Fast Credit Repair

Will a title loan negatively affect your credit score?

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When you’re in a position where you need cash fast, title and cash loans can seem like a light at the end of the tunnel. After all, receiving all the money you need in hand is difficult to turn down and you’re sure that you can pay back the balance by your next paycheck. Even with this certainty, you may be wondering: what effect do title loans have on your credit score? Like most financial-related questions, the answer isn’t written in black in white.

What is a Title Loan?

Before we talk about the effect that title loans have on your credit, let’s explore what a title loan is and how it works. Title loans involve using the title of your car as collateral for a loan. So if you fail to pay your loan within the set agreement, you will essentially lose your vehicle.

Financial experts often consider title loans as a poor financing choice because of their high annual percentage rates, but if you know that you will have the cash to pay back the loan before the loan is due, it can be a viable solution in an urgent situation. To avoid losing your vehicle, it’s essential that you make your payments in full and early if possible.

Understanding Secured & Unsecured Loans

Title loans are treated differently than traditional bank loans because they are secured. A secured loan means that you have provided your lender with collateral. In the case that you cannot manage your loan, this provides the creditor protection against their investment. These types of agreements are common with paycheck loans, pawn shop loans, car title loans, and any other loan types that require collateral.

Conversely, unsecured loans do not require any collateral. These types of loans are more traditional and provided by larger banking institutions. Instead, unsecured loans approvals are based solely on creditworthiness and trust. All unsecured loans require a credit check.

How Toes a Title Loan Affect My Credit?

Title loans don’t have a significant effect on your credit. Some title loan lenders don’t even require a credit check before they grant you an approval. This type of financing is often a solution for individuals with low credit who need money fast.

While making payments on time will generally help improve your credit, this isn’t the case with title loans. On the other side of things, occasionally missing a title loan payment will not automatically lower your score either- as long as your loan specialist does not repossess your vehicle.

The only time a lender may report your car title loan to the credit bureaus is under the circumstance of vehicle repossession. Losing your car is not only damaging to your life, but can affect your credit negatively for years.

What are my options if I can’t meet my title loan requirements?

If you find yourself in a hardship where you cannot pay your title loan it may be tempting to walk away – they don’t count against your credit score, right? Besides losing your car, failing to meet your loan agreements can negatively impact your credit and your finances.

The consequences of walking away from your title loan will ultimately depend on your agreement with your lender. In many cases, if you offer up your car for repossession voluntarily, the lender will not report the failed agreement on your credit score. However, many lenders don’t actually want your vehicle. Auctioning off your car may be less profitable than forcing you to make the payments. If this is how your lender prefers to operate, you may find difficulty in getting out of your title loan.

Before you sign any contracts, it’s important to understand the terms of your loan entirely. Your agreement should detail whether or not your lender has the right to refuse your collateral in exchange for payment. While this type of arrangement won’t necessarily affect your credit, failing to understand the terms of your agreement and communicate with your lender could have a negative impact on your finances.

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How to Buy Your First Car

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Okay, so you’ve been working on credit repair and restoration, and now you think you’re in a good financial spot to buy your first car. It might seem intimidating from the outset, but nearly 6.5 million new cars were sold last year, so if all of those people can buy one, so can you. It’s mostly a matter of being realistic about your financial situation, and positioning yourself to be eligible for a loan.

If you’ve never bought a car before, here are four steps you’ll want to take in order to do so.

  1. Know Your Budget

    Before you even begin to think about what kind of car you want, it’s a good idea to take a look at your budget and determine what you can afford. You should take all monthly expenses into account, then take a portion of what’s left over from your income to put towards your car purchase.

    Here’s a recommended strategy: about a year before you plan to buy your car, take the average monthly payment you think you can afford, and have it put directly from your paycheck into a savings account. After a few months, you won’t miss that money, and you’ll end up building a sizeable down payment for your vehicle. When you actually buy your vehicle and begin making payments, you won’t have to adjust to the change in your disposable income.

    All this being said, it’s important to leave yourself some padding in your budget. If you have about $500 left over after your bills are paid, you don’t want to make a monthly car payment of that size. Don’t forget about car insurance and an emergency fund. Breathing room is vital when it comes to budget.

