Time Frame For Credit Repair? – Credit Law Center

How long does it take actually to take for the credit repair process? There seems to be no definite answer on the time frame for how long the credit repair process takes. If you google it, you will see there is not a standard amount of time and no straightforward answer. Unfortunately what happens most the time is when the question is asked” how long does it take for credit repair” you end up more confused then you were before you asked the question.

So here’s the answer broken down as simply and clearly as possible.

Scenario 1

The perfect scenario would be someone that has two to three credit cards, and one to two installment loans. An installment loan could be a home loan, personal loan, or a car loan. In a perfect world, it would be at least twelve months or older, and in good standing, and would have zero collections or negative items on the report but have high credit card balances. If you pay the credit card balances down as little as possible 3 to 5% balance vs the limit is ideal. Paying down the balances will give a significant boost to your credit scores. A great rule of thumb to keep in mind “The older the credit card, the lower the balance, the better your FICO score will be.” This scenario will be the fastest way to since a jump in your scores.

Scenario 2

If you have established trade lines; a few credit cards and installment loans that are in good standing, and have a few medical collections it may take around 35 to 45 days to several months. Depending on how you choose to dispute these items you may see faster results. It is important to remember by law credit reports needs to be accurate and verifiable. Whether you choose an actual Law firm or doing the credit repair process yourself, it is important to remember for faster results you will want to dispute all information at one time, not just one or two items every month.

Scenario 3

If your credit report only has one trade line that has only been open 12 months or less and has collections accounts reporting, removing the negative collections could only take 35 to 45 days, to several months. Although your scores may increase slightly, you will want to establish a thicker credit file, by establishing more trade lines. A good rule of thumb is to have two to three installment accounts and two credit cards accounts.

Depending on your situation your scores may or may not be high enough to get approved for installment loans or credit cards. If you are unable to get approved the traditional way, you may look for a bank or credit union that has a CD credit builder loan and look for credit card companies that have secured credit cards.
After these new trade lines have seven or more months of positive credit history and balances that are 30% or below of the limit, you will see a more significant increase in your scores. Waiting for thirty to sixty days before you get your credit ran after the seven months is the best.

Helpful Tips to Remember

If your credit profile is lacking the recommended amount of trade lines, think of trade lines as your ongoing homework. Trade lines are similar to homework for the credit bureaus to grade, if you do not have them, they have nothing to grade you on. Your credit score is like a grade, the better you handle the trade lines, the better score you will have.

If all you have are collections and negative items, and zero positive trade lines open, the negative items should still only take anywhere between thirty-five days to six months to remove depending on the severity of the negative things. Opening active and positive trade lines as soon as possible is an important piece of the credit repair process. The longer the account is open, the better it is for your credit profile.

Having any late payments or slow pays will be very damaging for your credit profile, and will affect your credit for about twenty-four months. Each credit profile is unique and has its own individual information, and having one thirty days late could lower your credit score by one hundred points.

Repairing your credit could take anywhere from forty days to years depending on the scenario and how you go about correcting it. If you just wait for things to fall off, it could take seven or more years. It is important to remember that credit reports must be timely, accurate, and verifiable by law. Seventy-nine percent of all reports have inaccurate information on them. There are many rules and regulations that debt collectors and credit bureaus must follow, and if you are not familiar with these laws, you may want to reach out to a professional law firm to make sure your report is accurate.

Having a High Credit Score Could Be The Golden Ticket to Credit

A Credit score is a three digit number that could potentially make or break you when it comes to obtaining credit. Having a number above 740 is like having the Golden Ticket to getting credit.

Potential creditors look at your credit score to determine your risk. Your credit score is similar to a report card, with a grade on how financially responsible you are with your money.

What makes up your credit score?

  1. Payment History – 35% of your score, paying all bills on time will be a key factor. It is important to know that any late payments you have had will affect your score for some time and anything over 60 or 90 days late will be detrimental to your score.
  2. Amounts Owed – 30% of your score is determined by the percentage of available credit you being used. A good rule of thumb is keeping the amount owed under 30% of your available credit.
  3. The Length of Credit History – 15% of your score is based on the length of time you have had your cards open. Keeping the oldest account open and active will give you a stronger credit profile.
  4. Credit Mix – 10% of your score, having a good mix of credit shows you will be able to handle multiple types of credit lines. It is best to have a few credit card account and installment accounts.
  5. New Credit – 10% of your score is determined by how many new accounts you have opened. Having a few brand new accounts will affect your score.

Data from your credit report goes into five categories to make up a credit score.

