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Credit Repair Articles

Credit Repair, Personal Loans, Debt Reduction Education

October 15, 2011 | Credit Repair | Debt | Education | Personal Loans | No Comments

A new “Education” section has been added to Money-Cake.com to help people looking for information about Credit Repair, Personal Loans and Debt Reduction.  Each Section includes:

   
Credit Repair Education 

 

1 – Introduction to Credit

 

2 – Repairing Your Credit

 

3 – Protecting Your Credit

 

4 – Consumer Credit Laws

 

5 – Resources Extra Resources

 

   
Personal Loans Education  

 

1 – Home Loans

 

2 – Student Loans

 

3 – Personal Loans

4 – Other Loans

 

5 – Resources

 

   
  Debt Reduction Education   

 

1 – Your Debt

 

2 – Your Budget

 

3 – Reducing Your Debt

 

4 – Debt Consolidation

 

5 – Federal Student Loans

 

6 – Avoiding Debt

 

7 – Resources

Lexington Law Offering Free Credit Repair eBook

July 7, 2010 | Credit Repair | No Comments

Lexington Law is offering a free eBook titled, “Credit Revolution- Path of the Smart Consumer“.  The eBook offers numerous tips for dealing with creditors with real life stories and free consultation.

The eBook is written by three heavy-hitters in the Credit Repair field with over 40 years of combined experience. The eBook pulls back the curtain on the inner workings of the credit reporting world and outlines what you can do to make it work for you.

This eBook is an exclusive offer and is available for a limited time only.

Some of what’s inside of the 151 page book includes:

  • Page 10 – The truth behind statements like “Only time can cure bad credit”
  • Page 41 – Six real-life stories prove credit reporting is not black-and-white
  • Page 73 – Four tips for dealing with creditors while you repair your credit
  • Page 94 – The real reason why bad credit can stay on your reports 7 years
  • Page 104 – Three things you think would raise your credit score but do not
  • Page 111 – Five life events that can unfairly destroy your credit rating

 

Download your free ebook.

How to Legally Repair Your Credit

November 2, 2009 | Credit Repair | No Comments

Many people are confused as to the legality to repairing their credit.  First, it is helpful to understand what is illegal to repair your credit.  

  1. It’s illegal to change your Social Security number to get a clean credit.  If any company offers you this as a type of credit repair, you should immediately report them to the proper authorities.
  2. Disputing every item on your credit report, regardless if you know it to be true or not is illegal.  Per the Fair Credit Reporting Act, only items that are unverifiable, misleading or inaccurate should be disputed.  Items that you know to be true and reflect your credit history should not be disputed.
  3. It’s illegal for any credit report service to charge you for services not completed.  This will protect you the consumer of any fraudulent companies that charge for services they never complete.

So, what exactly is considered legal credit repair?

Legal Credit Repair involves removing negative items from a credit report. There are several different methods of going about this; however, the most common and effective are as follows:

“Goodwill” Negotiation – Negotiating with creditors to remove negative items from your credit reports for mild late-pay accounts. No law exists that requires negative items stay on your credit reports for any amount of time.  As a result creditors have the ability to remove these items if it works to their benefit, even if it simply pleases a customer.

Credit Disputation – The Fair Credit Reporting Act gives consumers the right to contact credit bureaus directly and dispute items on their credit reports. Consumers have the right to plead “not guilty” to negative information on their credit reports and the burden of proof is on the credit bureaus, just like in a court of law.  Consumers can dispute any and all items on their credit reports that they believe is inaccurate, unverifiable, or misleading. If the credit bureaus can not verify that the information on a credit report is correct, then those items must be deleted.

A good source to get help repairing your credit is Lexington Law.

How Does Having Bad Credit Affect You?

October 28, 2009 | Credit Repair | No Comments

Most people don’t realize that having a poor credit score will cost them hundreds or even thousands of dollars per month.  The reason they aren’t aware is because most people don’t run the numbers.  If they did, they’d be surprised!