  2. Do Your Research

    This is the fun part of buying a car. Think about what your needs are and what kind of car can fulfill them. If you live in a snowy climate, you’d want something with 4WD or AWD (four wheel drive or all wheel drive, respectively). If you live somewhere that’s warm, and you don’t have much to haul around (kids, gear, equipment for your job, etc.) then a smaller, less-expensive car may be a good fit for you. The most important thing is to be realistic. Remember, you won’t be driving this car forever. It doesn’t have to be the nicest or flashiest car. Just make sure it’s safe and runs well.

    If you aren’t sure which car you want, you’re always free to test drive vehicles at dealerships to help you narrow it down to a specific make and/or model.

  3. Apply for a Loan

    When you’re ready to apply for a loan, start with your own bank. They already have a lot of information about you (including how much money you actually have), which will help cut down on paperwork. Some banks have rules about the types of cars they will give loans for (for example, some banks will not fund a loan on a vehicle more than five years old), so it’s also a good idea to know what car you’d like before you apply. Even if your credit isn’t the best, there are loans for people with poor credit.

    Many money experts recommend against getting financing through the vehicle dealership. That’s because they simply don’t have the best rates out there, so it’s a good idea to do the legwork and find the loan on your own. If you don’t have much credit history, you may very well need a cosigner or a large down payment, so come prepared.

  4. Consult Your Mechanic

    Now you have a new car! Just one more thing: if you choose to buy a used car, make sure you have a trusted mechanic take a peek under the hood before you sign the final paperwork. Many dealerships are understanding of this. If you meet resistance from a salesperson on this item, that’s a major red flag. If there’s nothing wrong with the car, then there’s no reason for them to keep you from looking under the hood.

Buying a car isn’t so hard when you’ve done your research and come financially prepared. The most important thing to remember is to be realistic and stay within your budget so you don’t end up in a sticky situation where your credit could be negatively affected. To learn more about getting your credit up to speed to buy a car, visit

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The Future of Credit Cards

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Guest Article from Alayna Pehrson – Content Management Specialist at

Credit cards can play a major part in determining the status of your credit reports and credit score—the key stepping stones to obtaining the best financial opportunities society has to offer. As technology evolves, credit cards are evolving too, and to maximize their benefits, you’ll want to stay on top of the changes.

Increasing payment variety

Physical credit cards, although helpful when trying to build credit, are starting to lose the popularity game to different payment methods like Apple Pay, PayPal, Venmo, and virtual credit cards. These payment methods are constantly advancing and are expected to gain even more popularity in the future. Although a potential decrease in credit card usage may seem surprising, the world has already seen a different form of payment lose its frequency: cash. Due to the development of credit cards, debit cards, and digital payments, cash transactions became less popular. So, what does this mean for physical credit cards? Growing payment variety may cause credit card usage to drop until physical credit cards will no longer be a reality. On the other hand, credit cards have adapted in the past, which has led consumers to use them regardless of technological advancements. Although credit cards may be fighting a losing battle in comparison to newer forms of payment, credit cards are still valuable as they are directly correlated with credit reports and credit scores. A person’s credit score cannot be influenced (yet) by online/mobile/app payments. In order to continue getting certain rewards, opportunities, loans, etc., the public has to continue using credit cards on a regular basis. Until another form of payment evolves to influence credit, credit cards will still play an important part in society’s future.

Security risks and advancements

Although credit card security has improved over the past couple of years with the implementation of around-the-clock credit monitoring and fraud alerts as well as identity protection services, credit card identity theft is still a constant threat. Physical credit cards are at-risk more so than virtual credit cards and mobile payments because credit cards and credit card numbers can be physically stolen. People who regularly use credit cards usually carry them in a purse or wallet and use them to make in-store purchases. If they are not careful, thieves can easily steal the card or write down the number when the card owner is using the card to make an in-store purchase. Criminals can also steal a credit card number if the card owner swipes the card at an unsecured location or if the card owner makes a purchase online on an unsecured website. Credit card thieves can use credit card skimmers to steal credit card information. Thieves can also use malware to obtain credit card information off of a personal device or computer. While the future of credit card security looks bright as new technology and security measures are being developed, other forms of payment may continue to prove more secure regardless of future credit card security.

