Credit Repair

Can a Low Credit Rating Keep Me from Being Hired?

According to a recent survey performed by VISA, 4 in 5 American consumers don’t know that bad credit can hurt their chances of being hired for a job. What many people don’t realize until they see it firsthand is that employers have the right to reject job applicants because of the information saved in their credit reports.

Companies who reference your credit as a part of the employment process contend that your credit history is a good predictor of your character, judgment and reliability as an employee. Some consumer advocates disagree with this and feel the practice is an unjust method of discriminating against job applicants. Regardless of which side of the story you agree with, the fact remains that the information recorded in your credit reports could have bearing on your being hired for a new job.

Good Morning America featured an article titled How Bad Credit Can Affect Job Prospects in which there are a handful of helpful tips to think of when applying for a new job. First among these is seeing if the employer will be requesting a copy of your credit reports. Prospective employers have to get your permission before performing a credit check so read through the small print of application. Is it usually in the fine print where you lend your consent upon signing the application.

If you have great credit, you probably won’t have anything to worry about. If, however, your credit reports show difficulties making timely payments or other credit problems, it is advised that you take steps to minimize their impact. Of course, if you haven’t seen your credit reports recently and don’t know what’s on them, make sure you order a copy before starting the job search. You can order your reports free of charge at AnnualCreditReport.com.

If your score is sub-par because of credit reporting errors or other questionable negative items saved in your credit reports, work to get these items corrected or removed. If you don’t have time to address these listings before applying for a job, there are many other benefits to correcting these issues so it is still advisable that you do so. But for now, you will have the added challenge of helping a prospective employer see past your poor credit score.

If you know an employer wants to perform a credit check, consider preemptively addressing the issue instead of having to perform damage control after the fact. Many people with bad credit have perfectly reasonable circumstances such as unexpected unemployment, fallout from a divorce, or medical issues that can wreck havoc their credit rating. After explaining your situation confidently and truthfully, you may find employers will be sympathetic to your troubles.

Identifying the Top Credit Repair Companies

With so many new and inexperienced credit repair organizations coming onto the scene, many of which are simply turnkey credit repair businesses using third party software as the backbone of their product, it becomes difficult to know which companies can be trusted with your credit reports. To help separate the top credit repair companies from the greenhorns trying to make a quick buck, here are some tips for spotting a quality credit repair provider:

1) Look for experience – Creating a credit repair company is surprisingly simple. All a person needs is a web site and a few hundred dollars to purchase a credit repair business software package. Staying in the business and producing results is more difficult. The leading credit repair companies usually have a history of helping people which not only indicates a stable business, but it is also a sign that the company operates within the confines of the law.

A company’s BBB report will list how long it has been in business, although not necessarily how long they have been providing credit repair services. If the company does not have a BBB listing, it could be a red flag since the company may be very new. When you are unable to determine how long a company has been operating, you can try performing a WHOIS lookup of their domain name to see how long it has been since the domain was registered, but if it takes that much work to track down the information, you are probably better off looking elsewhere.

2) Look for a “brick and mortar” presence – The Internet is a great vehicle for commerce, but the process of working to repair your credit generally produces better results when performed offline. Trustworthy credit repair providers usually have a physical location that you can use as a guide to how stable the company is. Mapquest or some other satellite imagery service is a great tool for researching the company’s headquarters. Grab the company’s address, load a map and see if the company has their own building, is headquartered in an office complex, rents out a location in a strip mall, or has the mailing address of a personal residence.

3) Look at pricing and payment options – Signed into law in 1996, the Credit Repair Organizations Act establishes rules that credit repair companies must abide by. One of these is to only accept payment for services after they have been performed. This was created to help protect people from credit repair scammers who would charge large upfront fees and never fulfill their end of the arrangement.

As a result of this, you should steer clear of credit repair companies who require an upfront payment.

In addition to finding out how much and when you will be expected to pay for credit repair services, note the payment options. Most reputable online companies will, at a minimum, give you the option to pay via credit card on their website or over the phone.

Credit Repair Starts with Education

There is an institution in our society that impacts everything from your ability to purchase a home, get approved for automobile insurance, and gain employment with certain organizations. It’s an element that affects almost each and every person in this country but it is something rarely covered during formal education and is not well understood by a huge portion of the people it affects.

