Frequently Asked Questions

General Questions about Credit

• What is the Fair Credit Reporting Act?
• What is a Credit Score?
• What is a Good Credit Score?
• What is a Bad Credit Score?
• What is a Credit Report?
• What Kind of Information Appears on a Credit Report?
• How Long Will Negative Information Stay on My Credit Report?
• Can I See My Credit Report?
• Are Credit Bureaus Part of the Government?
• How Can Bad Credit Hurt Me?

Credit Repair

• What is credit repair?
• What is a credit repair service?
• Can Bad Credit Be Deleted?
• Can Credit Repair Services be Trusted?
• Can I Fix Bad Credit Myself?

Credit Monitoring

• What is credit monitoring?
• What is a credit monitoring service?
• Who should monitor their credit?
• What is identity theft?
• How does credit monitoring prevent identity theft
• What is identity theft insurance?

General Questions about Credit

What is the Fair Credit Reporting Act?

The Fair Credit Reporting Act (FCRA) allows a consumer to challenge the information on his or her credit report on the basis of “completeness and accuracy.” When a consumer files a dispute, the credit bureaus must contact the creditor and confirm that the information is accurate, verifiable, and not obsolete. If, within 30 days, the credit bureau has not received verification from the creditor, the credit bureau must promptly delete the credit listing.

What is a Credit Score?

Your credit score is a snapshot of the risk you currently represent to a lender. Factors considered include length of credit history, number of open accounts, loans, mortgages, public records, and others formulated to produce a 3-digit score between about 300 and 950.

What is a Good Credit Score?

A good credit score is a credit score above 680. A score over 680 qualifies you as a “prime borrower” and will ensure that you have no problem getting a good interest rate on a home loan, car loan, or credit card.

What is a Bad Credit Score?

If your credit score is above 560, but below 680, you are considered “sub-prime.” You may face higher interest rates on loans.

If your credit score is below 560, you will most likely have to pay high fees to get a credit card and probably will not qualify for a home or new car loan.

There are a variety of monthly Lexington Law plans that can help you repair your credit, regardless of how bad it is.

What is a Credit Report?

Whenever you apply for any type of credit or financing, a credit report is pulled from one or more of 3 major credit bureaus: Trans Union, Experian, or Equifax. These bureaus collect and maintain information on most Americans, then sell it for profit. Credit bureaus receive personal information from the lenders who grant you credit. If you make a payment late, it will show up on your credit report. Credit reports show not only your past, but what you’re doing with your credit right now. Credit grantors look at credit reports and use them to make decisions as to whether or not to grant you more credit.

What Kind of Information Appears on a Credit Report?

Merchant Trade Lines - Department store credit, auto credit, mortgages, and credit cards

Collection Accounts - Accounts that have gone into collection (whether currently paid or unpaid)

Public Records - Bankruptcies, judgments, and liens.

Inquiries - Every time a potential credit grantor looks at your file, a credit inquiry occurs.

How Long Will Negative Information Stay on My Credit Report?

The Fair Credit Reporting Act requires that most negative credit items be deleted from your credit bureau file in no more than 7 years, except for a Chapter 7 bankruptcy, which can be reported for up to 10 years.

Can I See My Credit Report?

Most credit grantors are not allowed by the credit bureaus to show you your own credit report, but you can purchase your credit report from the credit bureau for a fee. Trans Union and Equifax credit reports are difficult to interpret and understand, but Experian credit reports are easy for most people to read.

Are Credit Bureaus Part of the Government?

Credit bureaus are for-profit corporations and are not affiliate with the government in any way. They sell your personal information for money.

How Can Bad Credit Hurt Me?

Bad credit can make it difficult or impossible to obtain credit cards, auto loans, home loans, and other types of credit. If you can obtain these lines of credit, you will pay a much higher interest rate.

For credit cards, bad credit will result in you having to pay exorbitant setup fees, recurring monthly fees, and/or cash deposits. Based on a $20,000 auto loan paid over 5 years, bad credit can cause you to pay between $5,000 and $9,000 in extra interest (provided you can get the dealership to extend you a loan at all). If you have bad credit, you can pay an extra $50,000 to $130,000 in interest on a $100,000 home mortgage paid over 30 years.

Credit Repair

What is credit repair?

Credit repair is the act of fixing erroneous items on your credit report to improve your credit score. Most credit reports have some inaccurate information – Accounts that are paid off that still appear open, late payments that were never late, etc. Fixing your credit report can lead to a better credit score, which can save you hundreds when you finance new purchases.

What is a credit repair service?

A reputable credit repair service is almost always a law firm. Generally, there are one or two lawyers who run the firm and a team of paralegals who work on the actual credit repair cases, calling the lawyers in as necessary. Reputable credit repair services do an extensive amount of research in what actions successfully gets credit bureaus to remove erroneous items from credit reports. They take this research and apply it to your case, guiding you in which items to attempt to remove, sending letters to the credit bureaus on your behalf., and instructing you on how to deal with any communication you receive directly from the credit bureaus.

Can Bad Credit Be Deleted?

Yes. You can have incorrect items on your credit reports removed by all 3 credit bureaus. In extreme cases, you may even be able to have bankruptcies deleted from your credit reports.

Can Credit Repair Services be Trusted?

Yes and no. Some credit repair services, such as Lexington Law credit repair service, are reputable and can legitimately assist you in removing erroneous items from your credit report. Any credit repair service that "guarantees" to fix or improve your credit "or your money back" is most likely not reputable.

Can I Fix Bad Credit Myself?

You have every legal right to dispute inaccuracies on your credit report yourself. It is not advisable, however, because credit bureaus are infuriating to deal with and will waste as much of your time as possible in an effort to give up your quest for removal of inaccurate information. Seeking out qualified legal representation can help the process go smoothly with far less stress for you.

Credit Monitoring

What is credit monitoring?

Credit monitoring is looking at your credit report on a regular basis for changes. Any change in your credit report, no matter how small it seems, can effect your credit score and your ability to finance purchases, qualify for credit cards, and more.

What is a credit monitoring service?

A credit monitoring service alerts you every time there is a change in your credit report or reports. That way, you can immediately investigate whether the change is negative or positive and whether it is legitimate.

Who should monitor their credit?

Everyone should monitor their credit, but it is especially important for individuals who are trying to repair their credit reports and remove erroneous items. It is also important in the months leading up to a major purchase such as a new car or home.

What is identity theft?

Identity theft occurs when someone steals your credit card, opens an account in your name, steals money from your checking account, etc. It can happen in a variety of ways, most of which will eventually show up on your credit report.

How does credit monitoring prevent identity theft?

By inspecting your credit report on a regular basis, you can see if new accounts have been opened in your name, if late payments are showing up on accounts that you have previously closed, etc. Changes in your credit report will often alert you to the fact that someone has stolen your identity.

What is identity theft insurance?

Identity theft insurance is offered by many credit monitoring services to cover the costs if your identity is stolen. If your credit card is stolen and abused, for example, identity theft insurance would cover your losses if the credit card company would not.