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Credit Cards

Should you be using or saving your credit card reward points?

Should You Cash in Your Credit Rewards Points – or Keep Saving?

By | Credit Cards

For most people, credit card reward points provide a much-needed perk to regular credit card usage. When you know you are earning credit card reward points for your purchases, it can soften the blow of those larger expenses. Once you have collected a substantial amount of points, you probably wonder whether it’s wise to cash them in now — or keep saving for a better reward. Of course, you don’t want to wait too long, or your points might expire. The way that you use your points can be just as important as how you earn them. As you weigh your options, check out our helpful advice for deciding how to capitalize on your credit card rewards points.

When to Save Points

If your credit card offers big-ticket incentives for accumulating a certain amount of points, it makes financial sense to stockpile the rewards. Generally, these types of cards favor the travel-oriented consumer, who’s looking to earn points toward airline miles or hotel stays. In the end, your efforts could net you a free — or significantly discounted — vacation that might normally cost thousands of dollars. But some cards set eligibility restrictions for these points, so make sure you read the terms and conditions carefully. Even if you don’t have any trips planned in the immediate future, your travel rewards card might offer other redemption options, such as merchandise or gift cards. But if your primary reason for obtaining the card was for travel, it’s best to keep saving up those points for that particular purpose. The value of the airline tickets and hotel stays is typically much better than the merchandise or gift cards offered by the card issuer.

When to Redeem Points

When you have a more general-use credit card rewards program — one that isn’t geared specifically toward travel — it’s best to redeem your points more frequently. If your card allows you to cash in your points to pay down your balance, you could be saving yourself a good chunk of money — and interest charges — starting right now. You might also choose to use your rewards points on items that you purchase most frequently, such as groceries or gas. Saving money where you can is one of the biggest perks of a credit rewards program, which is why cashing in when you can is often a smart move. Your credit card issuer will typically have a conversion chart so you can see exactly how your points translate into cash (for example, one point may equal one cent). That’ll allow you to determine how to best maximize your rewards points.

The Fine Print

Whether your rewards card offers points that can be redeemed for gift cards or merchandise, make sure to scour the terms and conditions. Some cards have a time limit on how long you can accrue a points balance without spending. Regardless of how you use the rewards, you’ll want to cash in before that expiration date. Your card issuer might also change the terms of its rewards program at any time. For example, they could decide to increase the threshold for redemption of certain rewards — which would effectively devalue the points you already have. They are required to notify you of any such changes, so be sure to read any notices from your credit card issuer when they come in the mail.

Keeping Your Points

Whether you choose to save your points up or redeem them every month, it’s critical to keep your account in good standing. Most credit card companies have a clause in the agreement allowing them to withhold rewards under certain circumstances — such as if you miss a payment. You’ll also lose out on your points if you close the account, so make it a point to redeem any points before you cut ties with that particular card. And check in with your account, and your points, on a regular basis. Some cards could yank your points balance if you leave the account inactive for a long period of time. If you think you might forget to redeem your points, see if your card offers an auto-redemption option.

Learn More

Educating consumers like you on smarter credit card usage is just one of our specialties here at Ovation Credit. When you contact us for a free consultation, we’ll help you improve your credit with a thorough review of your credit report. Reach out and let us know how we can help you here.

Think before you buy. Learn what you can't buy with your credit card.

What You Can’t Buy With Your Credit Card

By | Credit Cards

Credit cards can be one of the single most powerful items in your wallet. When used correctly, they can steadily build a positive credit history, greenlighting your way to better interest rates and loan approvals. Mismanagement of credit cards, on the other hand, could send you spiraling into debt and financial woes. With their sheer power and convenience in a tech-friendly marketplace, it seems difficult to envision purchases you can’t buy with your credit card. However, there are several scenarios in which you cannot use plastic to finance your purchases. Read on for our roundup of the most common items you can’t buy with your credit card.

Payments for Other Credit Cards

If you’ve ever been strapped for cash around the time one of your credit card payments was due, you might have toyed with the idea of using another credit card to make the payment. Beyond the fact that this typically will not make much financial sense, it’s also a no-no for credit card companies. You probably won’t even be able to find the option to do so on your card’s payment platform. There is, however, a loophole: you can transfer your balance to another credit card, but you will incur a balance transfer fee and possibly other conditions.