What we’re talking about here is the modern credit system. This is the system where credit reporting agencies (credit bureaus) receive, organize and store financial information about consumers provided by a variety of sources that is then sold to lenders, employers, and others. This information is then used to make decisions about whether or not you are a stable, credit worthy person.

After a short time dealing with banks,credit card providers and other lenders, most people learn the rudimentary basics of the credit reporting system. They know their credit reports contain information about them and they know it is beneficial to have a high credit rating. They also learn through a constant bombardment from credit bureau advertisements that people can order copies of their credit reports. But from there, their knowledge of credit drops off and many of the things people believe to be true are in incorrect or incomplete interpretations of the facts.

Many do not know how a credit score is derived, what steps they can take to maximize their credit score, the tools they have for disputing questionable credit listings, and how the law protects their right to receive fair treatment from credit bureaus, creditors, collectors, and credit repair firms.

Much like how the pigs exerted control in Animal Farm, this lack of knowledge leaves people at the mercy of the organizations whose revenues are tied to consumer credit. When left unchecked, even upstanding companies will err on the side of generating more money. As a result there are people are paying excessive interest rates that pad the pockets of lenders because these people are not knowledgeable enough about credit to fight back. They are allowing themselves to be victimized by companies who, intentionally or not, are taking more of their money than is fair.

The more people learn about credit, the more empowered they become. Credit scores are a powerful and necessary tool in today’s society, but as with all sources of power, it must be kept in check. Those who understand how it functions are the ones who will be able to enforce their right to a fair and accurate credit score.

Lexington Law, the trusted leaders in credit repair, believes that learning about your credit is the first step in improving it. To assist consumers with this, Lexington Law has provided credit education resources including videos, lawyer interviews, expert articles and more.

Removing Charge Offs from My Credit Report

Creditors want to have confidence that you will repay your debts and a charge off on your credit reports is an indication that you cannot be counted on to do so. For this reason, a charge off will significantly lower your credit score and can be cause for you to be denied credit.

It is because of the severity of a charge off, almost everyone would want to have this derogatory credit listing erased, but few realize there is anything they can do about it. What they are not aware of is that there are steps you can take in an effort to remove charge offs from your credit reports. In fact, Lexington Law, a consumer advocacy law firm with 18 years of experience helping over 1/2 million Americans work to improve their credit, reports that their clients had over 100,000 charge offs removed from their credit reports in 2008.

You have a number of options when it comes to repairing your credit. For starters, under the Fair Credit Reporting Act, you have the right to request the credit bureaus verify any items in your credit reports you feel may be inaccurate, untimely, misleading, incomplete, ambiguous, unverifiable, biased or unclear (known as “questionable” items). Essentially, as the name of the act implies, you have the right to question any items that you feel give lenders, insurance providers, and others an unfair or inaccurate impression of your credit worthiness; including charged off accounts.

If your credit bureau dispute is unsuccessful or if the reported charge off doesn’t qualify as a questionable negative item, there are still options available to you. Your creditors and collections agencies have the ability to remove the items they have added to your credit reports. Sometimes, simply as a result of you asking nicely, they will agree to stop reporting a negative item. If a friendly request doesn’t do the job, there are more confrontational steps you can take that make use of your rights under consumer protection acts such as the Fair Credit Billing Act and the Fair Debt Collection Practices Act.

It may not be easy, but with time, effort, and proper knowledge, you may be able to remove charge offs from your credit reports. Of course, if you do not have the time or the desire to attempt repairing your own credit, there are a number of reputable credit repair companies who can make use of their experience to aid you in working towards achieving your credit goals.

Credit Repair Scams and Legitimate Credit Repair Services

The credit repair world can be a scary place. With the number of news articles, television segments, and opinion pieces cautioning against fraudulent credit repair services that get published by well regarded media outlets, it can appear as if the best option is to steer clear of credit repair companies altogether – something the news outlets seem to advocate.

