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MAY 16, 2013

Lexington Law Review - A Free Evaluation of Credit Repair

I recently hired Lexington Law firm to help fix my credit and do credit repair. Are they good and can you please review them?

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Bill's Answer: Answered by Daniel Cohen

Since first writing our review of Lexington Law and evaluating their services in particular, and credit repair more generally, we received hundreds of comments from clients and consumers.

There is nothing any credit repair organization can legally do for you — including removing inaccurate credit information — which you can’t do for yourself, for free. However, many consumers decide that it is worth paying an organization to take care of these matters for you. The fees can be substantial, ranging from hundreds to thousands of dollars.

The Credit Repair Organizations Act (CROA), a federal law, prohibits credit repair organizations from taking consumers’ money until they fully complete the services promised. It also requires such firms to provide consumers with a written contract stating all the services to be provided and the terms and conditions of payment. Consumers have three days to withdraw from the contract.

Credit repair is not effective for current, unpaid debts. Even if current debts fall off a credit report, they will reappear at the next reporting period. You need to get out of debt before seeking to remove a debt from your credit report.

 

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Credit Score Before and After

Lexington Law Review

The activities of credit repair companies are constrained by the Fair Credit Reporting Act (FCRA) and the Credit Repair Organizations Act (CROA);we at Bills.com are not in a position to be able to verify whether or not Lexington Law are fully in compliance with these and other federal and state laws and regulations. Any consumer wishing to use the services of a credit repair company must due their due diligence before proceeding.

Under the FCRA, if a consumer credit reporting agency receives what it (in its sole opinion) deems as a frivolous challenge, then that credit reporting agency can ignore the request. Credit repair companies cannot guarantee success because creditors have such a large influence on what appears in a credit report. Also, the credit reporting agencies deal with so much data, it is a mix of art and science for a person or credit repair company to change or delete a listing on a credit report.

Lexington Law has been in business for quite some time. Any company with many clients over a number of years, such as Lexington Law, will generate complaints on consumer Web sites where readers claim the company is a scam. Of course, each consumer needs to do their own homework.

Quick tip Lexington Law Firm cannot get you out of debt. Contact one of Bills.com’s pre-screened debt providers for a no-cost, no-hassle debt relief quote.

Letter of Deletion

A letter of deletion is a request to remove inaccurate marks from your credit report. A sample letter of deletion is below, and we include instructions for how to submit it online at no cost.

No one can remove accurate and timely negative information from a credit report legally. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for doing this on your own. If you paid the accounts in full and as agreed, then you can try to get them removed.

Following up with the credit bureaus might be a time-consuming proposition, depending on how many items you want to be removed. To get these items removed from your credit report you have two options:

1. Pay For The Services of a Credit Repair Firm

Lexington Law is this type of firm. There are many firms that specialize in the area of credit repair. Be careful about the firm that you choose and make sure that it is a reputable firm. Check with the Better Business Bureau to learn about the performance of a particular company. You need to do proper research on the firm that you will eventually do business with. By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign. The law contains specific protections for you. For example, a credit repair company may not:

  • Make false claims about their services
  • Charge you until they have completed the promised services
  • Perform any services until they have your signature on a written contract and have completed a three-day waiting period.
  • Suggest you mislead credit reporting agencies about your accounts or alter your identity to change your credit history

Your contract must specify:

  • The payment terms for services, including their total cost
  • A detailed description of the services to be performed
  • How long it will take to achieve the results
  • Any guarantees offered
  • The company’s name and business address

2. Do It Yourself

Bills.com offers a debt self-help center that can help you solve your debt problems on your own for free. Step one is to obtain a copy of your credit report from each of the three credit bureaus. Do not contact the three nationwide consumer reporting companies individually. Instead, go to AnnualCreditReport.com for no-cost, no-gimmick copies of your credit reports. Alternatively, call (877) 322-8228, or write to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You may order your reports from all three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time.

Check your reports for the action items. All the bureaus now have provisions to dispute items online, but in most cases you will need a copy of the respective report and other information to do so. Once you are ready, contact each of the three bureaus at the contact information provided below:

Equifax Experian TransUnion
800-685-1111 888-397-3742 800-916-8800
Equifax.com Experian.com TransUnion.com
File a credit dispute online at Equifax File a credit dispute online at Experian File a credit dispute online at TransUnion

Sample Letter of Deletion

Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (not originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the following:

FTC Sample Letter of Deletion

Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Company
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,

Your name

Enclosures: (List what you are enclosing)

Conclusion

Neither Lexington Law nor trying credit repair on your own will resolve debts you still owe. You have to clear your debts before credit repair will work.