Illegal or High-Risk Activities

Think twice before you charge anything that could be considered an illegal or high-risk activity. A credit card company may disallow the charge. Examples of such activities include casino gambling, online gambling, adult pornography, medical marijuana, and lottery tickets. Of course, some of these activities are legalized or at least operate in a legal gray area — but many credit card companies have decided that they are simply not worth the risk, due to the high likelihood that these customers will dispute the charges at a later date. Online gambling, for instance, is illegal in the United States, so most of those sites will prohibit you from paying with plastic. In other situations, it’s up to the card issuer to decide what is acceptable card usage. For American Express, online pornography and medical marijuana don’t pass muster, but these activities could be fair game for other card companies.

Substantial Loan Payments

You might salivate at the idea of all the rewards points you could rack up by charging your mortgage or student loan payment (and then immediately paying off the bill from your checking account). Generally, though, your lender has rules in place to forbid you from doing this. It’s likely a combination of reasons; on the lender’s side, they do not want to pay the hefty credit card merchant fees, while the credit card company doesn’t want to take on the risk of a substantial charge that may or may not be paid off. Your checking account is generally the smartest funding source for these transactions.

Money Orders

You will likely have to pony up cash or a debit card to purchase a money order, for the simple reason that a money order basically amounts to purchasing cash. Be wary of any money order issuer that doesn’t bat an eye when you hand over your credit card. Even if it’s accepted, you will probably end up paying a fee and a higher interest rate for this transaction, since your credit card company will likely treat it as a cash advance.

Cryptocurrency

Depending on the type of card you have, you may or may not have trouble using your credit card to purchase cryptocurrency, such as bitcoin. Some card issuers may allow it, but then later slap you with a cash advance fee for the transaction. For that reason, it’s best to avoid using plastic for cryptocurrency purchases altogether.

Stocks

In most cases, you can’t buy stocks with your credit card. Your investment accounts generally must be funded with actual money from your checking account. Most brokerage firms strictly prohibit the use of plastic. Even if you could find a service that might allow credit cards, you would likely lose out on any of the benefits, thanks to the steep credit card interest rate and the relatively low rate of return on any investments you’d be making.

Education Leads to Success

At Ovation Credit, we want to equip you with the tools and knowledge to build a better credit life. Make today the day you start on the journey to a more improved credit standing. Reach out to us for a free consultation here.

It's easy to skim your credit card statement but make sure to check out the fine print.

Credit Card Statement Fine Print: 6 Key Areas to Watch

By | Credit Cards

If you’re like most credit card users, chances are that you quickly scan your credit card statement when it arrives in the mail, check your balance on the front page, and then chuck it into the trash. You could be making a big mistake if you neglect to scrutinize your credit card statement’s fine print, at least once every couple of months. The fine print is typically the place where credit card companies sneak in the most essential details about your account. If you aren’t aware of the various account terms and conditions — or any changes that could be in your future — you might set yourself up for some very costly blunders. Knowing how to decipher your credit card statement fine print arms you with the knowledge to become a more responsible credit card user. The next time your credit card statement arrives, be sure to check out these top six areas.

1. Notices of Changes to Interest Rate

If your credit card company has plans for an interest rate increase on the horizon, it is required to advise you of the increase at least 45 days before it takes effect. You should be able to find this information near the top of your credit card statement, typically under a boldface heading such as “Notice.” The information should also specify the date that the higher interest rate will become effective. The credit card company may or may not advise you if it will be increasing your interest rate if you miss a payment or reach your credit limit — but if it does have such a policy, you will likely be able to find that information in this area as well.

2. Dispute Charge Policy

When the time comes for you to dispute a charge with the credit card company, you need to know about your card’s specific guidelines for doing so. The credit card statement fine print will typically outline everything you need to know about their dispute policy — where to email or mail your correspondence, what documentation to include, and the basic framework for the card’s dispute investigation process.

3. Explanation of “Other” Fees

On the back of your credit card statement, the issuer explains various fees that may be applied to your account, depending on your usage. For instance, if your card allows cash advances, the fine print will clarify the fees you incur each time you use this perk. Be sure to peruse this area of your credit card statement thoroughly. The fine print may also address fees that most card users wouldn’t expect — such as fees for the card company to report your account activity to the credit bureaus, pay by telephone, or other customer services.

