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Why Most Attempts to Repair Credit Fail
and Your Credit Score Gets Worse

Credit scores seem to be one of life’s great mysteries:

  • everyone knows the importance of reaching a credit score of 700 or more
  • some people know that you are allowed by law to challenge negative credit report entries
  • almost nobody knows the specific steps you can take to quickly and dramatically improve your score

And here’s the financial industry’s dirty little secret – they do not want you to know how to cleanse your credit. And you can’t really blame them – both lenders and the credit bureaus have a vested and profitable joint interest in keeping your credit score low.

Lenders and Credit Reporting Agencies
Profit from Your Low Credit Score

Lenders want to keep your score just high enough to meet underwriting requirements, but low enough to justify extracting those juicy, profitable fees from you, because, you are a “high risk borrower.” Think about it: a mortgage applicant with a 600 credit score will pay hugely inflated interest rates and hundreds of dollars in application and processing fees.

The credit reporting agencies profit as well from your low credit score. The 3 national credit bureaus – Equifax, Experian and Trans Union – sell credit profile information to lenders and earn millions doing so. Guess which profiles bring the most money? I’ll give you a hint – the little old lady with 1 credit card and no balance, who qualifies for 2% car loans is far less valuable than the family of 4 who pays a penalty interest rate because of a missed payment due to a child’s illness.

You might wonder where is it written that a credit score 600 borrower is any more likely than a 700 score borrower to default? Borrowers a year or two out of bankruptcy often have no debt, and by law they cannot file another bankruptcy again for up to 8 years. Wouldn’t you think if you are debt free, barred by law from filing bankruptcy and steadily employed, your credit score would rise quickly. You might think so, but you would be wrong.

Federal Law Offers Little
True Consumer Protection

Surely Congress would not leave millions of consumers without recourse? In fact, there is a federal law called the Fair Credit Reporting Act. But like so many laws passed by the House and Senate this one too fell prey to credit industry lobbyists. A violation of the FCRA can subject the credit reporting agency to a damage aware of up to $1,000 + whatever attorney’s fees your lawyer can prove. Good luck, therefore, trying to find a lawyer to accept an FCRA case under a “no fee unless you win” contract.

What other rights does the FCRA confer? You do have the right to dispute outdated and inaccurate credit information on your credit report. But here, too, the banking industry lobbyists created massive loopholes. You can write challenge letters, but the credit bureaus themselves are allowed to disregard those challenges if they decide that your letter is “frivolous.” Talk about the fox guarding the hen house!

Lexington Law Firm Levels the Playing Field

So what can a hardworking American do about a depressed credit score and damaging credit report information?   You could try to write challenge letters yourself but statistically, your chances of success are quite low.   You could also search the Internet for credit repair companies, but, like many things on the Internet, you could end up spending a lot of money and wasting a lot of time with no good result.

Let me introduce you to the nation’s oldest and most recognized specialty law offices – the Lexington Law Firm. Founded in 1991, the attorneys (and the firm now employs 22 licensed credit restoration lawyers) at Lexington Law practice in one area and one area only – credit restoration under the Fair Credit Reporting Act.


Legal, Effective Credit Report Repair

Since it’s founding in 1991, Lexington Law has served over 500,000 Americans, removing millions of damaging, inaccurate and outdated credit entries.  In 2010 alone, Lexington Law attorneys removed over 1 million derogatory credit score postings.

 

What Can You Expect from Lexington Law?

Individual results will vary, of course, but last year, a Lexington client with serious credit flaws (known as “Concord Level clients)  saw, on average, over 8 derogatory entries disappear within 3 months and over 28 derogatory entries fall off within 1 year.   Now, your credit report may not even have 28 negative entries, so imagine how quickly your credit score will improve when you put the muscle of Lexington Law behind you.

How Much will this Cost You?

Again, every case is a little different, but Lexington Law client fees start at $99.95 and ongoing fees of just $49.95 per month.   And the folks at Lexington will give you a no-obligation quote over the phone – just call them toll free at 1-888-751-3367 to ask.

 

Do It Yourself?

