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Credit Laws

May 06
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Prepare yourself for the credit reform for staying up to date and educated.

Credit Reporting Reforms May Be on the Way: What’s in Store, and How It Could Impact You

By | Credit Laws

If you find yourself frustrated with credit bureaus and the way information is reported to them, relief may soon be on the way. In a nod to growing consumer frustration, California U.S. Representative Maxine Waters, who heads the House Financial Service Committee, recently reintroduced a draft bill proposing sweeping reforms to the credit reporting industry. Dubbed the Comprehensive Consumer Credit Reporting Act of 2019, the bill aims to deliver expanded rights to customers and increased transparency into the credit reporting process. Let’s take a look at the proposed credit reporting reforms and how they could transform your credit report for the better.

Changes to the Dispute Process

Much of the bill revolves around changes to the dispute process, with an emphasis on placing the onus on credit bureaus, not consumers, to remove inaccurate information. If enacted, the bill would require agencies to notify consumers of negative information at least 90 days before it is reported. They could no longer simply dismiss your disputes as frivolous or irrelevant — and would have to devote an appropriate number of employees to investigate consumer complaints. The proposal would allow consumers to appeal disputes that the credit bureaus have already reviewed and rejected. In addition, the bill would require credit bureaus to clarify their dispute procedures so that consumers can more easily submit a dispute with the necessary supporting documentation. The data furnishers — or the companies reporting the inaccurate data — would need to maintain records to verify the accuracy of the disputed items.

The Information Reported to Credit Bureaus

The proposal also takes aim at the type of information reported to credit bureaus and how long it can remain on your credit report. The bill proposes to remove negative items from credit reports once the debts are paid or settled. Additionally, the changes would slash the amount of time a negative item can linger on your report, from seven years to four years, and reduce the bankruptcy scar from 10 years to seven.  If you were the victim of a predatory lending practice relating to a mortgage loan, the bill would prevent any adverse information from showing up in your credit report. And the bill would extend the time before a collector can report a medical debt as unpaid — with a bonus of mandating that credit bureaus completely expunge fully paid and settled medical debt from your history.

How the Changes Could Impact You

If the consumer-friendly proposed overhaul were to take effect, it could spell big changes for your credit report. You would likely see a lift in your credit score faster, thanks to a shorter shelf life for derogatory entries. If your credit report contained any inaccuracies, the process to dispute that information would likely be much easier than it is now. With a more simplified and regulated dispute process, you’d have a much better chance of having negative and incorrect information removed. As it stands now, the process to dispute false information can take years and involve many failed attempts — which translates to more time contending with a lower credit score. The changes are comprehensive enough that there’s a chance you could clear up damaging or incorrect information before it even reached your credit report — a huge time-saver for all involved.

What’s Next

While the bill is still in the discussion draft phase, expect dialogue over the proposals to continue. The bill has arrived at a pivotal time in the wake of the data breach at Equifax, when Americans are increasingly anxious about the security of their personal information. Although the bill stalled when it was first introduced in 2017, the majority in the House of Representatives has since shifted to the Democrats — which bodes well for the bill’s reception this time around. There’s a decent chance the bill, once it’s officially proposed, could meet with significant support from both sides of the aisle. We will keep you posted as the bill continues its path toward official introduction.

Start Your Better Credit Life Today

While possible credit reporting reforms are certainly an encouraging development, don’t wait for the legislation to pass before you take action to improve your credit. Our pros specialize in disputing items with credit bureaus, and we know how to work with them to secure the results you want. Simply put, our methods work. Get started with your better credit life today, and set up a free consultation with us at Ovation Credit.

Mar 02
0
Asking for a higher credit card limit

What You Need to Know Before Asking for a Higher Credit Limit

By | Credit Laws

Sooner or later, most consumers who use credit cards regularly toy with the idea of requesting a credit limit increase. You might ask for a higher limit in order to finance a large-scale purchase or because you’ve outgrown the original limit. Either way, it’s up to you to present a compelling case to the credit card issuer. You will likely want to highlight your past payment history and your reasons for asking for an increase. The rep for the credit card company may also want to know if your circumstances have recently changed, such as a boost in your paycheck, which could serve as a mark in your favor. Since a credit limit increase could affect your credit limit and financial condition, make sure you have carefully weighed the benefits and the risks as they apply to your specific situation. Here’s what you need to know before you ask your card issuer for a higher credit limit.

An Approval May Be Easier Than You Think

A credit card company is poised to make more money from a consumer with a higher credit limit — so it’s generally in their best interest to approve a request like this. If you already pay on time every month, you should have no problem meeting their guidelines for an increase. A word of caution: the credit card company might extend a larger increase than you actually need or want — so be prepared with a number in mind that’s still well within your spending limits.