4. Interest Rate Calculation

If you want a comprehensive rundown of how your credit card applies interest to your purchases, your credit card statement is the place to find it. The fine print should also address the timing of the “grace period,” also known as the date by which you would need to make a payment before interest is assessed.

5. The Date Your Card Issuer Reports to the Credit Bureaus

Knowing when the credit card company reports to the credit bureaus is essential if you have goals of improving your credit score. Some card companies are more helpful in this area than others. If you are scheduled to make a payment after the credit card company reports to the credit bureaus, the company will likely report the balance it had on file for you at the time — even if you paid it off in full just a few days later. Sometimes, the credit card company reports the information on your statement closing date — but this can vary from issuer to issuer (which is why checking your statement is so important!).

6. Rewards Cards Provisions

Many Americans carry at least one rewards card in their wallets. As valuable as they can be, rewards cards often come with their own elaborate set of terms and exceptions. For instance, your credit card issuer might stipulate that you will have to wait a number of weeks for rewards points to be applied to your account. The fine print will also discuss the conditions that must be in play to remain eligible for those rewards — such as the length of time your account has been open and whether or not you have missed a payment.

Keep Up the Momentum

Reviewing your credit card statement is also an excellent way to spot errors or even fraudulent charges. If you find either one, you’ll have a solid reason to take up a dispute with your credit card company. At Ovation Credit, we can help with that dispute process, saving you the time involved in building a case yourself. Contact us here for a free consultation.

college students figuring out credit

6 Smart Credit Card Strategies for College Students

By | Credit Cards

College students will be testing the waters of credit card usage as they enter adulthood. For the first time, they’ll be swiping plastic for basic purchases, setting the groundwork for their futures as responsible adults. While this is an excellent way to build credit, it can lead to disastrous results. After all, students also have a packed calendar of academic and social commitments — so it’s understandable that smart financial planning doesn’t typically rate highly on their list of priorities. But careless spending can quickly add up, and it can take years to undo the damage of high-accrued credit card balances. Learn about how you can use a credit card safely and responsibly with these six tips.

1. Look for a Card That’s Student-Friendly

More than ever, credit card companies are catering to students in search of convenient and stress-free payment options. Do a little research on credit cards that are geared toward college students. You’ll want to look for a card with no annual fee or other hidden fees, as well as low interest. Although you may encounter more than one appealing offer, avoid the temptation of opening too many cards. One card is ideal for most students. It offers you the chance to track your spending and plan for due dates without becoming too overwhelmed.

2. Charge What You Can Afford to Pay Off

Be honest with yourself about how much you’ll be able to pay off every month, and set an appropriate limit. The best policy is to only use your credit card for purchases you can easily pay off that month. That way, you’ll avoid racking up debt that will only snowball in the coming months. If you have already reached the limit you established for yourself that particular month, leave the card at home and stick to cash for the time being.

3. Pay on Time, Every Time

Late payments can quickly wreck your credit score — and it can be difficult to recover as a nascent credit card user. This is the single most important part of responsible card ownership. When you first sign up with the credit card company, make it a point to set up an auto-pay option. You can usually choose the amount and the date that the payment will be withdrawn from your account. Take advantage of all the tech tools now widely available with most card issuers. It’s a great idea to download the credit card’s app onto your smartphone and opt-in for alerts about approaching due dates. The more reminders you can set for yourself, the better.

4. Stay Well Below Your Credit Limit

A good rule of thumb is to make sure your credit card balance never exceeds 30% of your credit limit. For instance, if you have a $2,000 credit limit, you won’t want to have an unpaid balance greater than $600 at any given time. If you are already only spending what you can afford to pay off each month, sticking to this tip won’t be a problem.

5. Encourage Responsible Card Ownership in Your Friends

Once you have adjusted to using a credit card responsibly, encourage your friends and classmates to shop around for a similar card. When more of your friends have plastic in their wallets, you are less likely to be the one offering up your card for nonessential purchases. One example: College students commonly frequent restaurants together. If you’re the only person there with a card, you might be stuck picking up the tab, while your friends fork over cash to cover their share of the bill. This can be tricky because while you will end up with more cash in your wallet, it won’t necessarily help you pay off the balance at the end of the month.

