Category: Credit Repair

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 Amazon.com 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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What VantageScore 4.0 Means to You and Your Credit Report

rebuilding credit

In early April, VantageScore Solutions, developer of VantageScore credit scores, announced that its new VantageScore 4.0 tri-bureau credit scoring model will be available to lenders in fall 2017. But this announcement doesn’t only impact lenders.

You can think of VantageScore as a competitor to the widely used FICO score used by the majority of lenders. Although FICO, created by Fair Isaac Corp., is the credit industry standard, the VantageScore model, which was created in 2006 by Equifax, Experian, and TransUnion, has grown significantly in the past several years. The number of VantageScores used increased 40 percent between July 2015 and June 2016, with more than 2,400 lenders and other credit industry participants using it — including 20 of the top 25 financial institutions.

So, what does VantageScore 4.0 mean to you?

VantageScore 4.0 is an update to version 3.0, and includes three important changes:

  1. Perhaps most notably, VantageScore 4.0 is the first tri-bureau credit scoring model designed to accommodate the National Consumer Assistance Plan initiative. The NCAP takes effect July 1 and, among other provisions, it will mark the end of the three reporting agencies collecting and reporting a significant amount of information pertaining to tax liens and civil judgments.

Furthermore, VantageScore 4.0 also distinguishes medical accounts that have been sent to collections from other types of collection accounts and ignores medical collections that are less than six months old in order to allow adequate time for insurance payment processing, according to VantageScore Solutions.

The new model “relies less on derogatory collections and public-records data to ensure that the model will not lose substantial predictive strength in the likely event that these records fail to meet enhanced data quality standards and are removed from consumer credit files under provisions of the NCAP program,” VantageScore Solutions said.

  1. VantageScore 4.0 will be the first credit scoring model used by Experian, Equifax, and TransUnion to include “trended credit data.” This essentially means the new model takes into consideration a consumer’s credit behavior over time vs. looking only at a current snapshot.
  2. The new version will accommodate consumers with limited credit histories through the use of data mining to create consumer scorecards. Through extensive data, VantageScore 4.0 identified thousands of consumer behavior combinations common to those who pay their bills on time.

Consumers and lenders stand to benefit from this new model, which promises more consistent credit scores from all three national credit reporting agencies.

If you’d like to learn more about how the new VantageScore 4.0 can impact you, or more about credit scoring and credit repair, contact Lexington Law today.

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7 Ways You May Not Know Bad Credit Can Affect You

rebuilding credit

It used to be that a low credit score made it more difficult to buy a home or secure a major loan. And while that can certainly be a problem, for many people not yet ready — or not interested in — home or other property ownership, their credit score was often an afterthought.

Today, things are much different and your credit report and credit score have more far-reaching implications that can impact many things, from your ability to get a job or an apartment, to your ability to find a date (yes, really). Considering the impact it can have on your life, credit can be a source of extreme anxiety.

Here are some of the things that can be affected by your credit score.

Ability to rent or lease a place to live

In the past several years, credit checks have become a routine part of the home rental process. In fact, a 2014 study conducted by TransUnion found that 43 percent of landlords perform credit screening as part of the leasing process, and 48 percent surveyed said that results of a credit check are among the top three factors considered in accepting a lease application. When looking at credit reports, landlords may view an unstable financial past or payment history as a good indication of future behavior. If you do secure a lease, you will likely be subject to higher upfront deposits. For example, while some landlords require first and last months’ rent upfront, you may be required to pay an additional month or two upfront if your credit is poor.

What you pay for utility deposits

Coupled with with the previous point, this can be a double whammy if you’re moving into a new place. Utility companies — electricity, water, cable, phone, and Internet — also check credit as a routine part of the application process. Utility payment history isn’t part of your credit report, so even if you’ve paid your utilities on time in the past, that won’t work in your favor. If you have poor credit, you’ll typically be required to pay a security deposit on these services in order to be granted service in your name. That deposit is required upfront before services will be activated.

Higher insurance premiums

This applies to both car insurance, and property insurance for those who do own homes or other property. While illegal in some states, a number of car insurance providers correlate making late payments with reckless driving behavior and will therefore raise rates or deny auto coverage altogether to consumers with poor credit scores. A study by InsuranceQuotes found that premiums double for drivers with poor credit.

When it comes to home insurance, some providers also place punitive rate hikes on customers because they perceive a connection between low credit scores and high insurance claims. Just as with car insurance, you could see your property insurance rates as much as double unless you live in a state where this practice is illegal, such as Hawaii or Maryland.

Limited job prospects

We’d all like to believe our personal life or circumstances should not impact our professional life, but that’s not the case when it comes to job hunting. As with applying for a lease, it’s now standard practice for employers to conduct a full background screening, including checking a credit report. While a dozen states have enacted laws prohibiting the use of credit reports as a factor in hiring, nearly half of all employers — 47 percent — have reportedly used credit reports when vetting potential job prospects.

Inability to access funds in an emergency

Let’s face it. Even though we know it’s good practice to keep an emergency fund, we all have situations for which we’re financially unprepared and which catch us off guard. These include everything from an unexpected major car or home repair, to a pet’s illness, to our own surprise medical bill. Unfortunately, even smaller loans to get out of a pinch can be unattainable when your credit score is low.

Higher interest rates

Even if you are granted credit, you can expect significantly higher interest rates on credit card and all types of loans with a low credit score. If you do happen to be a homeowner, this can complicate even a simple refinance and prevent your from being able to access equity in your home.

Strain on relationships

On a more personal level, poor credit can also impact the personal relationships in your life. Many people who are denied credit have no other option but to turn to family or friends for financial assistance. If loans aren’t repaid in a timely manner — or worse, aren’t repaid at all — it can strain and even permanently damage relationships.

And if you’re thinking of looking for love online, it seems that dating sites are even now credit conscious when it comes to finding your perfect match.

If a low credit score is negatively impacting your life, a reliable legal expert that specializes in credit repair can help. If you’d like more information from trusted legal experts in credit repair, contact Lexington Law today. We’ll help you understand your rights, and leverage them to ensure that you have a fair, accurate, and substantiated credit report.

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