Credit Report Grade Card

700 – 850 Excellent
680 – 699 Good
620 – 679 Average
580 – 619 Low
500 – 579 Poor
300 – 499 Bad

Having a zero credit score doesn’t always mean you have terrible credit, it usually just means you haven’t begun to establish credit yet. A zero score may also mean that you may have a harder time borrowing money from creditors since they have nothing to grade you on.

Having a score of 740 or higher qualifies you for the best interest rates, credit cards, and loans. It is also important to remember that the credit score is just a filter in the process of getting approved. Lenders will also look at your actual credit history.

It is important to remember that even if you have had a few mishaps or haven’t established credit yet, it is fixable. Remember the factors that are used to calculate your score and be conscious of your decisions, if you are unsure reach out to an expert.

5 Tips to Stop Living Paycheck to Paycheck- Credit Law Center

Many Americans are ending up broke month after month, even when their income is well above the poverty line. A recent survey by Suntrust Banks found that a third of higher-income households, (those that bring more than $75,000 or more a year) are living paycheck to paycheck.

It’s easy to get caught up in debt, once you are living paycheck to paycheck. You are more likely to use credit cards to pay for monthly expenses, therefore racking up more debt. Each month you will pay just the minimum amount owed, and continuing to rack up more and more interest.

If your income is steady, but your financial habits are what is causing you to live paycheck to paycheck, here are some helpful tips to overcome the paycheck to paycheck struggle.

1. Create a Monthly Budget

Many of us are poor at money management because we haven’t been taught the proper ways to manage money. Creating a monthly budget and sticking to it is much as possible. Budgets are a great way to get you back on track. Some budgets can be as simple as keeping track of your paydays and the due dates of all your monthly expenses, then determine items you might be able to cut back on to start saving money.

2. Stop Spending Impulsively

How many times have you grabbed something that has been placed at the end of an aisle at the grocery store, or Target? At some point or another, I am sure we are all guilty of this. Often we don’t ever use the product, or we may get home and instantly regret purchasing it.

3. Stop letting your feelings sway your shopping

Instant gratification can be a huge culprit in buying items we do not need. Emotions play a significant role in buying unnecessary items, your child may be upset about something, and you go and buy him/her a new toy, or maybe you just rearranged your living room, and you decided that to make it complete you need a new chair. You go and buy, and regret spending the money later. When you are feeling this way, maybe writing it down on a wish list will help curb the impulsive spending.

4. You’re Still Paying for Unused Memberships

With debit cards and credit cards being readily assessable to pay for things in this day and age, it allows for us to sign-up for gym memberships, video programs, and more. I know I have a gym membership that I have paid for the last 12 months and never used it.

5. Pay Attention to Your Bank Statement and Credit Card Statements

If you find yourself broke month after month, it may be a little easier to stomach if you avoid looking at your bank statements and credit card statements. Avoiding these important financial documents could be detrimental to your financial health. How can you possibly create a budget or tackle your financial situation if you are avoiding the key to your situation? You can’t! It is also important to review your statements to make sure all information reporting is correct, in this day and age there is a significant amount of fraud going on.

After you find ways to cut unnecessary spending and begin saving it will be important to start paying more than the minimum on your current credit card obligations. This will significantly help pay down the amounts owed and the interest you pay.

One Late Payment May Tank Your Credit Score! – Credit Law Center

You may be one who pays all your bills on time every month, but maybe you had a financial emergency or even an oversight that caused you to pay one late payment.

If you miss a payment on one of your credit cards, mortgage or any other loan, you could see a drastic drop in your credit score. Having a late payment may cause lenders to look at you less favorable, even it is was just one late payment.

Banks use the information on your credit report to determine the risk of the borrower, therefore the payment history has the strongest impact on your credit score. You may have a history of years of on-time payments, but unfortunately, they will look at the most recent history of the missed payment as a greater risk.

How Will One Late Affect Your score

When a lender looks at your FICO credit score, the late payment will be evaluated on how severe the late is, how recent it is. According to FICO data, one 30 days late payment could cause as much as 90 to 110 point drop on a FICO score of 780, for a consumer that has never missed a payment. The higher the credit score you have, the more significant impact it could have on your credit score. While a consumer with a 680 FICO score and two late payments, may experience a 60 to 80 point drop after receiving another 30 days late.

I recently had a friend who had a score of 720, and she made an error in paying her car payment, and it dropped her score by 100 points. She didn’t have any collection items reporting; all her credit cards were paid to a $10 balance. That one late payment tanked her score.

Each credit reporting agency has its algorithm to come up with your credit score, depending on what report you pull and when your scores may vary with each report. Each time a report is your credit score will be refigured so that the recent information will be calculated in the score.

