credit ratings for consumers.

In light of the Equifax data breach, we understand consumers are concerned about their personal information and confused about what to do to protect themselves should they be among the millions of Americans whose information was compromised. We here at Lexington Law understand your concerns and want to clarify your rights as they relate to credit errors that might occur because of the breach, and help you understand the law is on your side to help fix those errors.

While Equifax is offering identity theft protection and credit monitoring services to those that were affected by the breach, it is important to keep in mind that the bureau cannot repair any kind of credit damage or errors that may have resulted from the breach as they are not structured to do so. Equifax’s terms and conditions state, “We do not offer, provide, or furnish any products, or any advice, counseling, or assistance, for the express or implied purpose of improving your credit record, credit history, or credit rating. By this we mean that we do not claim we can ‘clean up’ or ‘improve’ your credit record, credit history, or credit rating.” This is where Lexington Law comes into play because we CAN work to repair your credit—it’s what we were founded to do, and what we have successfully done for thousands, for more than two decades.

According to The Fair Credit Reporting Act (FCRA), Fair Credit Billing Act (FCBA) and the Fair Debt Collections Practices Act (FDCPA), you as the consumer have the legal right to dispute any inaccurate items that may appear on your report as a result of this data breach, or otherwise. Our firm’s 13 years of experience fighting for consumers have helped us develop tools and strategies that advocate for you and help fight for the credit you deserve. We help consumers utilize consumer protection laws that were created to keep you from becoming a victim of the credit reporting system, and ensure that any information that appears on a client’s credit report is fair, accurate and substantiated.

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How will you be affected by new reporting standards of public records on your credit reports?

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In March, 2015, the three main credit bureaus launched an initiative called the National Consumer Assistance Plan in order to make consumers’ credit reports more accurate and easier for consumers to correct errors on their reports. Starting July 1, 2017, these bureaus (Experian, TransUnion, and Equifax) will change the way they collect and report civil judgments and tax lien information on credit reports. These changes may not only affect what items are appearing on consumers’ credit reports, but may also help give a boost to their credit scores.

Reporting of public records on credit reports

The new initiative from the credit bureaus will affect public records having to do with tax liens and civil judgments.

  • A tax lien is a lien that is imposed against one’s property to secure the payment of tax, and may be a result of failing to pay income tax or other taxes. Although unpaid tax liens may remain on a report indefinitely, in practice credit bureaus may remove them after 10 years, and must remove a paid tax lien after 7 years.
  • A civil judgment is a formal decision made by a court following a lawsuit. For many consumers, the most common civil judgment on a credit report results from a lawsuit by a creditor for failing to pay a debt. Civil judgments may stay on a credit report for up to seven years from the date of entry.

There will be two primary ways this new standard will affect how the credit bureaus obtain and report this data on consumers’ credit reports. First, in order for a tax lien or a civil judgment to appear on a credit report, the public record must contain the following three items of information: (1) name, (2) address, and (3) Social Security Number and/or date of birth. This standard not only applies to new records that may become available, but also existing data that may already be reported on a credit report. Second, public records that are reported on credit reports must be checked for updates by the bureaus every 90 days to ensure their accuracy. If the records are not checked then they should be removed from the credit report.

The higher standards for public records are estimated to improve the credit reports of roughly 12 million U.S. consumers. Because this change will affect such a great number of people, it is important to review your personal credit reports regularly for possible errors.

Effect on consumers’ credit scores

With the possible removal of negative information on consumers’ credit reports, the effect on an individual’s credit score will vary. According to a FICO study, of the 12 million consumers that would have a public record removed because of these new standards, approximately 11 Million would see some kind of increase in their overall FICO score. The amount of the increase, however, may not be as substantial as one would think. FICO estimates that for the majority of these people the increase in their FICO score would be less than 20 points. Although the bump in credit score may not seem substantial, it may help many people increase their score enough to secure a new loan or mortgage.

It is important to remember that although one or more public records may be removed based on these new standards, there are still many other factors impacting your credit score. There may be additional negative items affecting your payment history besides the lien or judgment that was removed. Other factors that will influence your score include your credit utilization, length of credit history, new credit accounts, and credit mix.

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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Student Loans and Marriage – Will I be held responsible for my spouse’s student loans?

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When two people are married, performing a mutual inventory of debts is a wise planning tool. Planning now to prevent surprises later helps ensure a relationship begins on the right foot. A common question that arises when people get engaged is whether their future spouse’s student loans could hurt their wallets or their credit.