Current credit card usage

Credit cards are designed to be influential forms of payment. For instance, having a good credit score along with clean credit reports can help you buy a car, purchase a home, get better interest rates, earn rewards, get approved for loans, or land a dream job. Bad credit, although devastating, can be fixed via credit repair and the sensible use of a credit card. The world will continue to use credit cards for those very reasons until there is a significant change that forces credit cards out of the picture. Because credit cards have been used for years on end and have evolved throughout time, there is not yet substantial evidence that proves credit cards will be obsolete in the near future.

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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The Best Podcasts & Books For Your Credit!

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The Best Podcasts & Books For Your Credit!

Posted by Erica Steeves on March 21, 2018

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        If you’re among the millions of Americans that are looking to improve their credit score, then you likely already know that doing so takes commitment. But committing to a credit repair plan is only half the battle. First, you need to know how to create that ideal credit repair plan for you. While there are lots of resources that you can tap into for such purposes, a few avenues you may not have thought of include books and podcasts. We’ve put together a list of some of our favorite:     Perfect for downloading and listening to while you’re driving or just bumming around the home, here are five of our favorite credit repair podcasts:

  • The Credit Repair Show: Available via Player FM, this podcast is dedicated to how important it is for consumers to have good credit. It also offers several plans for credit improvement, including some that are designed to help raise a credit score by 100 points or more.
  • Planet Money: This NPR show is all about money and wealth management, and several episodes cover credit score-related topics. Episodes drop regularly, so there’s always new information to take in when it comes to your finances.
  • Listen Money Matters: This podcast doesn’t focus on credit as much as it does personal finance. However, how you manage your money and juggle your finances can play a big role in how your credit score looks.
  • Realtor’s Guide to Credit: Interested in improving your credit so that you can get a lower interest rate on your mortgage? This is the five-part podcast for you.
  • Money for the Rest of us: Host David Stein covers all aspects of personal finance and how to achieve the illusive financial freedom.


Credit Repair Books

Here’s a look at some of our favorite books on credit repair:

  • Raise Your Credit Score in 10 Easy Steps: This book by Angel Love focuses on sharing strategies to help consumers raise their credit score.
  • How to Get Out of Debt, Stay Out of Debt and Live Prosperously: Debt management is a big part of boosting your credit score, but many consumers feel like they’re swimming upstream. This book by Jerrold Mundis is designed to help consumers get out of the red and into the black.
  • The Spender’s Guide to Debt-Free Living: Don’t think you make a lot of money and therefore can’t get out of debt? Think again. Ex-blogger Anna Newell Jones wrote this book about how she eliminated more than $23,000 worth of debt in 15 months, all while making less than $35,000 a year.
  • 33 Ways to Improve Your Credit Score: As the book’s title implies, this book includes tips on credit repair. Some of the tips shared by author Tom Corson-Knowles are instant.
  • Credit Repair Kit for Dummies: Are credit scores and credit reports a foreign language to you? Then this could be the book for you. This book explains everything from how credit reporting works to specific steps on how to repair credit.

To end this post with some exciting news, our very own Nikitas Tsoukalis (Owner and CEO of Key Credit Repair) recently released his very first book:  Opening Doors: A comprehensive Guide to great credit scores that anyone can use.  get your copy today on Amazon! 

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Does a student loan deferment or forbearance impact your credit?

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There’s no denying that getting a college degree is one of the best things you can do to pursue a prosperous future, but this professional head start can come at a steep cost. Over the past few years, student loan debt for the country has topped $1 trillion, leaving over 40 million Americans in a serious financial predicament.

Unfortunately, accompanying the ever-increasing mountain of student debt is the avalanche of loan delinquency. Recent graduates accustomed to the college lifestyle, often without the means to repay debt, are being severely ensnared in an endless cycle of late payments and possible default. While the future of a college education hangs in the balance, today higher education is still a necessity that often leads to significant debt for many Americans each year.