What to do after a late payment

If you have missed a payment, it is important to try not to let things snowball. It is important that you continue to pay all current accounts on time, and not let yourself get behind on them.

Things you may want to consider doing to keep bills current.

1. Make a budget or a calendar with the due dates of all accounts.
2. Continue paying all bills on time.
3. Take a look at setting up payments on automatic bill pay.
4. Contact Creditors to work out a payment plan on any accounts that you may be behind on.
5. Monitor your credit report regularly.

Notifying The Credit Bureaus of the Passing of A Loved One – Credit Law Center

The passing of a loved one comes with many daunting tasks and an overwhelming amount of emotion. One task you may overlook is reporting their death to the three credit reporting agencies, Equifax, Transunion, and Experian. When a loved one passes, the Social Security Administration will eventually get around to notifying the credit bureaus. However, it could take approximately six months or more.Unfortunately, thieves are no longer just targeting the living. They will file tax returns, obtain credit cards and blatantly steal the deceased’s identity.The good news is there are a few steps that the loved ones can take to help prevent identity theft on their loved one.

Why Thieves Target The Deceased

Death notices and public obituaries allow for your loved one’s credit profile to be an easier target. Criminals will use the information published in the obituaries to dig deeper to obtain more personal information from the social security index or death certificate.

Many family members or other relatives will have access to personal and financial information, making it easy to commit identity theft.

Steps to Take to Report Your Loved One’s Passing

1.Get multiple copies of the certified death certificate.
2.Report the death to all three credit bureaus.

  • Send a certified letter to the three credit bureaus.  You will want to include the Name, Social Security Number, date of birth, date of date, and the last address. You will also need to attach a copy of the certified death certificate,  and any documentation naming you the executor or executrix, and your state issued id.
  • It is important that in your letter you ask the credit bureaus to add the following statement – Deceased – Do Not Issue Credit.

Where to Send the Letters

  • Equifax Office of Consumer Affairs PO Box 105169 Atlanta, GA 30348
  • 1-800-685-1111
  • Experian PO Box 9701 Allen, TX 75013
  • 1-888-397-3742
  • Transunion PO Box 6790 Fullerton, CA 92834
  • 1-800-888-4213

Requesting a copy fo the deceased’s credit reports will help you determine what creditors the deceased had and who to contact by phone of their passing. It is important to contact any credit card companies, banks, auto loans, or mortgage loans of their passing. Notifying them of the death will allow these account holders to close the account and not allow any further debt to accumulate.

One important factor to remember before closing out any active credit cards or trade lines is to find out if you or any other family member is joint on the accounts. Closing an active trade line that you are a joint holder on may end up damaging your credit.

Is Now the Right Time for Credit Repair? – Credit Law Center

A significant factor in the credit repair process is determining if you are ready to commit to the lifestyle changes that are required to make it successful. Becoming creditworthy doesn’t happen overnight, and there is no magic formula to increase immediately. Each credit scoring model comes with its unique algorithm that will vary depending on the type of score you are pulling. Therefore the important factors are not just the score; it is the content provided on each credit file. Once you have made the decision that you are ready to commit to the becoming creditworthy, it is time to come up with a game plan for achieving this goal.

Credit Reports

There are three credit bureaus, Transunion, Equifax, and Experian; it’s likely that each report will have more or less information than the others. Not all lenders or collection agencies report to all three bureaus.

The Six Parts that Make up a Credit Report

      1. Consumer information (address, birthday and employment)
      2. Consumer statement (this may be a short statement explaining a credit dispute that went unresolved)
      3. Account Histories
      4. Public Records
      5. Inquiries
      6. Creditor Contacts

The information provided on each report will change when opening a new account, miss a payment or change your address. Negative items may remain on your report for 7-10 years, and the favorable items may stay on credit file longer. The FTC states that one in every four credit reports contain reporting errors, a significant part of the credit repair process is reviewing these reports for any inaccuracies. If your credit report contains in any inaccurate information, you will want to make sure you dispute this information to the credit bureaus.

Steps to Stronger Credit

Below are a few things to consider when you have committed to credit repair. These items below are critical factors in maintaining and improving your credit history; these are the essential financial tips you need will need to use if you want to keep a healthy credit score.