Most of the time, your spouse’s student loans cannot hurt you. A loan usually names just the actual borrower of the loan, but someone else can also co-sign. A co-signer on a loan bears responsibility for the repayment of the loan along with the signer. Therefore, without your signature on the loan, you generally cannot be held responsible for its repayment. Bringing the debt into the marriage later doesn’t change the name on the loan.

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New Year, New Health Insurance

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Insurance deductibles reset at the New Year — and if you’ve changed your insurance plan, there may be some changes in your costs. Even if you’re insured, you could still be hit with huge medical bills. Simply having insurance is often not enough to avoid facing financial stress.

The changes in costs could be due to a number of factors. Particularly, many Americans have health insurance plans with high deductibles, which means that patients must pay a certain amount (a deductible) out-of-pocket before insurance kicks in. While an insurance plan with a high deductible usually comes with an upside of low monthly premium payments, the downside is that when an unexpected medical event (such as injury or sickness) strikes, the financial consequences could be huge.

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How Divorce Can Impact Your Credit

shutterstock_268679894Many individuals find that their finances and credit are in shambles after going through a divorce. While the act of getting divorced doesn’t directly impact your credit, it could have indirect effects that damage your credit.

Courts issue divorce decrees to finalize a divorce. Divorce decrees generally divide a couple’s debts and obligations and assign responsibility to one spouse or the other. But if your ex-spouse fails to pay a certain loan or account as ordered, the divorce decree won’t help if the account is still shared by both parties. If the debt is joint, each party is responsible for the debt — regardless of the divorce decree. The creditor can still go after each party for payment. This is because the financial institution that issued the loan, or the creditor that each party is responsible to pay, is not a party to the divorce decree. The divorce decree does not break the contract you signed to pay your creditors.

Not only can creditors try to collect from both parties of a joint account, they can place negative marks on the credit reports of both users of the account for missed payments. Negative marks for late or missed payments are part of your payment history, which accounts for the largest chunk of a FICO credit score. A negative mark can stay on your credit for up to seven years. That’s why it is better to make a payment now on a joint account (even if your ex-spouse is responsible to pay under the divorce decree) rather than suffer the consequences of a seven-year negative mark on your credit score. You can always try to collect the money in court later from your ex-spouse.

To avoid a possible credit crisis, here are a few steps you can take to protect your credit in a divorce.

  1. Identify all joint accounts and remove one name from the account. This could include credit card accounts, utility bills, car payments, and mortgages, among other things. The party responsible for paying should be the only party whose name appears on the account. If your name is on an account, you are responsible to pay it. This may require a refinance for a mortgage, but ensuring that accounts are no longer joint will prevent damage to your credit in the long run.
  2. Make payments if you are still on the account, even if you’re not supposed to pay. If an account is joint and it looks like your ex-spouse cannot make the payment on time or at all, make the payment yourself (even if the divorce decree says you’re not responsible). You can try to collect the money from your ex-spouse later. It is better to prevent a negative mark on your credit than to try to remedy the situation after the negative mark has appeared.
  3. Sign up for a credit monitoring service to avoid identity theft. Armed with your social security number, date of birth, and mother’s maiden name, an ex-spouse could open new accounts and accumulate debt in your name. To avoid this scenario, sign up for a credit monitoring service that will alert you to any new accounts or unusual activity. Also, change your passwords if your ex-spouse has online access to your accounts.

Going through a divorce is stressful. If your name remains on a joint account and a payment is missed or late, a negative mark could remain on your credit for up to seven years. Take charge of your credit and make sure that your name is removed from all accounts that you are not responsible for paying. That way, you can try to avoid further stress.

Cynthia Thaxton is an associate attorney for Lexington Law Firm. She attended The College of William and Mary in Williamsburg, Virginia and earned a bachelor’s degree in International Relations and a minor in Arabic and graduated summa cum laude.
After graduating from college, she worked in Abu Dhabi as a paralegal for two years. Cynthia then returned to Virginia to attend law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. While in law school, she was a law clerk at the State Department’s Office of the Legal Adviser.
Cynthia has experience in corporate law, international transactions, real estate, HOA law and creditors’ rights and she is admitted to practice law in Utah. In her spare time, she enjoys skiing with her husband, running, and going on hikes with her Labrador retriever, Shep.
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