Every adult in North America has probably heard of the two words “credit score”. Credit score affects many important aspects of modern life. From the moment we open our first charge account, we become subject to the whim and whimsy of our credit score. It’s like a living, breathing animal following each of us around in the shadows before jumping out into the light every now and then to either help us or hurt us. In many respects, our credit score determines our quality of life.
Credit Scoring Bureaus
There are essentially four credit scoring and reporting companies that affect consumers. There are other credit scoring organizations, but they are primarily for commercial purposes dealing with business. There are three credit reporting companies associated with consumers – Equifax, Experian, and TransUnion. Each of these three companies provides credit-related information about individual consumers to banks and other lending institutions, insurance companies, and even employers and landlords. Each company produces its own credit score number based upon its own formula for calculating that number.
The 800-Pound Gorilla
The main source of information for many credit scoring companies is a company known as “FICO”. FICO stands for Fair Isaac Corporation. This company started using formulas for calculating credit scores back in the late 1950’s and became the model after which the other three companies took their lead. FICO uses a secret formula calculation to determine credit scores, but the general formula’s main components are well known at this time:
- 35% Payment history – Late payments on bills, such as a mortgage, credit card or automobile loan, can cause a FICO score to drop. Bills paid on time will improve a FICO score.
- 30% Credit utilization – The ratio of current revolving debt (such as credit card balances) to the total available revolving credit or credit limit. Paying off debt lowers the utilization ratio and improves the FICO score. Applications for and receiving a credit limit increase can also drive down the utilization ratio. Consumers should note that closing existing revolving accounts will adversely affect this ratio and therefore have a negative impact on a FICO score.
- 15% Length of credit history – As a consumer’s credit history ages it can have a positive impact on their FICO score.
- 10% Types of credit used – installment, revolving, consumer financing, mortgage payments – having a history of managing different types of credit can be a benefit.
- 10% Recent searches for credit – Credit inquiries made when a consumer is seeking new credit, can hurt FICO scores. Consumers shopping for a mortgage or auto loan over a short period probably won’t experience a decrease in their score; however, all credit inquiries are recorded and displayed on credit reports for a period of time. Credit inquiries made by the owner (a self-check), an employer (for employee verification) or a company marketing pre-screened offers of credit or insurance do not have any impact on a credit score.
Why a Credit Score Is A “Snapshot”
Each consumer’s credit score changes over time and when a lender or insurance company makes an inquiry into a person’s credit score, they get a “snapshot” of that individual’s credit score because of the constant changes. Each time a consumer opens a charge account their score changes. Each time a consumer misses a payment on a credit account, their score changes. When a consumer pays off a debt, their score changes again. Over time, credit scores go up and down and up and down a thousand times. What’s important to understand is where a person’s credit score is at any given time and what can be done to improve that score to provide the most advantages in the credit world.
Good and Bad and Places In-Between
Because credit scores fluctuate, consumers should try to be aware of where their credit score sits and what can be done to increase the number to as high a level as possible. Good credit means consumers pay lower interest rates on loans, get better insurance coverages and have improved job opportunities. A good credit score saves money, provides better rates and can even help get a really good job. Bad credit means the opposite to the above will occur and more. Bad credit affects lifestyle and opportunity. No one wants a low credit score that’s the result of bad credit actions, but they happen and in today’s economy, they happen more and more frequently. A median credit score might make life a little better, but not much. Unless a consumer has a credit score over 650, they’re going to suffer when it comes to credit-related activities in their life.
Can Bad Become Good?
Yes. Bad credit scores can improve through the diligence of the consumer using good credit habits, making payments on time, not over-borrowing and maintaining low credit balances in their credit accounts. But there’s a catch – bad credit takes a long time to become good credit while good credit can become bad credit very quickly. Thankfully, there are solutions to changing bad credit scores into better scores. The solution is called a credit repair company. Credit repair involves a process of challenging, validating, and verifying the accuracy of information contained in each of the three main consumer credit rating bureau’s data so that only the data which helps the score stay high is retained and the bad information which lowers a credit score is eliminated.
Credit Repair Options
Consumers can attempt to repair their credit on their own, however, the process is rather complicated – involving debt validation letters, challenging information contained in each of the three credit bureau’s databanks, verification of debt from creditors and other time-sensitive procedures which, if not done properly, can actually result in a lower score rather than the hoped-for higher score. Most consumers turn to a credit repair company which can perform the intricate tasks associated with repairing credit with greater control and higher success rates. Where consumers can get sidetracked is deciding which credit repair company can really help them improve their credit score and which company is just going through the motions without concern for the end result.
The Best Credit Repair Option
Obviously, among the hundreds of companies offering credit repair services, there’s going to be one company which stands out from the others. That company will have many years of experience dealing not only with the credit bureaus, but also with the multitude of creditors submitting information to the bureaus and even the nefarious “debt purchasers” who prey upon consumers buying their delinquent accounts from creditors for pennies on the dollar and then using less-than-honorable tactics to intimidate, cajole, and coerce consumers into paying more for those debts than they really should. There is only one company with 20 years of experience dealing with credit repair and there is only one company with over 500,000 satisfied clients. That company is Lexington Law.
Who is Lexington Law?
Lexington Law is a legal firm that specializes in helping consumers repair their bad credit. Instead of simply being a credit repair group (like the ones your hear advertised on TV and the radio), Lexington Law is, in reality, a law firm which specializes in being a consumer advocate. A lot of people have the opinion a law firm has the pull to get creditors to listen when it speaks. Lexington knows the laws which govern credit reporting and they use that knowledge to help consumers improve their credit scores as much as possible.
Lexington Law is the biggest law firm specializing in credit repair. They have a large team of lawyers, paralegals, and financial experts who know everything there is to know about how to help you improve your credit score, so that you don’t have to be bound by bad credit. Lexington Law has been helping consumers escape the woes of bad credit for 20 years and they have helped remove millions of negative items from people’s credit reports. More than half a million clients have entrusted Lexington Law to help improve their credit scores.
What Can Lexington Law Do For You?
Lexington Law assists their clients by pursuing creditors to make sure the items reported on their credit reports are accurate. Companies that grant credit to consumers make mistakes all the time – and Lexington seeks out those mistakes and demands they are removed from their client’s credit report. Lexington is relentless in this endeavor as they comb through their client’s credit reports. All it takes is a single stroke of a pen or click of a mouse for credit companies to damage consumer’s credit scores for up to seven years. Lexington Law places the burden of proof back where it belongs – on the credit companies. It’s simple – if a creditor cannot prove you owe them money, the negative item is removed from your credit score. The more negative items removed from your credit report, the more your score will improve.
If you are ready to get started on repairing your credit call 800-220-0084 for a free consultation or you can read more about Lexington Law and how they helped me raise my credit scores.