6. Prepare an Exit Strategy

If you run into some difficulties and can’t pay your balance in full, make sure you’re at least paying the minimum amount due. You will end up paying more in interest, but that’s better than accruing late fees. And if you decide that you aren’t ready to use a credit card, you may want to shelve the plastic for a few more years. Work toward paying off what you owe and close the account.

As you comb through college student credit card offers, make sure you’re also thinking about your credit report. Now that you have a credit card, you’ll want to check in on your credit report regularly. The numbers and terms on a credit report can be confusing to read, and it can be even tougher to figure out if all of the information reported is accurate. If you need a helping hand sorting out what’s on your report, reach out for a free consultation with the Ovation Credit team.

Young woman just found out the best credit card offer.

Credit Card Offers You Should Think Twice About Taking

By | Credit Cards

When you’ve embarked on the journey to build or improve your credit, choosing the right credit cards is nearly as important as paying your bill on time. Ideally, your credit card should offer low interest or APR (a minimal or nonexistent annual fee), and rewards or other incentives that fit in with your lifestyle. Unfortunately, credit card companies often use misleading language to steer unsuspecting consumers into signing up for credit card offers that do not actually help credit. As you sift through the next stack of credit card offers in your mailbox, make sure you take the time to review the fine print hiding underneath the colorful attention-grabbing headlines and lofty promises. There are certain credit card offers to think twice about taking. We’ll give you the lowdown on the most glaring offenders, so you can separate the good credit card offers from the not-so-good and downright harmful ones.

Tricky Bonus Conditions

Credit card companies count on generous welcome offers to entice new customers into signing up. The problem? If the user does not meet certain conditions — such as never holding a card from that company before — the company reserves the right to deny the bonus. What that means: Think twice before you take a credit card welcome bonus offer. You may not qualify for the offer, based on any other accounts you have ever opened with that issuer. And even if you do qualify now, the card issuer could revoke your eligibility for several reasons. Your best bet is to call up the card issuer and confirm the terms and conditions of the offer, as well as your eligibility. You will also want to hold onto the documentation setting forth the credit card offer guidelines.

Store Credit Cards

Store credit cards effectively solicit consumers with tempting offers, such as 10% or 20% discounts on purchases or the chance to earn store credit. Think about the timing of the offer — right as you are about to drop a significant amount of cash, and it’s likely when you do not have the time to carefully review the rates and the terms you are accepting. Most people only find out about the excessive interest rates after they receive the first bill a month or two later. The average APR on a store credit card can reach around 22.99%. If you do not pay the balance every month, the interest you’ll rack up will easily cancel out any of the benefits.

Low-Rate Intro Offers

Introductory offers are another example of a credit card offer you should think twice about taking. Some cards lure you in with the promise of a low-interest rate during the introductory period — a common offer for cards geared toward appliance or furniture purchases. If you fail to read the fine print, you will not find out when the intro period expires — and the rate that will then take effect. Many people are shocked to find their rates jump exponentially after the intro period. To add insult to injury, the interest usually starts accruing at the time of purchase. If you have not paid off the debt during the intro period, the interest could be charged retroactively at the higher rate.

Rewards Cards

The right kind of rewards card pays off in dividends, allowing you to earn points that can be later redeemed for travel, other high-ticket items, or cash back on the items you purchase the most. However, remember that some rewards cards can come with a hefty price tag in the form of high-interest rates or annual fees. Before you commit to a card with alluring rewards, make sure the card actually gels with your lifestyle — and doesn’t bring with it any exorbitant fees. In addition, be prepared to pay off the balance every month, or the amount you pay in interest will offset the rewards. Think twice about taking a credit card offer that sounds too good to be true.