Don’t let student loans ruin your FICO score before you even get a chance to build credit in the first place. If hard times come knocking after graduation, loan deferment or forbearance are viable safeguards against overwhelming loan payments.

Deferment vs forbearance

If you’re having trouble making ends meet due to student loan payments, loan deferment or forbearance can offer some temporary relief. With that said, it’s important to recognize the difference between these two payment reprieves before taking action.

Deferment and forbearance both effectively put your minimum loan payments on hold in instances of economic hardship. A key distinction between these two options is whether interest continues to accrue:

  • Deferment: For government-subsidized loans, interest payments are suspended. Deferment is more difficult to qualify for, but will save you money on interest as it will not accrue during the time of deferment.
  • Forbearance: Your monthly loan payments may be reduced or put on hold, but you will continue to accrue interest on the outstanding balance of the loan regardless of the forbearance.

Both options offer a safety net for individuals in over their heads in a sea of student loan debt, but does this financial relief come at a cost to your credit score?

Does deferment or forbearance negatively affect credit?

If the cost of student loan payments is too overwhelming, don’t hesitate to seek out deferment or forbearance, especially since it will have less of an impact on your credit score than would a reported late pay or defaulted loan status.

A common misconception is that pausing student loan payments will wreak havoc on your credit. In reality, suspending payment through deferment or forbearance should not significantly impact your credit score but may create some volatility once the loan status is updated to reflect the requested change. Meanwhile, not making loan payments that you can’t afford and running the risk of late payments is far more costly to your credit score than putting loan payments on pause.

The importance of credit repair

While loan deferment or forbearance are good options to help you protect your overall credit if needed, chances are there are other financial factors at play that affect your ability to pay your bills and thus threaten your credit score.

If you’re not meeting your financial goals, it might be time to conduct an in depth review of your credit score. After all, a less-than-stellar credit score can negatively impact overall financial security from high interest rates to the inability to secure a loan.

If poor credit is impacting your ability to achieve financial success, consider learning more about the credit repair process. For more than 20 years, Lexington Law has helped consumers improve their understanding of their credit score while distinguishing itself as a leader in the credit repair industry. If poor credit is inhibiting your ability to pay off loans or stands in the way of financial goals, contact Lexington Law today.

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When Should I Unfreeze My Credit?

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In 2017, Equifax, one of the three major credit bureaus in the U.S., experienced a major data breach. Millions of people were using Equifax to monitor their credit at the time, and the data breach left them all vulnerable to credit fraud. To help alleviate the damage, or at least as a stopgap measure, Equifax placed all of these accounts under a credit freeze.

It’s important to first understand what a credit freeze does. When your credit is frozen, it means that no one can use your credentials to open any kind of new account that requires a credit check, such as a credit cards or loans. No one can even see your credit report, except for debt collectors acting on behalf of entities to whom you are already indebted, and certain government agencies. A credit freeze does not change any of your existing credit or loan repayment terms. You will still be required to make payments as usual on any debts you owe, including credit card debt. Your credit score can still change during this time as well. Unfortunately, there’s no way to freeze your credit score.

During this time, you will also be prohibited from opening any new accounts, as credit bureaus have no real way of knowing with absolute certainty that it’s you opening the account, and not someone who bought your information off of the dark Web. In most states, a credit freeze is indefinite (though it can be temporarily or permanently lifted by you alone), and in some states, it expires on its own after seven years.

When should I lift my credit freeze?

When your credit is frozen, you are still able to open new accounts, but you will have a special personal identification number (PIN) or password to do so. That means that if you apply for a new job or rental home, for example, those who need to know your credit history will be able to access it safely, either with a password or by having you temporarily lift the freeze.

Lifting the credit freeze for good may not serve you well right now, especially if your information was compromised in the Equifax data breach. If you choose to do so, however, make sure to enroll in credit fraud alerts from one of the major credit bureaus (it’s currently free from Equifax to all U.S. residents for one year) or from a third-party credit monitoring company.

A credit freeze will not affect your life too drastically. It will allow you to have some peace of mind that those who are trying to open accounts with your information will be unable to do so until the freeze is lifted or expires.