Once you resolve the issue with the credit bureaus, follow the steps above to dispute the debt. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. If you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.

There are also certain Web sites that provide kits for as little as $13.95, these kits have letter templates and tips to help you repair your credit all by yourself. You can learn more about credit, credit scoring, and credit repair at Bills.com.

Generally we do not believe that firms like Lexington Law, Ovation Law, and other credit repair industry leaders are scams, even though they do have lots of complaints about them on consumer-complaint Web sites. Be sure to evaluate each company’s complaint volume against the size of its overall client base and do your own homework and further ensure that the amount you will pay the company seems reasonable to you for the services you will receive — many people fail to do their homework and are unhappily surprised.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

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Comments (509)


Saul H.
Houston, TX  |  May 16, 2013
I have an old credit card in collections that will reach the 7 year mark in 2014. My question is if I were to settle the debt, will my 7 years of this showing up on my credit report start all over again?
Bills.com
May 16, 2013
No, the 7-year credit report clock does not restart when a consumer settles a debt. Here, the derogatory account will fall off your credit report in 2014, assuming the date of first delinquency was in 2007.
Tom W.
Rogers, AR  |  May 09, 2013
I had an overdue payment 16 years ago for a cell phone bill of approx. $200. I have not paid the amount as it is listed by several collection companies on my reports and I fear if I pay one the others will keep their collection current as they have not been paid. Due now with interest around $370. How do I get rid of this derogatory credit which is ancient and a small amount of money?
Bills.com
May 09, 2013
Seven years after the date of first delinquency is how long most derogatory items can appear on a consumer's credit report file. An unpaid 16-year old cell phone bill is subject to the 7-year rule. Follow the directions described in the original article above to dispute this information.
Danielle L.
Shawnee Mission, KS  |  May 03, 2013
Being a single mom for years and struggling my credit has always been crap. I've never had the money to just pay it off and have always been denied for everything it seems. About a year ago I finally got almost everything paid off. I think there is 1 thing showing that hasn't been paid, but the collector can't tell me what the debt is. I'm in KS and I understand the whole 7 year process, but there are 2 on there that have been paid, but is still showing a balance. The major issue I am facing is a repossession which is showing on one of my credit bureaus; the debt is approx $2000 and I haven't paid them a dime as I disputed this from the get go. I was in a tough situation, had no car, bad credit and had to do something. I was charged $10,000 for a 97 Honda Civic (this was probably in 2005 or 2006) with over 250,000 miles on it. My own stupidity, but I had no choice at the time. They eventually sent a 1099 to the IRS and it was obviously claimed as income. I wrote the IRS and told them the whole situation and they told me I didn't owe the debt. The people I am dealing with is called Car Financial. I have been round and round w them about removing or putting a zero balance and they refuse. They go around in circles telling me I owe the debt; that they're no longer collecting on it; I don't think they know what they're doing. I don't think the other small things showing will be am issue coming off as I've already spoke with them, but are there any other options for this car situation? I was thinking about going through a credit repair agency, but will it help? Please help! I just want all this resolved so I can finally have good credit! I also have a lot of student loans, but those don't hurt me bc they're in good standing. My scores right now are about 585 and the 2 other credit report companies are about 650's. I do have a car that's 2 years old; never missed a payment so that's good. Please help! I also just got a capital one cc with a small balance to help my score. Thank you!
Bills.com
May 08, 2013
Some of the facts in your message are unclear to me. Regarding the Honda repossession, add 7 years to the date your last payment was due. If, for the sake of argument, the last payment was due in January 2010, the repo will appear on your credit report until January 2017. As time passes, the repo's harm to your credit score will fade, and the positive actions you mentioned will boost your credit score.

You mentioned the Honda lender sent you a 1099. I have good news and bad news.

The good new first: I assume the 1099 was a 1099-C. If so, the IRS was referring to Cancellation of Debt Income. See the link I just mentioned to learn more about how you avoided tax liability for the amount in your 1099-C.

Now the bad news: Despite what a 1099-C states in plain language, the fact that a creditor files a 1099-C does not mean the debt is canceled, forgiven, extinguished, or may no longer be collected. A 1099-C is just a confusingly named tax filing, and does not give the consumer who receives one a shield from future debt collection activities.

You mentioned one account in your credit report(s) has incorrect information. See the Bills.com article How to Dispute a Credit Report to learn what steps you can take to correct false information appearing in your credit report.
Tony T.
Bronx, NY  |  April 24, 2013
I have paid off my old charge off's with a settlement amount. I have mailed the paid settlement letters to all 3 credit company's. Will this help raise my credit scores? Also will I be able to remove this bad debts from my report?
Bills.com
April 25, 2013
The damage to your credit score was done when the accounts went severely delinquent. The benefit of paying off your accounts is that it prevents collection efforts from your creditors. The accounts should fall off 7 years after the date of first delinquency, under federal law. If they are still showing after that, you need to file a dispute with the credit bureau.