The best kind of credit card offer can set you up for a healthier credit score. While you are shopping around for the best offer to improve your credit score, check out the rest of the services we can offer you at Ovation Credit. Our team of professionals can whip your credit report into shape quickly and efficiently. Find out how we can help you today with a free consultation here.

credit cards are available for you if you have bad credit

Credit Cards for Bad Credit: What to Look for, What to Avoid

By | Credit Cards

 Credit Cards for Bad Credit: What to Look for, What to Avoid

Having poor credit should not be a life sentence. Now, more than ever, consumers with troubled credit histories have access to a wealth of credit card options. The key, however, is to make sure you find a credit card that will support your credit-building goals, not amplify any existing problems. Finding credit cards for bad credit will require patience, persistence, and a healthy amount of research. You may need to spend more time digging through the fine print to learn what a prospective card is really offering. To save you some time, we rounded up our top tips for selecting a credit card for bad credit.

What to Look For

The best credit card for your situation might not boast top-notch benefits, such as cash back or rewards on your purchases and a low interest rate. Even the most attractive option will come with its own set of drawbacks. However, after you cultivate a decent history of paying your credit card bill every month, you stand a much better chance of qualifying for a card with better perks — and terms — the next time around. Here is what you should be looking for in a credit card for bad credit.

  • Secured cards. Secured cards will require you to pay a cash deposit up front, which will serve as your “credit limit.” This is typically the smartest financial option for someone shopping for a credit card for bad credit. If you do not pay the bill, the card issuer could take the deposit. But when you build up a history of on-time payments, you will eventually earn the deposit back and perhaps be able to upgrade to an unsecured card.
  • Store credit cards. The often-overlooked store credit card can actually be quite useful as a credit-building tool. These typically boast lower barriers to qualification, so a person with bad credit would have an easier time obtaining an approval. They also offer lower credit lines, so it is easier to avoid racking up excessive debt. The catch: Only charge what you can afford and pay the bill in full every month so that you avoid the higher interest rates and late fees that come with these cards.
  • A card that reports to the three major bureaus. Find out if the card you select will report to the three major credit bureaus. After all, you want your credit report and score to reflect all of your hard work and efforts to repair your credit. Typically, the major card issuers will automatically do this, but always ask before you make any commitments.

What to Avoid

Consumers with bad credit are especially at risk for predatory credit card offers. Credit cards for bad credit unfortunately often come with a steep price tag — in the form of high annual fees or interest rates. These are the main areas you should avoid in your search for a credit card for bad credit:

  • Excessive fees. You may not be able to avoid an annual fee when you are shopping around for a credit card for bad credit. Still, it is best to keep the annual fee as low as possible. Aim for a fee under $50. Be on the lookout for any additional fees, such as one-time account opening or processing fees.
  • High-interest unsecured cards. Be wary of any unsecured card offer that promises a quick and painless credit approval, even for those with subpar credit. To protect themselves from risky consumer prospects, these credit card companies charge excessive interest and fees — which will only aggravate your debt and credit problems.
  • Cards with spending requirements. Some credit cards offer welcome bonuses and other rewards if you spend a certain amount during the first few months of card membership. Steer clear of these and any other offers that encourage excessive spending. It may not sound like much fun, but you’ll want to focus on keeping your spending in line with your budget and paying your balance each month.
  • Too many credit applications at once. Each application you submit will register as a hard inquiry on your credit report, which can drag down your score. To avoid that, only apply for cards that you are pre-qualified for — provided they don’t come with any of the risks mentioned above. The pre-screened offers are considered soft inquiries, which will not affect your credit rating.

Take the Next Step

Using your new credit card responsibly plants the seeds for a stronger credit score. If you need assistance tidying your credit report during this process, reach out to the team of specialists at Ovation Credit. We’re happy to dive in and help you restore your credit to good standing. Contact us today.

Man stealing an id

How to Freeze Your Credit for Free

By | Credit Cards

Identity fraud is a growing problem throughout the world and can have a devastating effect on your credit. Identity thieves target personal and financial information to gain access to consumers’ existing accounts or to open new accounts under a false identity. Once they do, they can have free reign over your finances.

Luckily, there are ways you can protect yourself as much as possible against this problem. Common sense is helpful when you receive a phone call or email from someone asking for information while claiming to be from your bank, credit card company, or even the IRS. But even if you have your guard up, you can include an additional level of security by implementing a freeze on your credit report. And best of all, it’s now a free service offered by credit bureaus.

We’ll walk you through the process from start to finish so you know exactly what is included with a credit freeze and how to add one to your own credit report.

What is a Credit Freeze?

