Lexington Law Firm doesn’t just take the reins and rebuild our client’s credit; we also educate and empower our clients so they can maintain good credit going forward. Our primary goal is to restore your damaged profile while simultaneously helping you understand the nuances of building good credit. The subject can seem complicated at first, but once you learn more about what affects your score and how to clear negative information from it, you can rebuild credit and maintain a solid profile.
Why Your Score Matters
Your credit score is a lot like the report card you receive at the end of each term when you go to school. It’s essentially a snapshot of how you’re doing, only instead of measuring your academic progress, it’s a measurement of your creditworthiness. Your score helps lenders determine how much risk they’ll take if they give you credit. The most common type of score is a FICO Score, which was created by the Fair Isaac Corporation. Many lenders rely on this score to determine an applicant’s creditworthiness.
In most cases, a FICO Score of 670 or higher is considered “good,” while scores above 800 are exceptional. A score between 580 and 669 is generally considered fair, and a score between 300 and 579 is poor. If your score is poor, you may not qualify for credit, or if you do, you may need to pay a deposit or fee. You’ll most likely have a high interest rate if you are approved. The higher your score, the more likely you are to qualify for better-than-average interest rates and generous terms. If you have a low score now, there are things you can do to rebuild credit and improve your score.
The Difference Between Your Score and Your Report
Your score only gives lenders a limited idea of your creditworthiness at a given moment in time. It’s a fluid number that can change on a daily basis, depending on what actions you take. If you open a new line of credit or make a late payment, your score may go down temporarily. If you pay down your debt and rebuild credit, your score may go up.
When you apply for a loan, the lender will usually look at your full report — not just your score. Your report contains a fuller picture of your standing as a borrower and usually includes the following:
- Any derogatory marks (payments that are more than 30 days past due, foreclosures, collection accounts, repossessions and/or charge-offs)
- The total number of credit lines you have open
- The types of credit you have
- Your total amount of debt
- The length of time you’ve had open accounts
Lenders may also look at your debt-to-income ratio (the total amount of your expenses versus income) when deciding whether or not to grant you a loan. Race, sex, religion, marital status and national origin do not affect your score or report in any way. If you are turned down for a line of credit or loan, you can rebuild credit and try again later.
How Errors Appear on Your Report
If you have meticulously maintained your credit profile, it can be frustrating to discover a mistake that affects your creditworthiness. It can also take a lot of time and effort to correct the error. Unfortunately, this situation is much more common than most would like to believe. In fact, approximately one out of every five consumers has errors on their credit reports that can potentially affect their ability to get a loan.
Common credit report errors include inaccurate personal details and incorrect account information. It isn’t unusual for consumers to discover the wrong address, name spelling or social security number on their reports. It’s also fairly common for two accounts with similar names to become mixed up. While many of these errors are simply clerical, some are indications of identity theft. All mistakes on your report should be taken seriously and handled immediately. Unfortunately, it can be very challenging to rebuild credit on your own and the process is often slow. Hiring a professional credit repair company can help yield better results.
Customized Credit Score Improvement Analysis
It’s not always easy to figure out how to build your credit once it’s been damaged. At Lexington Law Firm, we provide our clients with a customized credit score improvement analysis. After taking a comprehensive look at your score and profile, we will identify areas you can improve and provide you with specific actions you can take to restore your score and profile. Your analysis may include tips for paying down debt and instructions for using secured cards to establish positive credit. While you work on these things, we’ll work on clearing inaccurate negative information on your reports.
How We Work on Correcting Negative Information
The Fair Credit Reporting Act (FCRA) gives consumers the right to dispute inaccurate items from their reports. Disputing questionable items with the major credit bureaus is one of the most popular methods used to rebuild credit. It’s also common to work directly with creditors to take negative items off reports. In some cases, creditors may be willing to cooperate with you to erase negative items in a non-combative way, while others may refuse to do so. In the latter cases, you can take advantage of consumer protection acts.
Taking these corrective steps can be intimidating for many consumers, especially those who are trying to restore their credit for the first time. In complicated cases, we use a variety of effective legal tactics to fight negative items on reports and restore credit for our customers. We make sure all negative items on your report are completely accurate, fairly reported and fully substantiated. We offer three different levels of service and will help you determine which level is the best fit for your needs.
Tips to Pay Down Debt
There are many approaches you can take to pay down your debt. It’s important to take them all into consideration and decide which approach will work best for your situation. Here are a few tips we give our clients to help them pay down debt as quickly as possible:
- Create a budget
- Pay more than the minimum balance on credit cards and loan payments, if possible
- Pay off debts with the highest interest rates first
- Once a debt is paid off, put the payment for that debt toward the next remaining debt with the highest interest rate
- Stop making credit card purchases
Distinguishing between wants and needs is an important skill to learn when paying off debt. You may also wish to sell unnecessary or unwanted items and put the money you earn from them toward your credit card debt.
Start Improving Your Credit Report Today
If your profile has been negatively affected in any way, we want to help you rebuild credit and restore your creditworthiness. To receive your comprehensive credit score improvement analysis and learn how we can help you fight unwanted items on your report, give us a call or sign up online.