There are dozens of articles talking about how to keep yourself from becoming the victim of a credit repair scam. Most itemize a list of warning signs such as companies that charge hefty upfront fees, claim to help you create a clean credit identity, don’t keep you informed of your right to repair you credit yourself, and generally make misleading or untruthful statements. At this point, however, a very small percentage of articles mention that there are credit repair companies like Lexington Law who do not participate in the practices that are common to a credit repair scam. In fact, many articles from established news agencies like CNN end by suggesting people “get legitimate help” from consumer credit counseling services.

Not only is this advice incomplete, but it is also completely useless to people who truly could benefit from the assistance of a legal credit repair service. Credit counseling programs may be able to assist people who are unable to make payments on their debts, but it will do nothing to improve your credit rating. Some credit counseling programs even have the potential to make your credit look worse.

Unlike consumer credit counseling services that aim to bring your finances under control, credit repair services are designed to help you raise your credit score. They are not mutually exclusive services and in many cases, a person who has used a credit counseling service to help overcome their debt issues becomes a good candidate for credit repair once they have completed the program.

Legal credit repair services do have a purpose and it is a disservice to say otherwise. Hopefully as consumers and news columnists alike become more familiar with credit repair and the services credit repair organizations provide, we will start seeing more of a balance between news stories warning of credit repair scams and news stories listing the qualities to look for in a reputable credit repair service.

Adding the 100 Word Statement is Not a Suggested Credit Repair Tactic

Negative listings on credit reports have some of the biggest effects on your credit score. A few delinquent payments can make the difference between getting a favorable interest rate on a loan and being required to make a substantial down payment just to qualify for financing. Major blemishes like charged off accounts, repossessions, and foreclosures have the potential to drop your credit score so much that you will have difficulty getting approved for credit, regardless of the terms.

So what’s a person to do when there are damaging items on a credit file that shouldn’t be there? Errors do happen and negative listings are incorrectly added to consumers’ credit reports all the time. And what about negative listings that do describe actual events but there was a legitimate reason behind them? Is it really fair to require that you live with a bad credit rating for up to ten years when the dark spots in your credit history were essentially out of your control?

The Fair Credit Reporting Act (FCRA) gives consumers a few options when dealing with poor credit, and enforcing their right to a fair and accurate credit score. This includes your right to order free copies of your credit reports as well as the right to dispute items on your credit reports that you feel may be inaccurate, untimely, misleading, incomplete, ambiguous, unverifiable, biased or unclear.

Another antiquated option you have as a result of the Fair Credit Reporting Act is the ability to add a 100 word statement to your credit reports explaining to creditors the circumstances behind negative items on your credit reports. The idea is that when looking at your credit reports, lenders will be able to consider the justification behind these negative listings when considering a loan application.

What makes this statement antiquated is that these days, lenders rarely look at the individual items in your credit reports. In fact, they may never see your reports at all so your carefully penned 100-one hundred word statements would never be read.

On top of that, lenders are primarily interested in your credit score, which does not take the one hundred word statement into account. No matter how good your justification is for having negative listings on your credit reports, your credit score will remain unchanged.

The only way to prevent negative items from affecting your credit score is to have them removed from your credit report. One option people have for attempting to do this is the credit bureau dispute described in the Fair Credit Reporting Act. Additional credit repair options are made available through a number of other consumer protection acts targeted towards creditors and collections agencies.

Make the Most of the Credit Crisis By Fixing Your Credit Score

As is often times the case, even situations as dire as today’s credit crisis have a silver lining. In the case of the credit crisis, the silver lining is that prices for large purchases are dropping. Plummeting interest rates with already decreased prices work together to make now one of the best times in decades to purchase a home or a new car.

There is, however, a catch.

Not everyone can take advantage of this opportunity. Credit today is more difficult to come by, hence the term “credit crunch”. After years of irresponsible lending practices and an unprecedented number of defaulted loans and foreclosures, lenders have been forced to be much more conservative in their lending practices. Today, they are only willing to lend to the lowest risk consumers.

Lenders determine credit risk by looking at your credit score. A poor credit score tells them that you can’t be counted on to repay your debts on time and maybe not at all. As a result lenders will deny credit to people they feel are too high of a credit risk, and charge elevated interest rates to those who are a moderate credit risk to make sure they can still make money even if a small percentage of those people default on the loan.