A credit freeze denies creditors access to the information found on your credit report. Since credit card companies and lenders run a credit check before issuing any type of loan or card, any fraudulent application made under your name should be denied if a check can’t be performed. While it’s not a foolproof method, it certainly reduces the chances of having an identity thief successfully open a new account under your name.

Just remember that when you’re ready to apply for an authentic new type of financial product, you’ll need to remove the freeze. That can be anything from applying for your own new credit card or paying an installment loan such as a mortgage or car loan. Build in time prior to submitting your application to get the credit freeze lifted since it can take a few days to go into effect. Once you get approved for the credit, you can put a freeze back on your credit.

This is also a good tactic to use for children. Some identity thieves and scammers target social security numbers of minors because their credit reports typically aren’t checked for years. It can be a huge nuisance for someone in their late teens or early 20s who goes to apply for a credit card or student loan only to find out that their history is already full of credit errors from fraudulent accounts.

How Do You Freeze Your Credit for Free?

Historically, credit freezes cost around $10 to implement with each credit bureau, which is quite an expensive service. New legislation, however, has favored consumers by requiring the credit bureaus to offer credit freezes for free. Contact each credit bureau directly to enact a freeze: Equifax, Experian, and TransUnion.

You’ll receive a PIN that is specific to your account and you’ll need that number anytime you want to lift a credit freeze. It’s a cumbersome process to replace your PIN and verify your identity, so keep it in a safe and secure place until you need it.

Can a Credit Freeze Help with Credit Repair?

Placing a credit freeze on your credit report won’t help with existing credit errors; it’s primarily used for preventative measures. In that way, though, you can better avoid needing a new credit dispute due to potential negative items caused by fraudulent accounts on your credit report.

Another way to help limit damage and improve your credit is to access your free credit reports each year. You can order your own credit reports even if you have a credit freeze in place. In fact, some other third parties such as your existing creditors can also still access your credit report to confirm your eligibility for certain APRs, for example.

Once you get a copy, check your report from each bureau to make sure there aren’t any red flags. If you see an account or balance you don’t recognize, call the listed creditor for more information. If you have been the victim of identity theft, your first step is to get the account stopped so no more spending can take place. From there, work on fixing your credit either on your own or through a professional credit repair company. Unfortunately, even other people’s fraudulent activity can hurt your credit history, regardless of how unfair that seems.

You can help expedite the process and get your financial footing back by talking to a firm like Ovation Credit. Our legal team has the experience to get your credit report back to the way it should be as quickly and efficiently as possible.

While identity theft can be prevented with a free credit freeze, you can fix any incidents that do happen with Ovation. Sign up for a free consultation to learn more.

Sources:

https://www.northwesternmutual.com/life-and-money/you-can-now-freeze-your-credit-for-free/

Woman becomes an authorized user on friends credit card

Become an Authorized User on Someone Else’s Credit Card — and Build Your Credit Score

By | Budgeting, Credit Cards

These days, improving your credit score can take many different forms. Becoming an authorized user on the credit card of someone else — typically a more-established credit user — can help enhance your score as you work on building up your credit history. Because the other person’s credit habits will reflect directly on you, you might be able to increase your score more quickly and effectively than you would with your own efforts. As an authorized user, you’ll enjoy many of the same privileges accorded to a typical cardholder, such as receiving a card with your name on it and using it to make purchases. For that reason, taking on an authorized user status is an excellent tool for those with limited to no credit history. However, there are some important distinctions that you’ll want to consider before you make your decision. Here’s what you need to know about authorized user status and how you can use it to your advantage.

How It Works

As an authorized user, you hold no responsibility for paying the balance on the credit card bill. That fact alone can make the prospect of becoming an authorized card user very tempting — but it is still a decision that will have significant financial repercussions. Since someone else is forking over the money for your purchases in addition to their own, it’s even more important to follow good budgeting and spending practices. Remember that if the primary cardholder cannot afford to pay off a large balance, your own credit score will take a hit.