If you have concerns about your credit, or if you’ve been working on credit repair after identity theft, visit for more information about protecting yourself and your financial reputation.

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Are Zero Interest Balance Transfer Credit Cards Going Away?

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If you’ve ever considered moving credit card debt from a high-interest card to a balance transfer credit card that doesn’t charge interest for a year or more, you’re not alone.

Transferring a balance to a credit card that doesn’t charge interest for six to 21 months — with 18 months being the most common timeframe — and you can save hundreds or possibly thousands of dollars in interest charges.

Finding zero-percent balance transfers may be getting more difficult, for a few reasons. And if you do find one, the window to pay it off may shrink.

More people are doing balance transfers, but they’re not keeping the cards and using them after paying off the transferred debt. That can make them less profitable for credit card issuers such as Citi, which reported in an earnings call in January that they’re facing “headwinds” from people who use promotional rate balances and don’t carry a balance.

Citibank is one of the nation’s largest credit card issuers. A credit card company’s profit comes when users don’t pay their balance in full each month, or after paying off debt during a promotional window they keep the card and rack up more debt. A transferred balance that isn’t paid off during the promotional window can be set at a much higher interest rate than the card normally charges, and the interest can be retroactive to when it was first acquired.

“The growth in promotional rate balances reflects a strong response to our offers, generating growth in both spending and borrowing activity from new accounts during the promotional period,” said John Gerspach, Citi’s chief financial officer, in the earnings call.

Citi expects promotional rate loans to stabilize and then begin to decline in 2018, Getspach said. It also plans to shorten or eliminate the promotional period on certain offers, he said.

Shorter zero-interest windows would give people less time to pay off the debt they transferred, potentially pushing them away from balance transfer cards. That could lead to another domino falling: fewer reward card bonuses as fewer people charge big purchases on rewards cards for bonus points and then transfer the balance to a card that doesn’t charge them interest for a year or so.

Zero-interest balance transfer credit cards are often only offered to consumers with excellent credit. People with lower credit scores can still get balance transfer cards that save them money, but they’ll likely be charged at least a low interest rate on the transfer amount. Still, if that’s lower than their existing credit card’s interest rate for a year or more, it may be worthwhile.

Balance transfer cards also usually charge a fee of 3-5 percent of the amount being transferred, which can eat into the savings if you pay off the balance during the promotional period. Some don’t have balance transfer fees, so be aware of what the card you’re considering offers before signing up for it.

Another cost to look out for: Annual fees. Not all cards charge one, but an annual fee on a card that you’re hoping to dump in a year is another unwanted cost.

Interest rates are always changing, and not always in a good way for consumers.

The Federal Reserve is expected to raise the target federal funds rate in March, which could lead to higher interest rates on credit cards and other financial products. Three rate increases by the Fed are expected in 2018, assuming the economy stays strong, according to Reuters.

The average household with debt has outstanding credit card balances of $16,048. Higher interest rates will make that debt more expensive.

The Fed is expected to raise the target federal funds rate by 0.25 percent. Having $10,000 in credit card debt at 15 percent APR that is being repaid at $200 per month, and then increasing the interest rate to 15.25 percent would add $189 in interest over the lifetime of the debt.

If you’re thinking of moving a balance from a high-interest credit card to a zero-interest card with an introductory period, you might want to take advantage of that opportunity sooner rather than later. Such offers may not last for long, either going away completely or shrinking the timeframe to use them without paying interest on the transfer.

Do the math to make sure that any balance transfer fees or annual membership fees don’t negate the savings.

If you do transfer a balance, you should have the goal of paying off the balance completely when the zero-interest period ends. If you don’t, you could be charged interest on the entire amount transferred from the first day of the transfer.

Also, don’t use the credit card for new purchases, either during the introductory period or after it. If your goal is to get rid of debt, then taking on new debt with a new credit card isn’t going to get you there.

If you have a poor or middling credit score, don’t expect zero-balance transfer cards to be offered to you. They’re usually targeted at people with excellent credit, though you may be able to get a transfer card with a lower interest rate than your existing card.