Many people with bad credit when purchasing a car or home don’t realize that if they had better credit their interest rate would be lower, thus their monthly payments would be lower.  Many people purchase cars and homes and just look at the monthly cost and not the interest rate.  

Most prime credit cards are out of reach from consumers with bad credit.  The few credit cards that are available (known as “sub-prime” credit cards) typically require expensive setup fees or recurring monthly fees, often require cash deposits, offer very low credit lines and most of the time don’t report as positive credit activity to the credit bureaus.

Let’s take a look at automobile financing and determine the cost of poor credit. If you plan on financing a car, you will end up paying $5,000 to $9,000 more because of your bad credit. The higher the interest rate, the higher your monthly payment which adds up to significant money over the years.  See sample calculation below.

cost-of-bad-credit-car

Another area where having bad credit can really hurt is your home mortgage.  A typical house will cost you $50,000 to $130,000 more in interest if you are buying the home with poor credit. See sample calculation below.

cost-of-bad-credit-home

Improving your credit score is vital before making major purchases.

Related Articles:

Frequently Asked Questions About Credit Repair

October 26, 2009 | Credit Repair | 1 Comment
credit-report-faqs

Will a negative item on my credit report come back after I succeed in deleting it?

Credit bureaus will sometimes delete a negative listing temporarily if they haven’t heard from a credit grantor within 30 days.  If a credit grantor then reports a negative listing, the credit bureaus will often reinsert the negative listing on the credit report and reverse the credit repair.  However, many times, the creditor will fail to respond and the negative listing is permanently deleted and repaired.

Credit bureaus must follow strict procedures, per the Fair Credit Reporting Act, to notify you if they decide to re-report a listing on your credit report.    

Are negative items such as bankruptcies and foreclosures impossible to remove from the credit report?

There is no type of negative listing that can’t be removed and repaired from a credit report.  It has been done many times.  However, negative items such as unpaid debt and bankruptcy are very difficult to remove and repair.

Do I get a new credit report if I declare bankruptcy?

Bankruptcy is to the credit rating what a nuclear bomb is to the battlefield.  When an individual files for bankruptcy, every credit account that’s included in bankruptcy becomes an “included in bankruptcy” item. Bankruptcy discharge listings and filings will appear in the court records section of the credit report. With so many negative items are attached to a bankruptcy, it will be extremely difficult to remove all trace of the bad credit, if at all.  As a result, it is advised that you should avoid bankruptcy at all cost.

It is true that disputing items on my credit report is easy and can be done by myself?
 
It is true that disputing items on your credit report is very easy. However, getting results (and actually repairing bad credit) is very difficult, complex, and can be very infuriating. Repairing your credit is like repairing your car transmission or representing yourself in court; it is possible, but is it smart to do. It can be very time consuming and risky.

The Federal Trade Commission (FTC) receives more complaints against credit bureaus than any other type of business. As a matter-a-fact, if you call the FTC to report a complaint about a credit bureau, their phone system will prompt you to press one if your complaint is about a credit bureau or press another number if your complaint is about another type of business anything else.

Will my account show as “paid” and no longer considered negative when I pay off a past due account?

It is very difficult to repair your credit without taking care of your outstanding debts.  Paying off your debt will improve your credit rating by much, if at all.  Negative credit stays on your credit report for a maximum of 7.5 years, except for bankruptcy which can stay on your credit report for 10 years.

Paying off outstanding diligent debt will change the account status to “paid was charged off”, “paid collection, or “paid was late”.  This will stand out as a very negative item.  When you have outstanding debt, it is recommended that you seek professional help to settle it without further damaging your credit.  Sometimes, it is possible to negotiate a deletion of negative credit as part of the payoff.

Do creditors read my 100 word statement on my credit report explaining my side of the story and do they take my statement into consideration?

Most creditors do not look at the credit report when a credit application is completed.  They are most interested in the numerical credit score to determine whether or not they should extend you credit.  Your FICO score does not take into consideration the content of your statement.