Choosing a Financial Partner

The person who adds you as an authorized user could have the power to boost your credit score dramatically — so make sure you’re choosing someone who already practices excellent credit habits. You’ll want to know if the account you’re being added to has been open for a while, typically carries a low balance, and boasts consistent on-time payments. It’s also a good idea to discuss your financial goals in the beginning. For instance, if you plan to be an authorized user for a short period of time (perhaps six months to a year) in order to later qualify for higher-limit credit cards, let the other person know this is a temporary arrangement with a set end date. Establishing clear guidelines and expectations at the start is the smartest way to head off a future conflict.

Effects on Your Credit Report

Before you sign on as an authorized user on someone else’s account, verify that the account is one that is reported to the major credit bureaus. The major card issuers will usually report the entire history of the account on your credit report. You can expect to see a difference in your score as soon as that information shows up on your report, usually within 30 days from your addition to the account. Keep in mind, though, that not all accounts are reported to the credit bureaus. If the account in which you’re an authorized user belongs to a smaller bank or credit union, the credit history may not be reported — and therefore it won’t impact your credit score. Generally, credit score formulas will weigh the primary cardholder’s history as if it were your own personal history, so you would benefit from the longer record of the other person’s timely payments.

Moving on

One major advantage of the arrangement is that authorized users can be removed from the account at any time. You can simply contact the card issuer and request to be taken off the account. This option can be useful if your relationship with the cardholder changes or their financial habits start to suffer. Or you might decide the arrangement has simply run its course and you’re ready to apply for a card in your name only. Depending on the credit scoring model, the entire account and its history might disappear from your credit report entirely — or it could remain for several years and continue to impact your credit score. Either way, you’ve likely gained valuable practice using credit and set a solid foundation from which to continue to build your credit score.

Requesting that someone else add you as an authorized user is one way you can safely and effectively bolster your credit profile with the help of someone else. Give your score an even bigger lift by reaching out to the pros at Ovation Credit, where we help credit users tackle disputes and fix credit issues every day. Set up your free consultation here.

: 5 Worst Life Events for Your Credit Score

5 Life Events That Could Impact Your Credit Score

By | Credit Cards

It’s impossible to control many of life’s setbacks and disappointments — or the impact they could have on your credit score. By the same token, even some of the happiest moments in life can later wreak havoc on your credit score. In most cases, the life event itself is not to blame for the damage to a credit score — but the very change in circumstance often brings on certain conditions that can torpedo a formerly solid score. Regardless of which life event has precipitated your credit score drop, remember that you can reverse the damage with a healthy amount of awareness and persistence. Read on for our roundup of the five worst life events for your credit score.

1. Divorce

The actual separation itself will not be reported on your credit score, and it will not cause you to be denied on any credit applications. However, many people find themselves struggling financially after a marriage dissolves. A divorced spouse may find it tough to make ends meet with a reduced income, leading to missed payments or higher credit card balances. Occasionally, if you hold an account jointly with an ex-spouse and your ex fails to pay, the negative entry could end up on the credit reports of both individuals. That is one reason why after a divorce, experts advise severing ties with the ex-spouse to avoid the possibility of any future joint account problems.

2. Job Loss

Your credit score can take a serious hit if you lose your job. Although your employment status is not specifically listed on your credit report — and will not factor in the overall calculation — you are likely to experience financial troubles during the period in which you are unemployed. Those monetary stresses, in turn, make job loss one of the worst life events for your credit score. Without a reliable income, you may resort to running up balances on your credit cards or attempting to take out a loan to cover your expenses. If money becomes particularly tight, you may not be able to make the monthly payments. Payment history and your credit-to-debt ratio will then be affected — two factors that account for a major percentage of your credit score.

3. Marriage

Getting married is an undeniably joyous occasion — but most people are later surprised to find out that this life event can indirectly sink a credit score. When you merge your finances with someone else, for better or worse, you link yourself with their credit behavior. Merged accounts may be easier to track, but if one of you misses a payment, the other spouse will have that black mark recorded on their credit report for the next seven years, too. In addition, marrying someone with a weaker credit score can affect your ability to qualify for joint loans in the future, since lenders will consider both of your credit histories. That, in turn, could lead to loan denials or higher interest rates.

4. Opening a Business

Although the start of any new enterprise is an exciting time, entrepreneurs may notice an impact to the credit score along with some early financial growing pains. The typical new business owner will likely need to apply for personal loans to kick-start commercial growth. Whenever someone takes out numerous loans or opens credit cards within a short period of time, credit bureaus register these as hard inquiries that can dock credit scores a few points. Falling behind on these payments can seriously plummet a credit score. And since opening a business is often a risky economic move, many business owners may accrue sizeable debt on their own personal accounts if sales start slumping.