About Author

Aaron Crowe

Aaron Crowe

Aaron Crowe is a journalist who specializes in personal finance. He has written for AOL Real Estate,, US News & World Report, Wisebread, LearnVest, AOL Daily Finance, AARP, Wells Fargo, Allstate, the USC Marshall School of Business, and, as well as other insurance, credit and investment websites. Check out his website at

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Are Credit Card Chips Secure?

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credit card chips secure

The credit card chip might seem like a nuisance — a payment method that not only takes much longer, but often doesn’t even work on the first try. If you’re like most people, you’ll attempt the chip reader once and then default to the less-secure swipe just to get out of the checkout lane.

When card chips were initially introduced, Americans were told that what they sacrifice in convenience they will make up for in added security. After all, credit card fraud has doubled in the past seven years, and something had to be done. But, two years into the mass adoption of the added security measure of the chip, many of us are left wondering: are these credit card chips really more secure?

What are credit card chips?

Chips — officially known as Europay, Mastercard, Visa, or EMV — have become a global standard security measure meant to contend with the rising frequency of security breaches and credit card fraud.

Magnetic strips are susceptible to fraud because they transmit static data for every transaction — one magstripe delivers one set of information. Chips, on the other hand, create new transactional data with every purchase, which is far less susceptible to counterfeit. For example, if an identity thief used a credit card skimmer and obtained your magstripe info, the card would be compromised; however, if they stole your chip data, that info is only applicable for one transaction and therefore no longer sensitive or even relevant for future purchases.

According to Visa, chip-enabled merchants have seen a 66 percent reduction in credit card fraud since the adoption of the EMV. So, that means card fraud is a thing of the past, right? Unfortunately no — EMV is not a fix-all, and cunning identity thieves still find ways to access your sensitive information despite mounting security protocols.

Credit card fraud isn’t going anywhere

The EMV initiative cost American retailers around $25 billion to upgrade terminal hardware and update software. With a price tag of that magnitude you would expect chip technology to be flawless — but it’s not.

Various security lapses continue to put consumer information at risk despite EMV technology. For example, retailers must pay extra, and opt-in, for default encryption on transactions for many terminals made by major manufacturers. This means that consumers that pay at an unencrypted terminal unknowingly take on added risk of identity theft. Not to mention, hackers continue to adapt to evolving consumer-protection standards and still find security loopholes regularly. However, the greatest threat to consumer identities is far less granular, and goes beyond individual transactions.

EMV does not protect against one of the most prevalent causes of identity theft in the country: data breaches. There were more data breaches in 2017 than any year in history, and over 170 million American records were exposed. While EMV might protect against certain kinds of fraud, data breaches remain a prominent threat.

How to protect your identity

Your FICO score is a record of your borrowing history, and if this record is sullied with illegitimate items it can take years to get finances back on track. The best way to fend off identity theft is to monitor your credit report and look for unusual activity such as unfamiliar inquiries or new accounts. If you see an unfamiliar change in your score then you might be a victim of identity theft.

Chip or no chip, consumers must be proactive and be on the lookout for identity thieves on their credit reports. Be one step ahead of thieves, check your credit regularly, and enlist the help of a professional credit repair service. offers a free personalized credit consultation and audit of all of your credit accounts. With access to industry-leading repair services, members typically see a 40-point score improvement in the first four months of their subscription.

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3 Easy Ways to Avoid Identity Theft This Tax Season

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Now that we’re almost into March, we all have our W-2s from our employers and are well on our way to being ready to file. Some well-prepared individuals have already done so. However, if you still have yet to file, beware: there are many ways to find yourself at the wrong end of a stolen identity this tax season. There are many different ways to protect yourself and maintain your good credit standing or your journey through the credit repair process. Here are some things to keep in mind as you make your way through tax season.

The IRS Doesn’t Call

Every year, we hear the same story and the same warnings are issued by the IRS. Scammers have been using the same tactics for a while now. They call someone’s home or cell phone claiming to be from the IRS and inform the call recipient that they owe thousands of dollars in back or overdue taxes. They even go so far as to provide fake badge numbers, names, and more. They will then ask for a credit card number. Never give out your credit card number to someone claiming to be from the IRS. If you aren’t sure if the person calling you is legitimate, simply call the IRS to find out if you owe taxes, and if so, how much.