Today, lenders threshold for credit risk is far lower than it has been in previous years. A credit score over 750 is now required in many cases to get approved for a loan with the best interest rate and the best terms. A credit score lower than 750, and you have to pay extra. Too far below, and you run the risk of being denied for credit altogether.

But what happens if your credit rating says you are a high credit risk, even though you really aren’t?

Credit errors, imperfect scoring formulas, and irrelevant credit information combine to give many people credit scores that are not representative of their true credit worthiness. They are dependable consumers, but their credit reports tell a different tale. For people in this situation, fixing their bad credit may be the best option for getting the credit rating they deserve.

So if your credit is holding you back, don’t just sit idly by and wait for it to improve on its own. You have the right to a fair and accurate credit score and there are steps you can take to legally fix your credit. Take action today and you may even be able to benefit from the credit crisis.

Four Tips for Identifying a Legitimate Credit Repair Company

The Federal Trade Commission is charged with the enforcement of consumer protection law and has the responsibility of protecting you and me from unscrupulous companies that unfairly garner our business through false claims and, quite simply, by breaking the law. With regards to dishonest credit repair clinics, practices like this became so pervasive that a federal law was passed to outline how credit repair companies can operate. The Credit Repair Organization Act (CROA) was passed to protect consumers and provide them with recourse if they are a victim of a dishonest credit repair organization.

When researching credit repair organizations, there are some glaring red flags alerting you to steer clear. According to the Federal Trade Commission, avoid credit repair organizations that:

Accept Payment in Advance – Credit repair providers shouldn’t request payment prior to services being rendered. Under the Credit Repair Organizations Act, these companies cannot require payment until after they have completed the services promised. This is to protect people from companies that charge large upfront payments and never do the agreed upon work.

Do Not Disclose Your Consumer Rights – Legitimate credit repair organizations will let you know that you can order one free copy of your credit reports every 12 months from each of the credit bureaus, and that you are able to dispute inaccurate or questionable items on your own, free of charge. If a company does not alert you to this information, specifically in the form of a CROA required disclosure titled “Consumer Credit File Rights Under State and Federal Law”, you should probably look elsewhere.

Endorse Using a New Credit Identity – Some sketchy credit repair clinics will advise you to create a new credit identity by using an Employer Identification Number (EIN) in place of your Social Security number on credit applications. This is a serious crime and if anyone suggests this as an option, run the other way.

Misrepresent the Services They Provide – Be wary of credit repair companies that guarantee to remove negative and accurate items, such as late payments and foreclosures, from your credit reports. No one can guarantee that items will be removed, particularly if the items are true.

Four Myths about the Credit Bureaus

They exert enormous power over your life – and the lives of every other American adult. But how much do you actually know about the big three credit bureaus?

Surveys suggest that the average American knows very little about consumer reporting agencies other than that they control consumer credit profiles – and as a result, their buying power. And that is exactly how the credit bureaus want it, argues Dr. Randy Padawer, a clinical psychologist whose research into consumer credit has been featured in Smart Money Magazine and the bestselling FICO 850 seminar for The Motley Fool.

“The three major credit bureaus truly want consumers to believe that they’ve each been blessed with an officially sanctioned franchise,” says Padawer, who has consulted for Lexington Law, a firm whose credit repair services help clients dispute errors and other questionable negative information from their credit reports.

The less you know about the credit bureaus, the more difficult it will be to fix a problem when one shows up on your credit report. And odds are an error will appear. Four out of every five credit reports contain errors, and approximately 25 percent contain errors serious enough to cause significant problems for consumers, according to research by the U.S. PIRG.

Here are some credit bureau fictions and the facts behind each fiction:

Fiction 1: There are only three “official” consumer reporting agencies.

Fact: Many companies are in the business of collecting, compiling and processing credit information.

Fiction 2: The three major credit bureaus are officially sanctioned by the federal government.

Fact: “There are no official bureaus,” Padawer says. “While most Americans perceive their credit reports to have at least the same legal standing as their driving records, the truth is that the government had no role in establishing the for-profit companies which produce them.”

Fiction 3: The three major credit bureaus all record the same credit information.