  • Pay on time- Paying your current obligations on time avoids having late payments and collections on your credit report. Having either of those on your report will significantly lower your credit score.
  • Keeping a handle on your debts– If you currently have credit cards with a balance greater than 35% of the available limit, you will want to pay these down as soon as possible. Keeping the balances under 35% will improve your credit score.
  • Having a healthy credit mix – Credit mix determines 10% of your FICO score, maintaining a healthy credit mix will show you can manage multiple types of loan accounts, for example, car loans, mortgages, retail cards, personal loans or major credit cards. If your current credit situation doesn’t allow you to be approved for a credit card or loan, you may consider a secured credit card or secured loan from our financial institution.
  • Be patient and keep older accounts open– A significant portion in determining your credit score is time, the longer you pay an account on time, shows your ability to be responsible and credit worthy. The longer you keep a positive account open and active the more significant impact it has on achieving an excellent credit score.

Improving your credit will take time and discipline to achieve, but the benefit will outweigh the struggle of getting there. Achieving the ultimate goal of good credit will open the door to many opportunities.
 

Ways to Lower Your Mortgage Payment – Credit Law Center

For most Americans, a mortgage payment is their largest monthly obligation. Traditional lenders suggest that your monthly mortgage obligation is not over 28% of your gross income. Unfortunately, life happens to some of us; we lose a job, car accidents, illness or any other event that may cause havoc to our finances. If you have found yourself in a situation where you are robbing Peter to pay Paul each month, you may want to look at a way to lower your monthly mortgage payment.

Refinance at a lower interest rate

Refinancing at a lower interest rate seems to be the most common way to lower your monthly payment. For example, If you purchased a home in 2010 for $155,000 at an interest rate of 5.5% at 30 years, your monthly payment would be $880.00, if you refinanced at the balance at an interest rate of 3.89% for 30 years your monthly payment would be $649, total monthly savings of $232 a month. With total cash savings at year 15 of $41,760.00. The important thing to remember when refinancing is you will pay closing cost, in this particular example you could pay about $4,130. Your credit score will be a big deciding factor on whether or not refinancing is an option for you, the higher the FICO score, the lower interest rate you may receive.

Stop paying PMI

If you purchased your home and put down less than 20% of the purchase price for the down payment, you are most likely paying Private Mortgage Insurance, (PMI). PMI is the insurance that protects the lender if you fail to pay your mortgage. PMI may cost you anywhere from .5 percent to 1 percent of the loan amount each year. For example on a loan amount of $155,000, PMI may cost you up to $1,550.00 a year or $129.00 a month.

If you have built at least 20 percent equity in your home, you may request the lender to discontinue the PMI insurance. The lender will send an appraiser to your home to determine the current market value to determine the amount of equity in your home.

Reevaluating your Property Taxes

Many homeowners include their personal property taxes in their home loan using an escrow account. Personal property taxes are usually a significant amount of your monthly payment each month. The amount you are required to pay for the personal property value is based on the county’s tax assessment of your property. If you feel the amount you are paying is too high, the owner may request to have the property assessment reevaluated by the county’s tax assessor, if it comes back that it was originally valued too high you may ask them to lower the tax amount. If it is approved, then your yearly taxes will decrease, in return reduce the escrow amount you pay.

Take a look at what you are paying for home insurance premiums

Just like the personal property, many homeowners pay their home insurance premiums out of the escrow account. Homeowner’s insurance is a necessity when owning a home, but it can be expensive. Depending on how long you have owned your home you may not have looked at your homeowner’s insurance since you purchased your home. Many things are taken into consideration when quoting insurance, what jewelry you have in the home, did you add a security system to your home, multiple policy discounts, and Credit scores. If you feel you have had any changes it may be beneficial to request some quotes from various companies; it doesn’t hurt to get a quote.
Refinancing your home loan and home ownership will both require your credit score and could significantly affect the outcomes of saving you money. It is important to check your credit report for errors, make sure the information is reporting accurate and up to date. It could potentially save you thousands of dollars.

Referral Partners Build A Strong Foundation – Credit Law Center

People influence people. A trusted referral influences people more than the best broadcast message. A trusted referral is the Holy Grail of advertising.
– Mark Zuckerberg, Founder, and CEO, Facebook

Referral Partners are the block too many different industries success stories, therefore making sure you have a strong foundation and great products to offer is a must.

A recent study by Harris Poll on behalf of Ambassador shows that 82% of Americans explore recommendations from friends and family when considering a purchase. 67% say they’re a least a little more likely to buy a product after a friend or family member shared it on social media or email.

What makes referral marketing a success?

