Feb 29, 2008

Charge Offs and Bad Debts

Did you know that having just one charge off on your credit report can keep you from being approved for credit? Creditors see a charge off as a sign that you have not been responsible with your finances in the past and cannot be counted on to fulfill your financial obligations in the future. Unfortunately, charge offs can be remain on your credit report up to 7 years. However, there are steps you can take to remove them.

That’s great, but what exactly is a charge off?

A charge off is basically a bad debt. When a creditor is unable to collect on an account they write it off. Creditors usually write off bad debts after a certain amount of time (usually 180 days or so without payment) for tax reasons. Every year, corporations file a Profit And Loss Statement with the Internal Revenue Service. All of the year’s bad debts are added together as an item in the “Loss” section of the P & L Statement, and are deducted from the corporation’s tax return, much like other business expenses. To creditors, bad debts and even fraud are simply part of the cost of doing business.

Once it’s been charged off, do I still owe it?

Of course you do. The debt is still legally valid and the creditor can attempt to collect the full amount. Most creditors will sell or assign the account to a debt collector. So, here’s what happens: The original creditor reports the account as a charge off and the collector reports it as a collection account. So, now you have 2 negative accounts on your credit report.

Ok, so what if I pay it off?

Paying off a charge off will not remove it from your credit reports. It will simply be updated to a “paid charge-off,” which is slightly better, but still considered a seriously derogatory item and can still remain on your credit report for 7 years.

Yikes! So, how can I get charge offs removed?

Through creditor negotiations and credit bureau disputes, you may be able to improve the status of the charge off or completely remove it from your credit reports. In exchange for resolving the debt, your creditor may be willing to remove the account or report it as “paid in full.” In the event where a charge off is being inaccurately reported on your credit reports, you can dispute it directly with the credit bureaus.

Learn more about removing charge offs!

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Feb 28, 2008

The Real Cost of Bad Credit

It’s difficult to say exactly how much it will cost you to have bad credit. Each person has a unique financial situation. Depending on how long you decide to go without repairing your credit, it could cost you literally hundreds of thousands of dollars over your life time. I think most people would agree that they work too hard to pay the banks that kind of money. Imagine what you could do with that money if you saved it or invested it instead of giving it to the banks in the form or late fees and high interest rates.

Doesn’t it make you sick to think about how much money you’ve already thrown away? It made me sick. So, I finally decided to do something about it. I finally realized that by cleaning up my credit and managing my money instead of letting it manage me, I didn’t have to live like that anymore.

I realized that I hadn’t been taught how to manage money correctly. I hadn’t been taught how the credit game works. We just weren’t really taught that in school. So, I decided to teach myself about money management and personal finance. It’s one of the smartest things I’ve ever done.

I no longer pay twice as much for things. I no longer worry about whether I’m going to get approved or not. I no longer worry about whether I’m going to have enough to pay my bills. I no longer have these issues. I have piece of mind because I’m responsible with my money and I have control over it. It no longer controls me.

If you are not at that point yet, I really hope that you get there. It’s not just about money. It’s about time. Your time is precious. Stop living and thinking like a slave. To have financial freedom, you need to change your whole mindset. You need to learn how to repair your credit and how to manage your money. Then, you need to pass that knowledge down to your loved ones. It’s one of the best gifts you can ever give. Get started today.

If you’re ready to start living and stop worrying, let the professionals at Lexington Law Firm help you remove negative items from your credit reports.

Posted in bad credit, bad credit repair, credit, credit report repair, money management, personal finance | No Comments »



Feb 13, 2008

What is a FICO Score?

To answer this question, let’s start off by revealing what the acronym stands for. FICO stands for Fair Isaac Corporation. Fair Isaac was founded in 1956 by engineer Bill Fair and mathematician Earl Isaac. They developed the FICO scores, a measure of credit risk, that are the most used credit scores in the world. In fact, according to MyFICO.com, 90% of the largest U.S. banks use FICO scores.

FICO scores are available through all of the major credit bureaus in the United States including Equifax, Experian, and TransUnion. You can also get your scores directly at MyFICO.com. It’s important to note that the credit bureaus and many other credit monitoring companies also offer you their version of your credit score based on information from your credit reports, but these scores are NOT the same as your FICO scores and usually not the same scores your lenders will use. These scores are what are commonly known as FAKO scores and are more often than not, way off from your actual FICO score.

FICO scores can range from 300 to 850, but the majority of scores usually fall within the 600s and 700s. MyFICO.com reports that they are the only site offering all 3 of your FICO scores and the median FICO score in the U.S. is 723.

The exact scoring formula of FICO is kept very secretive, but they do tell us this:

Credit scores are calculated based on your rating in five general categories:

35% – Payment history
30% – Amounts owed
15% – Length of credit history
10% – New credit
10% – Types of credit used

Higher scores mean lower interest rates. If you’ve been declined for a loan, chances are lender has made their decision based on your credit scores. You can increase your FICO scores by removing bad credit and adding good credit to your credit. Learn how you can remove late payments, collections, charge-offs, bankruptcies, foreclosures, repossessions, judgments, and tax liens on your credit report to improve your chances at getting a loan.