Shred Documents with Your SSN on Them

Since most of us wouldn’t rifle through other people’s trash bins looking for documents to steal, it’s easy to think that no one does. Unfortunately, that is not true. Many people have fallen victim to monetary or identity theft simply through carelessness with their refuse. Any piece of paper with your personal information on it — especially your social security number — should be shredded immediately and placed in the trash. Shredders today do a fine job of turning sensitive documents into paper confetti and are relatively inexpensive. It’s definitely worth your investment.

Keep an Eye on Data Breaches in the News

If you find yourself involved in one of the major data breaches (such as the Target breach in 2013) then you’ll need to do some investigating to find out to what extent your information has been compromised. In some cases, victims of data breaches may need to contact the IRS to request an IP PIN, or a six-digit identification number that helps identity theft victims ensure their tax returns are processed safely and accurately.

All of these tips can help you further protect your identity from fraud and theft this tax season, which helps keep you on the right track with credit repair. To learn more, speak with the experts at Lexington Law. They can be reached at 844-259-3482.

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Personal Credit Scores & Business Loans

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Will Your Personal Credit Score Affect Your Business Loan Application?

Congratulations! You’ve decided to begin the process of applying for a small business loan. This is an exciting time for your new or existing company and could forecast many great things.

If this is your first time applying for a business loan, you might not be aware of the potential barriers that can get in your way. After all, receiving a business loan for your start-up or expansion can be competitive, and banks want to ensure that they trust only the best with their investments. Before you jump all in, you’ll want to have a clear understanding of the things that could qualify or even disqualify you from receiving funding.

One of these factors is your personal credit score.

If you are a small business owner in the United States, the three credit bureaus track two profiles: your personal financial history and your business credit history. Each profile plays a vital role in getting approved for a business loan. However, if your starting a new business or your existing business doesn’t have established business credit, the lender may rely more heavily on your personal creditworthiness when making their lending decision.

While your personal credit score and business credit profile express different information about you and your business, both have a substantial impact on the options available to your business and your ability to qualify for a loan.

Why Lenders Care About Your Personal Credit Score

Some business owners don’t think that their personal credit score has much of an impact when it comes to their organization. This just isn’t the case. A potential creditor is going to consider your personal credit score when making a decision to grant your company a business loan.

In general, a potential lender is going to view your credit score to determine if you:

  • Have the ability to repay the loan?
  • Are going to repay the loan?
  • Will pay the loan even if something unexpected happens?

Lenders see your credit score as an insight into your financial health and responsibility. Unfortunately, if a lender sees that you are not able to manage your personal finances, they may assume that you are a high risk for managing business finances as well. This is especially true if you are a new business owner. Without an established business history or credit to your company’s name, the only way the lender will be able to determine creditworthiness is by accessing your personal credit score.

How is my credit score calculated?

Three primary credit bureaus generate a credit score for lenders to access. Each reporting agency uses the same basic FICO formula to score the information that they collect. They also obtain personal information such as full legal name, date of birth, employment history, address, etc. They also list a summary of information that was provided to them by your creditors. Other information found in public records like bankruptcy or judgments are also included on your credit report and factored into your score. Each time that you apply for credit is also recorded on your report.

There are primary differences in the way that the three credit bureaus review and calculate your personal credit history. For examples, Transunion holds more detail about your employment information, Equifax separates your accounts that are open and closed, and Experian will record data like whether or not you are paying your rent and other bills on time. Essentially, these agencies are competitors, and lenders may choose to report to one bureau and not the other. While their data might include different results, their score is typically similar.

Importance of a Good Credit Score For Your Business

While you may not feel that your personal credit history is the best representation of how you will meet and exceed your business’s financial obligations, the need to establish and maintain a positive credit score is vital for every small business owner. Most banks and lenders take a close look at your credit score when they evaluate your worthiness as a business borrower and even consider the score in their decision-making process – regardless of how long your business has been operating.

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