  • Quality Products – Having a product that is unique and stands out in an industry with many competitors is beneficial to word of mouth marketing. If your referral partners are raving over your goods and services and tell you how much they love your products, they will share this information with others.
  • Audience – It is important to maintain a loyal following, staying engaged with your referral partners that you have built. Provide informative information and tools to help your referral partner promote your product.
  • Creating an effective joint marketing plan of action – It is important to create a plan of action with your partner. Making sure to have an open line of communication with your partner is a must. Come up with a game plan for the referral partner and the company, combining talents and assets to establish a better product for the consumer.
  • Commitment – Make sure your partners feel your commitment to them and what their needs are. Committing to each partnership that you make, giving them 100% in each relationship and transaction you encounter, knowing their expectations of the product you provide.

How to find the perfect partners

You may find that looking for reliable referral partners isn’t always easy as you may expect it to be, therefore finding a referral partner that compliments the service you offer to the ideal customer may be the easiest referral partner to have. For example, a Mortgage loan officer may partner with a credit repair company, real estate agent, and a real estate photographer, each offering their service, but the same end results to the client.. a purchase of a home.

Start by determining what your ideal customer’s needs are and then learn what other industry would help with the common goal. Reach out to others in these industries and ask to partner with them. The key to a successful referral partnership is making sure you are offering them referrals as well, invite them to other networking events that will benefit them.

We appreciate you as our partner!

Over the years Credit Law Center has established many different partner relationships, we are incredibly grateful for the various partners we do business with daily. Our company is always looking for ways to maintain the relationship and thank you for your loyalty to our business. Quarterly we schedule  Referral Appreciation Socials to show our gratitude, we look forward to these events and hope that if you haven’t attended one, you will in the future.

 

The Top 5 Credit Myths – Credit Law Center

We all know good credit is an important aspect of our financial life and is a must to purchase a home, car, and it even affects our car insurance. The first thing you need to know is the common misconceptions, the “credit myths.” Being aware of the top 5 credit myths, and knowing the facts will help you obtain a more secure financial health. The most common misconception or “credit myths” as I like to call it is not just for the average consumer. These myths are held by consumers, lenders, realtors and the majority of people in general.

MYTH #5 You only have one Credit

Top 5 Credit Myths (1)

FACT: Lenders may use different versions of FICO

Top 5 Credit Myths (1)_Page_03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

MYTH #4 Keeping your credit card balances at 50% will improve your scores

Top 5 Credit Myths (1)_Page_04
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

FACT: Your credit score is ascending, not descending.

That means you don’t star to gain points based on the types of accounts you have and how you use them. A great method to remember credit is the ABC’s shown below. The closer your balance is to zero the more points you will receive; meaning 1%, you would get an A+, a 9% balance you would get an A-. Note even if you pay on time and don’t do anything wrong if you have more than 30% of the balance of the card used would be a C Student.

Top 5 Credit Myths (1)_Page_05
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

MYTH #3 Closing Credit Cards will help your credit scores

Top 5 Credit Myths (1)_Page_06

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

FACT: Closing a credit card affects 65% of your score

There are 5 data groups that make up a FICO score, out of that data only 35% of your score is based on your pay history, the other 65% that makes up your score can be affected by just opening a new account and transferring a balance. This is the most common mistake we see someone with good credit make.
Top 5 Credit Myths (1)_Page_07

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

MYTH #2: Paying off a collection account will help your score

Top 5 Credit Myths (1)_Page_08
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

FACT: Paying an old collection will update the date of last Activity

Paying off on old debt collection will updated the last date of activity and the date reported. Some FICO scoring models give less than a 2% difference in whether a collection is paid or unpaid. The greatest amount of weight is given to the date of last activity. In other words if you have an old collection reporting correctly and a consumer pays it, then it simply updates the date of last activity and has a much larger negative impact on your score, than it would had you left it unpaid.
Top 5 Credit Myths (1)_Page_09
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

MYTH #1: All Credit reports are accurate

Top 5 Credit Myths (1)_Page_10
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

FACT:79% of all Credit reports contain errors

The FTC reports that over 79% of all credit reports contain errors. That would mean over 40,000.000 Americans would have credit reports with errors.

Top 5 Credit Myths (1)_Page_11
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Facts About Collections (Published by the CFPB)

31.6% of all credit reports have one or more collections on their report
67.5 of all collections result from unpaid bills rather than unpaid loans, over half are medical
The median unpaid non-medical collections trade line is $366; the median unpaid medical collection is $207
In a 5% sample of credit reports, approximately 1,400 different collection agencies were identified
Recent studies reveal about 80% of medical bills contain errors, according to Christie Hudson, Vice President of Medical Billing Advocates

It is critical to review your report for any errors you have; you may obtain a credit report annually at Annualcreditreport.com. If you have any questions regarding your report, reach out to us here at Credit Law Center.