Fact: Different creditors often report to different reporting agencies. In fact, there is no law that requires them to report to any of the credit bureaus at all. Consumer reporting agencies do not share information either, so if there is an error on your report from all three agencies, repairing it with just one of them does not mean the error will come off your other two credit reports at the same time.

Fiction 4: Credit bureaus will act quickly to help me rectify an error or remove inaccurate negative listings from my credit file.

Fact: Federal law requires all consumer reporting agencies to complete an investigation into a consumer complaint within 30 days of when it was first made. The credit bureau may decide to keep the disputed item on the report as is, update but not delete the listing, delete the item, or deem the dispute frivolous. Given that it is easiest to simply deem your complaint as frivolous, many consumers find that their legitimate disputes get dismissed.

Increasingly, frustrated and fed up consumers are turning to credit correction professionals like Lexington Law to help them resolve credit reporting issues. Anyone who has disputed a listing on a credit reports knows the process can be long, aggravating and perhaps ultimately fruitless. Involving a credit repair professional can achieve faster, better results.

Advice for Finding a Legitimate Credit Correction Company

Choosing a credit repair company is a big decision. Choosing the wrong company could end up costing you hundreds or even thousands of dollars. And on top of that, if they are not successful in repairing your credit, you have delayed achieving your goal of a good credit score by months or years. And if that wasn’t enough, getting caught up in a fraudulent credit repair service could get you in legal trouble.

So to assist you with making a good decision and help keep you safe from getting taken advantage of by a credit repair scam, here is a guide to shopping for a credit repair service. Below are some tips you can use to ensure you end up choosing a trustworthy credit repair company to help you work towards achieving your credit goals.

Know how the credit system and credit repair work

Before you begin searching for a credit repair service, you should know the fundamentals of how the credit reporting system works. You wouldn’t start shopping for a new car if you didn’t know anything about how to drive or how cars operate. So make sure before you begin looking for a credit repair company you understand the basics of how the credit bureaus operate, how your credit reports are created, how they are used, and why it is up to you to follow up on their accuracy. Also, familiarize yourself with what you can do to repair your credit yourself. You may find that you don’t need help from a credit repair expert.

Know what a credit correction company can and cannot do

Despite what some credit repair clinics would like you to believe, there are no hidden tricks to repairing your credit reports. Credit repair organizations use the same methods to fix up your credit score that are available to you as a consumer. The only difference is that an experienced credit repair firm already possesses the knowledge and experience necessary to take advantage of these credit repair tools. In comparison, it may take you hours of research and a few months of practice to figure out how to go about effectively restoring your credit.

Also know that by law, credit repair companies cannot accept payment for services before they have been rendered. This is because organizations operating a credit repair scam will frequently charge hundreds of dollars or more upfront and then never provide the help you were looking for. Any credit repair provider that requires a large upfront payment should be avoided.

Look at the services being included

A credit correction company is legally able to provide all the same credit repair services you can perform for yourself, but this does not mean that all do. Many credit repair companies only provide credit bureau disputes which can be effective for some people, but are typically less successful and slower than pairing credit bureau disputes with other credit repair methods.

Look for experience and results

While no credit correction company is flawless and ultimately the success of any effort to fix your credit is reliant on your creditors and the credit bureaus, an experienced credit correction company will likely produce faster and more meaningful results than a relatively new company that is still experimenting with their customers’ credit reports.

Look at the price tag

As with any service, the goal is then to get the best value for your dollar. To determine this, find out what services you will be getting for your money and make a reasonable estimate of the relative quality of these services. This should help you get a feel for how companies compare to each other. For example, if one service charges $49 per month for credit bureau disputes and has been operating for only 2 years, you are probably better off contracting with a competing service for $20 more per month that also provides creditor interventions and has been helping consumers for 10 years.

Above all, use your common sense

Just as you would at any other time when someone is asking you to spend some of your hard earned money, when you are looking at a credit correction company, trust your instincts and remember the old adage of anything that sounds too good to be true, probably is.

You should be completely confident that you are making a goodthe right choice. It is your credit score that is on the line and your money that is being invested. Don’t let anyone pressure you into doing anyting that doesn’t feel proper.