However, the statement does very that some of the negative listings on a credit report are technically accurate.  This makes a credit repair job more difficult and the word statement should be the first thing to delete from your credit file.

Can I trick the credit bureaus into starting a new credit file under my name if I change my social security number or by using an EIN (Employer Identification Number) tax number?

This scheme is know as “file segregation” and is promoted by many credit repair operators.  Some individuals have been successful in using a false Social Security Number and have tricked the credit bureaus into giving them a new identity.  The scheme is totally illegal and lying on any personal information on a credit application is a federal crime.

The scheme is very complicated because you must change almost all identifying information about yourself and be very careful to never use the old information again.  Some people make the error of using their old information only to mix the old with new and get in trouble.  They will end up with both credit reports merging their information which then becomes suspicious to the credit bureaus.

Worst yet, some people have been charged with crimes, or terminated from jobs for using the false information.  

Will by bad credit be improved if I build enough good credit?

Any amount of bad credit limits your chances of being approved by a credit grantor. Most creditors do not look at your credit report but instead have a computer pull your credit report, rates your credit standing, income, indebtedness, and stability, generates a number (or FICO score,) then determines an acceptance or denial.
A simple one or two slow payment can trigger a credit card or personal loan denial. The smallest amount of negative credit will cause the interest on a loan (home, auto, personal, etc.) to skyrocket

Is it illegal for creditors to take an accurate negative listing off my credit report?

The fact is that the law demands that negative listings appear on your credit report for no longer than seven years. The credit bureau or credit grantor can choose to delete the negative credit listing whenever they like.

Will the Consumer Credit Counseling Service help me repair my credit, especially if I can’t pay all my bills?

CCCS or Consumer Credit Counseling Service is a nonprofit debt counseling service funded and controlled by the credit grantors and the credit bureaus. CCCS helps individuals who are over their heads in debt.
 
Often, CCCS provides beneficial services to consumers, however, because there is an allegiance between CCCS and the credit bureaus, you cannot reasonably expect CCCS to do anything that the credit bureaus would not like such as help you repair your credit.

If you decide to leave CCCS before finishing their program, they can list your failure to complete the program as a negative listing on your credit report (although this is rare.) When you participate in the CCCS program, your creditors will often note it on your credit report. If you want to keep your perfect credit, do not use a credit counseling service because their process will generally make you late on your bills at least 30 days, thus creating negative listings on your credit report.

Using a debt counseling program is a red flag for prospective credit grantors. Paying off your debts is a good start in the right direction, but it does not repair your credit.  Consumer credit counseling can really help you if you’re over your head and need some help.

How difficult is it to repair my credit?

Repairing your own credit by yourself is possible, however, the credit bureaus want you to fail and have experience in discouraging consumers.  However, some consumers have been successful in repairing their credit without professional assistance.  Keep in mind that the process can be very time consuming and you have to educate yourself of the process.  The process can take 12 and 18 months and take a lot of hours per month.  It is definitely a good idea to get some help from companies like Lexington Law.

Can Negative Information on Your Credit Report Be Erased?

October 21, 2009 | Credit Repair | No Comments
delete-report

Good news, yes negative information on your credit report can be erased.  The fact is everyday negative credit listings are deleted from individual’s credit reports by the thousands every day.  However, these individuals did get some help.

Lexington Law has reported helping clients remove about 50,000 negative credit listings in about two years.  However, this doesn’t include bankruptcies that can’t be deleted.

Well how is this possible?  It’s possible because the Fair Credit Reporting Act (FCRA) allows consumers to challenge the information on their credit reports on the basis of “completeness and accuracy.”

When a consumer files a dispute, the credit bureaus must contact the source of the credit information (the creditor) and confirm that the information is accurate, verifiable, and not obsolete.

However, in some circumstances, the credit bureau is required to go beyond a simple verification of the creditor’s own computer record. If within 30 days the credit bureau has not received verification from the creditor, then the credit bureau must promptly delete the credit listing.