You need to focus on getting positive information reporting to the credit bureaus, in order to boost your score. Please read about the steps to take to improve your credit.
A W.
Auburn, WA  |  March 29, 2013
I signed up with Lexington law on March 15th. So far, 4 items have been removed off of my Transunion report. Good action considering it hasn't even been a month. Will update as time goes along. 1 of the collection items I had already paid off. The other 3 I had not paid off and were not scheduled to fall off anytime soon. So far I am impressed. But I hope they can get items off the other reporting agencies too. Especially Experian, since I hear they are the hardest! Look, companies like lexington lawfirm are for people who don't want the hassle or have the time to do it themselves. Yes you could do it yourself, but that's why they are around...For the people who are willing to pay for someone else to do the work....
Jeremy H.
Midland, TX  |  March 29, 2013
Just started working with Lexington Law! I only have a dozen or so negatives on each report, so I hope to get concrete results in a few months. Will check back with an update.
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Jeremy H.
Midland, TX  |  May 04, 2013
Just over a month in, and I am satisfied. Nearly 6 items removed, and nothing was billed until it was said to. Once the first removals happened, THEN they billed me. Am also working on keeping all accounts current and timely.
ANTHONY C.
Framingham, MA  |  March 29, 2013
An unknown person got a 2-year contract in my name from a cellphone company. I noticed this when I started receiving letters and phone calls about the bill I was supposed to pay. I called the company and they told me they're going to handle it. It's been almost a month, and no response from them. I'm very worried about it since I don't have any credit history. What can I do about this? Is it really effective submitting a dispute claim on my own? Or should contract this firm? Are they more accurate? What are my other options?
Bills.com
March 29, 2013
You may be a victim of identity theft. Go to the Bills.com identity theft recovery page and follow the four steps listed there to stop the damage the identity thief is causing. The damage to your credit score, which you mention in your message, is a side-effect of identity theft. You need to stop the thief first, then worry about the side-effects later.
K H.
Toledo, OH  |  March 27, 2013
I am reading mixed feedback regarding Lexington Law on this site. I have been with Lexington Law since 1/4/2013, approximately 4 months. I have had a total of 9 deletions. 5 Transunion, 3 Equifax, 1 Experian. They are doing a solid job for me. I do not recommend Lexington to people who have derogatory information unless you have paid the debt or the derogs are incorrect. If your negative information is valid and you owe the money, Lexington can't do much to help with that. My advice would be to pay the debt then engage Lexington to help with deletions.
Bills.com
March 27, 2013
Thank you for your feedback. It is important for everyone to know that accurate, derogatory information can remain on the credit report, no matter what steps Lexington or any credit repair organization takes on a person's behalf.
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S R.
Irving, TX  |  April 28, 2013
I tried Lexington out a few months back but I cancelled after only 2 months. They didn't get anything off for me. As a matter of fact 1 of the accounts they disputed was an old credit card bill. I disputed it myself and got it deleted recently. Lexington is not worth it to me.
Angeline A.
Framingham, MA  |  March 27, 2013
I left Puerto Rico in July 2012 because domestic violence leaving a car loan debt for $3,000 (aprx). Now I am living in Mass (U.S). This debt is affecting my credit a lot. I was thinking of using help of Lexington law. But I don't know if it's going to really help me. I am a single mom and i don't want to waste my money for nothing. It's something that I can really do?
Bills.com
March 27, 2013
Angeline, you need to resolve the outstanding debt, before you can work on repairing your credit. I don't advise hiring a credit repair firm, given your circumstances. I believe it would be a waste of money, if your goal is to remove the auto loan from your credit report.
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Angeline A.
Framingham, MA  |  March 27, 2013
Please tell me how I can remove that from my credit or improve in my credit score.
Bills.com
March 27, 2013
Angeline, an accurate, derogatory item will remain on your credit report for 7 years from the date of first delinquency, but the item carries less weight as time passes. As you can read on this page, some people hire credit repair firms and report that accurate, derogatory accounts were removed. The FTC says that no one should expect this when working with a credit repair firm. You could pay them monthly fees and not see any results. Certainly, there is nothing that they do that people can't do themselves.

Your best bet for improving your credit score is to get and use credit responsibly. That means having some active credit reports in good standing. If you can't open an unsecured credit account, look at opening a secured credit card. Remember, you don't want to run up debt on any card you open, only to use it and pay off the balance, in full, each month.