Obviously, in tough economic times, all of us are in a “do it yourself” mode and you may be wondering if you should try to repair your own credit.  After all, there are dozens of self-help books out there on this topic and the Fair Credit Reporting Act itself sets out the exact procedure to challenge “inaccurate and outdated” credit report information.

You can certainly try to write your own challenge letters (and if you look at your credit reports, the credit reporting agency will even provide you with a challenge form) but, statistically you are facing an uphill battle.

Problems with Do-it-Yourself Credit Repair

do it yourself credit repairFirst, if your credit score is 600 or below, there is a good chance that you have multiple derogatory credit entries.   Even if you are successful in removing one or two of these entries, the remaining derogatories will keep you credit score depressed.

Second, you will find that the credit reporting agencies interpret very narrowly the phrase “inaccurate or unverifiable” as set out at Section 611(A)(5)(a).   When you write a challenge letter, the credit bureau will electronically “ask” the reporting creditor to “verify” the debt.  If the creditor answers “yes,” the credit bureau considers its duty to investigate over and will thereafter ignore your challenges as being “frivolous or irrelevant.”

What Aggressive Representation Means to You

By contrast the attorneys and staff at Lexington Law take a much more expansive view of what constitutes “inaccurate or unverifiable” derogatory entries on your credit report.

For example, what if a debt buyer purchased at 10 cents on the dollar a portfolio of 10,000 collection accounts from a credit card issuer, and an account with your name on it is included in this portfolio.  Further, let’s assume that your credit report shows a 90 day late derogatory entry reported by this debt buyer.

If you write a challenge letter disputing the accuracy of the debt buyer’s entry, the credit bureau will request a verification from the debt buyer and thereafter close your file.   But how does the debt buyer know whether you were 90 days late, 60 days late, or not late at all.  When that debt buyer purchased those 10,000 accounts, they did not receive physical files with copies of letters or payment ledgers.   More likely than not, they received a database of names, account codes and outstanding balance figures.

Maybe the debt buyer can contact the original creditor to obtain a payment history printout, but more likely than not, the original creditor has deleted and purged its records once the accounts were sold.   To a firm like Lexington Law, which has an ethical and professional obligation to zealously represent your interests, the derogatory reference to an outstanding balance and a 90 day late payment history could very well fit into the “unverifiable” category.

Lexington Law Firm = Tenacious Advocates for You

Lexington LawThe secret to Lexington Law’s success is its tenacity.  They simply do not take “no” for an answer.  While you might be inclined to give when the credit bureau sends you a dismissive and vaguely threatening “your dispute is frivolous” letter, Lexington Law is just getting started.

The attorneys at Lexington know that credit repair is a marathon, not a sprint.   Lexington Law paralegals are trained in the art of follow-up.  They know that dispute letters must contain sufficient detail about the nature of your challenge to get by the credit bureau gatekeepers to trigger an “investigation” that results in a “claim not verifiable” response from a debt buyer who would rather write off your account than face a class action for fraud if it lies about the history of your account.

Credit Repair vs. Debt Consolidation

difference between bill consolidation and credit repairThe attorneys and staff of Lexington Law focus on credit report repair and restoration.   But Lexington Law cannot help you if you are carrying more debt than you can afford and if you are incurring on-going delinquent accounts.  Credit repair works best when you can pay your current bills but have derogatory (harmful) information on your credit report arising from such things as:

  • bankruptcy
  • late payments
  • liens
  • reposessions
  • foreclosures
  • judgments
  • charge offs

If new, bad credit information is being added to your credit report currently, it hardly makes sense to spend money in an effort to delete slightly older bad credit information.

If your monthly budget is in the red, you should “stop the bleeding” before embarking on a course of credit repair.  But be careful – many so-called “debt consolidation” companies will take your money but fail to deliver on promises of consolidation and reduction.

Options to consider include:

  • Chapter 7 or Chapter 13 bankruptcy
  • Credability (formerly known as Consumer Credit Counseling)
  • Dave Ramsey Total Money Makeover

Once you have your financial house in order, then it is time to work on improving your credit report and credit score.

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