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Feb 9, 2008

Credit Repair – Take a Stand

Are you there yet? Have you gotten to that point? Are you sick and tired of paying high interest fees? Are you sick and tired of being declined and embarrassed every time you apply for a loan? Don’t you think it’s time to take a stand?

When you finally get to that point, then you’re ready. But, until you get there, you’re probably not going to take action. If you’re not there yet, you might as well stop reading this.

But, if you are ready, then it’s time to start on your journey to financial peace and good credit. And once you get there, never go back. You work just as hard as the next guy. So, why should you have to pay more on a loan than he does? Don’t you think you’ve paid the banks enough money? The banks have plenty of money. Quit paying them more than you have to!

If you are sick and tired of living paycheck to paycheck and always begging the lenders to give you crappy loans then I want you to say this out loud right now:

“I’m done. I’m done living like a broke fool and I’m taking a stand RIGHT NOW. I will not let the banks make me their slave any longer.” Then, you’re going to take action, RIGHT NOW. Here’s what you’re going to do:

1. Get your credit repaired. Sign up with Lexington Law Firm and get it repaired NOW. Let the professionals clean up your credit for you. It’s very affordable.

2. Never let your credit get that bad again. Learn how the credit game works and promise yourself that you will never find yourself in that hole again.

3. Live below your means. That doesn’t sound fun, does it? Well, neither does being broke and being a slave to your lenders. Start living on a budget. Control your money so that it doesn’t control you. You know which spending habits you need to change. Change them. It’s time RIGHT NOW.

4. Pay off your debts and start saving money. If you’re not sure how, check out Dave Ramsey’s Financial Peace.

5. Help your family and friends. Help them realize what’s going on. Show them that they don’t have to be miserable and live like everyone else. They can break free from their chains too. Show them how.

Dave Ramsey, one of my favorite financial experts, says it like this: “If you want to be rich, look around and see what rich people are doing and do rich people stuff.” Rich people don’t pay high interest fees. If you keep doing what poor people do, you’re going to stay poor. You don’t have to. Take action and take advantage of all that life has to offer!

Posted in credit, credit repair tips, credit report repair, financial peace | No Comments »



Feb 4, 2008

Top 10 Credit Repair Myths

With so much misinformation being spread about consumer credit repair, I’ve decided to take it upon myself to list the top 10 lies, myths, and fallacies about credit repair. All myths have been researched, but as always, I encourage you to research them for yourself. The truth is out there; seek and ye shall find. Here we go:

Myth #1: Credit repair is illegal.

The Truth: Credit repair is not only legal, but protected by federal laws such as the FCRA and FDCPA. However, creating a new credit file and/or new identity is illegal.

Myth #2: Credit repair doesn’t work.

The Truth: The credit repair agency that I regularly refer clients to has helped over 400,000 clients improve their credit since 1991. That’s just one company. Thousands more have gotten great results by doing it on their own.

Myth #3: You can only dispute negative items on your credit report if you think they are not yours.

The Truth: You can dispute any negative account on your credit report that you want. Whether the account is “really” yours or not has no bearing on the consumer reporting agencies responsibility to verify it. Under the Fair Credit Reporting Act, the only information that can remain on your credit report is not what is accurate, but what can be proven as accurate. If it can’t be proven and verified then it must be removed.

Myth #4: The consumer reporting agencies are non-profit, government agencies.

The Truth: CRAs are privately owned, for-profit corporations.

Myth #5: Credit repair agencies are all scams.

The Truth: The FTC has been coming down hard on all credit repair agencies that don’t abide by the Credit Repair Organizations Act. Most of the scam artists are gone and most of the credit repair companies that exist nowadays are not scams.

Myth #6: A credit counseling service can help me restore my credit rating.

The Truth: Whoa is this one ever a lie! Credit counselors work with your creditors, to help them get their money from you destroying your credit in the process.

Myth #7: After a major financial plunge like bankruptcy, foreclosure or repossession, I won’t be able to get credit for 7-10 years.

The Truth: You can start enjoying good credit almost immediately after such an event if you start repairing and rebuilding your credit right away.

Myth #8: Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost.

The Truth: Ok, this one isn’t really a myth. It’s true…kind of. You see, the credit bureaus will try to make it as hard as possible for you to repair your credit. They have many tactics that they use to discourage consumers from contacting them. Most consumers get frustrated and give up because of the obstacles put before them by the credit bureaus.

The credit bureaus consistently violate consumer’s federal rights and constantly get sued for doing so. Credit repair agencies have been dealing with them for years and they know how to play the game. They know what works and they know when your federal rights have been violated. Many of them will help you seek litigation or refer you to an attorney if and when it comes down to that.

Myth #9: You have to hire a credit repair agency or lawyer to fix your credit.

The Truth: As mentioned above, there are benefits to hiring a credit repair agency. However, if you are willing to put in the time to learn how to do it on your own, you don’t need to hire anyone. There are many credit repair communities online that are willing to help you out and share methods with you for free.

Myth #10: Pulling your own credit report will count as an inquiry and hurt your credit scores.

The Truth: You can pull your own credit as many times as you want – if you are not applying for a loan. It’s considered a soft pull and does not count as an inquiry towards your scores. However, if you have a lender pull it for you, that does count as a hard inquiry and will make your scores drop.

Posted in consumer credit repair, credit, credit repair myths, credit report repair | No Comments »