Separately, you have to formulate a strategy for dealing with the debt resulting from the auto loan. You can try to negotiate a settlement with them or lay low and hope they don't locate and sue you before the statute of limitations expires. If you approach them in good faith, the creditor can respond to your good faith efforts with aggressive actions, including suing you. Sadly, there is no simple answer to what you're facing.
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Angeline A.
Framingham, MA  |  March 27, 2013
I read this on the internet about following these steps...will this work?

1 Call your lender after the car is sold to find out if there is a deficiency balance and, if so, how much it is. Inform the lender that you are incapable of paying the full sum and request a settlement offer. Lenders are well accustomed to having to settle deficiency balances and most will oblige your request. 2 Prepare for the settlement by amassing as much of a lump sum payment as possible. You will often be able to negotiate a lower settlement agreement if you are able to settle the debt with one large payment. 3 Review the settlement offer when it arrives. Counter the offer with one of your own. If you are living on Social Security, a military pension or are currently unemployed, inform your lender of that fact in your counteroffer. A private lender is unable to garnish your wages or otherwise collect from you if you receive government income or are unemployed. This may make your lender more willing to work with you since it is unlikely to receive payment any other way. 4 Wait for your lender to respond. You will often receive a new settlement offer, but be prepared for the possibility that the lender will adhere to its original offer. If it does, bump your settlement offer up slightly and try again. 5 Make your payment to your lender and request that a receipt for the payment be mailed to your home. Keep the receipt to prove you paid the debt.
Bills.com
March 28, 2013
Angeline, I did a quick search to see where you found this and it looks like you read it at Ehow. I believe that their advice does not take into account certain important factors. It is not wholly inaccurate, but I will point out what I think Ehow left out, as well as the risks of following their incomplete advice.

First of all, if you call the lender when they are not trying to collect from you, you are drawing attention to yourself. The lender may be willing to negotiate a settlement or it may say, "Thanks for letting us know where you are," and then start to aggressively collect on the debt, moving to legal collections. You will have to make your own risk/reward decision, calculating whether it is worth reaching out to them before they attempt to make contact with you.

If you decide to contact the lender, I do not recommend contacting the lender before having enough funds on hand to pay for a reasonable settlement. Step one would be saving the money up, not contacting the lender and then start saving for a settlement.

Collection laws vary from state to state. While there are certain protections that apply in every state, such as some types of income being off-limits to garnishment by this kind of creditor, you may be exposed to a bank levy or be forced to liquidate some kind of asset, depending on the collections laws in the state where you live. In your case, the collection laws in Puerto Rico possibly may still apply.

It may be wise to negotiate a settlement, but there is no guarantee whatsoever that the lender will agree. Even if your income can't be garnished, a judgment the creditor obtains will last for years (exactly how long it lasts depends on the laws in the area of jurisdiction). If you circumstances change, the creditor could try to collect from you as long as the judgment remains in force.

I agree with Ehow that if you choose to negotiate, start low. Ehow leaves out other important information. For instance, if you settle the debt, make sure that you get any settlement offer in writing before you send payment. The offer should clearly state that your reduced payment will bring the debt to $0 and close the matter completely. Ehow also leaves out the fact that if your forgiven debt is greater than $600, then you should expect to receive a 1099-C and you will have to include the amount forgiven as income on the tax return for the year in which the debt was forgiven. It is cheaper to pay taxes on the amount forgiven than the total amount, but it is important that you are aware of the tax implications, a fact that Ehow left out.
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Angeline A.
Framingham, MA  |  March 28, 2013
Thanks! If I do the settlement and pay for it! then I contact lexington law this account will get out of my credit report or improve in my credit score with help of them or I can do something in my own, or is not worth it?
Bills.com
March 28, 2013
There is no sure-fire way of having accurate information removed from your credit report. Once the debt is paid, Lexington Law would try a process that attempts to exploit a potential procedural loophole. You could try the same method on your own, but it also would have no guarantee of success. You could end up paying Lexington Law, after you settled or paid the account, and get no positive results. Federal law, however, states that the account will fall off your report 7 years after the day of first delinquency. I think the most prudent course of action is to save up some money to use in an attempt to settle, in case the creditor rears its head, and to take separate steps to rebuild your credit score.
Jeremy H.
Midland, TX  |  March 23, 2013
I just hired Lexington to help remove some small charge offs that I think are not legit. We shall see what they come up with. If nothing else, i can pay them off and then they can make sure that the collection agency removes them. If nothing else gets done but that, I will be happy.
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