To help clean up your credit report consider contacting LexingtonLaw.com. Lexington Law is a law firm that has been around for 17 years that specializes in credit repair. They has served thousands of clients since 1991. Lexington Law works closely with credit bureaus and creditors to help clients clean up their credit. The process is simple; you give Lexington Law all the information they need, you then sit back and relax and they will go to work for you.

How You Can Benefit From a Debt Consolidation Loan

July 21, 2009 | Credit Repair | Guest Post | Personal Loans | No Comments

Below is a guest post by Robin Williams.

A debt consolidation loan can combine your multiple debts into one loan, help you save money and handle your finances better.

It is quite easy to fall into a debt trap but it is always difficult to dig yourself out of it. If you have piled up a huge amount of high-interest debts and you’re finding it difficult to keep up with your monthly debt payments, one solution to lower them and get out of debt is a debt consolidation loan.

Why A Debt Consolidation Loan Is Beneficial for You

The idea behind a debt consolidation loan is simple. You are acquiring a new loan at a reduced rate than your present debts that frequently carry higher rates charged by retailers and credit card companies. Subsequently, you utilize the money to repay your existing debts. This leaves you with just one monthly payment rather than multiple payments. As the new loan is available at a reduced rate, you would also enjoy a reduced payment and it would be less than the aggregate of your earlier payments. This indicates that you can get out of debt faster.

An instance of how a debt consolidation loan works:

  • You are obliged to repay $4,000 for a store credit card that has an interest rate of 17.5% and monthly payment for this is $80.
  • Your bank credit card has an outstanding balance of $5,000 at an interest rate of 18.9% and monthly payment for this is $100.
  • You have a car loan of $15,000 of which $11,632 is outstanding at an interest rate of 6.97% and monthly payment for this is $359.
  • Your overall debt amount (not considering your mortgage) is $20,632 and your overall monthly debt payment is $539.
  • At this payment level, you’re not paying down your debts rapidly. To make things simpler, you obtain a 60-month home equity loan for the same amount ($20,632) at an interest rate of 7%. Your new monthly payment becomes $409.    
  • You can utilize this loan to repay your other creditors. With the considerably reduced interest rate, your new monthly payment amount is lower than your previous one by $130. Furthermore, your debt would be repaid in five years and the overall amount of interest payable by you is $3,880. This is less by $5,541 than what you would have paid for your original loans.

 

Utilizing A Line Of Credit Or Home Equity Loan

One popular form of debt consolidation loan is a line of credit or home equity loan. As the loan is guaranteed by your home equity, the lender can offer you a cheaper interest rate. The loan amount you can avail is dependent on the amount of equity you have. Usually, lenders would offer you an amount which is equivalent to 80% of your home equity.

The interest payable for a home equity loan might be tax deductible and this successfully lowers the loan costs. You can discuss about this with a tax consultant. Nevertheless, keep in mind that home equity loans require your home as collateral and in case of a default, you have the risk of losing your home.

Utilizing A Personal Loan

For consolidating your debts, lenders also provide personal loans. For this type of financing, it is hard to obtain an interest rate that is sufficient to better your condition, particularly if your credit score is less than adequate. If it is an unsecured personal loan, the interest rate would be more than a home equity loan. One technique to obtain improved terms and conditions is to have a friend or family member as a co-signer, assuring repayment.

Compare Loan Offers

Be cautious prior to signing the dotted line. For effectively lowering your debt, a debt consolidation loan must have an interest rate that is substantially lower than your existing rates. You should also know that your payments might be reduced by extending the repayment term but at the same time, this can result in increased interest cost. Verify if there are any commissions or additional charges along with needless costs like credit insurance.               

Rectify Your Spending Habits

It is essential to keep in mind that a debt consolidation loan would only be useful if you prevent accumulating new debt or else, you would land up in similar types of problems that you had in the past. A debt consolidation loan can help you get back on track. However, it would work if you select the correct loan and rectify your spending habits to stop piling up new debt.