5. Identity Theft

Unfortunately, the phenomenon of identity theft has become all too prevalent — and its impact makes it one of the worst life events for your credit score. When thieves take your personal information and use it to incur high balances on your cards, or open accounts that they have no intention of paying, you could see your credit score drop by 100 points — or more. You may not even find out about unpaid collection accounts until you see them show up on your credit report months later. Although you can fight to undo the damage through disputes and credit repair, it can take years to fully restore your credit score to its former level.

Give us a call or send us a message here to find out how we can help you regain your financial freedom.

Mom help teen learn credit cards

Smart Credit Card Habits for Teens

By | Credit Cards, Personal Finance

If you’re like most parents, you’ve taken the time to instill healthy financial practices in your youngsters. That informal education does not always extend to the use of credit cards — but it should. Right on the heels of proms and college applications, teenagers will soon find themselves thrust into a plastic-saturated world — and having some basic knowledge about smart credit card habits can make a tremendous difference. Smart teen credit card habits will put your kids one step ahead of their peers, allowing for a smooth transition into adulthood and a nice jump start on building a healthy credit history.

Give them a Starter Card

Teens who understand responsible credit card usage in high school will be less likely to fall into the common college debt spiral. One option to teach smart teen credit card habits is with a prepaid debit card, which can be funded directly from the student’s savings. Or you could add your teen as an authorized user to your own account. If you consider your teen responsible enough to hold a credit card, make sure he or she is also capable of maintaining a bank account from which to make the payments. Show them how to set a monthly limit and keep a record of their purchases. Point out when the running tab is nearing too close to the monthly limit of what they can afford to repay.  Be sure to set guidelines on what your teen can and cannot buy with the card — and review the statement each month as it arrives.

Teach Them That Credit Isn’t Free Money

It doesn’t take long for the average consumer to understand that overuse of credit leads to debt. However, teens might be less likely to appreciate this risk. One idea is to ask your teen to hand over the amount of cash (plus a few dollars extra) that he or she spent, or plans to spend, on a credit card. Once your teen sees that amount disappear from a checking account or allowance, he or she might reconsider the purchase. This also helps them to understand that any credit card spending must, eventually, be repaid — and often ends up costing more in the long run, thanks to interest and other fees.

Use the Monthly Statement as a Learning Tool

Just as teens are starting to appreciate the convenience and glamour of credit card usage, it’s time to peel back the curtain and point out some of the stark realities. Dig up one of your latest credit card statements and show them the total amount of your purchases, as well as the amount of interest charged and your APR rate. Most statements will also provide a rundown of how long it will take you to pay the balance — and how much you’ll pay in interest — if you only make the minimum payment every month. That is another good teen credit card habit to learn — how paying your balance in full every month, or making more than the minimum payment, can save thousands of dollars in interest fees.

Resist the Urge to Bail Them Out

If your teenager spends excessively and ends up accruing a mountain of debt, don’t panic — or try to solve the problem alone. Together with your teen, come up with a plan for him or her to repay the outstanding amount — whether through an after-school job or a monthly payment plan. It may seem cruel at first, but in the long run, it can be a momentous lesson for your child. In the real world, parents don’t just sweep in and erase debt problems — and the sooner your child can understand the realities of managing financial responsibly, the better.

Talk About the Importance of Credit Scores

Credit scores will be extremely important in your teenager’s future — and now is an excellent time to explain how their impact penetrates far beyond qualifying for loans and credit card offers. In a few short years, they could be applying for a job or trying to rent an apartment. Explain that employers, landlords, and creditors all use credit checks to verify an applicant’s financial status and level of responsibility. If teens grow into adults who understand the importance of smart credit card habits, they will have no problem achieving a solid credit score.

Set a Good Example

It’s no easy feat to teach kids about smart teen credit card habits. While you’re spending this time educating your child, make sure you take this opportunity to check in with your own credit report. Give us a call today at Ovation Credit and we’ll be happy to offer our wisdom with a free consultation.

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