Your Credit Utilization Ratio Will Be Affected

With a higher credit limit, your credit utilization ratio — also known as the amount of credit you’re using compared to the overall amount of available credit — will likely decrease. That, in turn, can lift your credit score. Lenders look favorably on consumers who are keeping their ratio at 30 percent or lower, and a credit limit increase will certainly help in that regard. The more room between your balance and the overall credit limit, the better — that way, you’re demonstrating to potential lenders that you practice responsible spending habits. However, it can be tempting to use the higher limit as an excuse to charge more purchases, but that will eventually increase the credit limit utilization and eat away at any progress you’ve made on your credit score.

Some Increases Happen Automatically

Some credit cards will offer automatic increases to customers as a reward for consistent on-time payments. It’s worth asking if this is a perk your card offers. If it is, find out how periodically your account may be reviewed for a potential increase. That can save you the trouble of having to request a higher limit.

Your Financial Standing Matters

Even though it may be fairly easy to snag that credit limit increase, a credit card issuer will still undertake a thorough review of your credit history. They’ll likely assess your recent payment history, as well as how much you’ve paid in proportion to your overall balance. If you’ve missed any payments or paid only the minimum amount due, that’ll send up a red flag to the credit issuer. You want to be able to prove that you’re spending within your means — and not just requesting a credit limit increase to cover up other financial woes.

Your Credit Report May Be Reviewed

The credit card issuer will probably pull your credit report if you’re asking for an increase. That query tends to drop your credit score by a few points. Although it will not result in any dramatic difference to your score, you should still hold off on applying for loans in the near future. When they review your credit report, the card issuer will be able to tell if you have applied for other loans or credit limit extensions recently, which could signal you’re in financial distress. That’s why it’s a good idea to limit your request to one card only — and make sure it is the one you tend to use the most often.

Before you ask for a credit limit increase, be sure you’ve done your homework and evaluated whether you’re a good candidate. Now is an excellent time to check in with your credit report and clean up any old debts or errors that could be hurting your score. At Ovation Credit, we offer a free consultation so we can help you track down any errors and tune-up your credit report before you ask for that credit limit increase.

Jun 20
0

Can I Repair My Credit After Bankruptcy?

By | Ask a Credit Expert, Bankruptcy, Consumer Rights, Credit Laws, Credit Repair, Personal Finance, Your Credit

Credit Repair After Bankruptcy

Bankruptcy sounds like a dirty word, but for many people, it is a lifeline to starting over. Whether you lost your job, were overwhelmed with an unavoidable expense or found yourself dealing with a costly illness, bankruptcy was designed to give people a chance to begin again. However, bankruptcy does take a serious toll on your credit score.

Understanding the Impact of Bankruptcy

Luckily, that’s not to say that your credit score is going to be ruined forever. According to the Federal Trade Commission, your bankruptcy can stay on your credit report for as long as 10 years after your debts are discharged, and that can make accessing new credit, buying a home or even getting a job difficult. While the impact can be severe, it is possible to repair your credit after bankruptcy. It just takes some proactive efforts on your part.

Look at it like this: Your credit score is meant to be indicative of how risky it is to let you owe money. High balances, late payments and anything else that could show you may be living outside your means is suspect. Filing for bankruptcy is largely the culmination of those issues. Now, you may have had extenuating circumstances that were completely outside of your control, or you may have merely gotten underwater and couldn’t find your way out. Whatever the case, the bankruptcy on your credit report is objective; it doesn’t matter why it happened. To repair your credit, you have to demonstrate that you are no longer a credit risk.

Starting Over After Bankruptcy

The first advice most people hear after filing for bankruptcy or facing some similar credit crushing issue is to establish new credit as soon as possible. That is good advice, but it is incomplete. Repairing your credit after bankruptcy will require that you have accounts on which you make regular payments. Getting a loan and then paying it off will not do nearly as much good for your credit report as making consistent payments.

“The key is to establish at least three positive trades actively reporting on each of your reports with Equifax, Transunion and Experian,” explains Marco Carbajo for the Small Business Administration. “For example, if you’re currently making timely payments on a car note but have no other positive credit that’s active, then you should obtain two secured credit cards and use them regularly.”

Understanding Your Credit Score

Aside from exercising your credit, you also want to practice good spending habits. According to the Federal Reserve Board, your credit score is influenced by whether you make your payments on time, the amount of debt you have, the number of accounts you have, the length of your credit history and how much you owe.

For instance, once you get your first credit cards after bankruptcy, you will want to make sure that you keep the amount of debt on those cards at less than 30 percent of the credit limit, and increase your credit limit whenever you can – the higher your credit limit, the more your creditors trust you and the better it looks on your credit reports. Also, make sure you are making your payments on or before the due date and paying any billable amounts in full.


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Being Selective About Your Credit

After bankruptcy, you want to be selective about where you find your credit as well. Many people with bad credit are sold solutions that promise to provide them access to new credit far more quickly than through any other source, but beware of those offerings. Even if the lender is legit, if the company is known as a “high-risk lender,” using them for your credit or banking needs could actually hurt your credit score. Instead, focus on well-known lenders and credit companies. Choosing a big bank over a high-risk lender, even if it means you have to start with a lower credit limit or a secured credit card over a traditional credit card, looks better and may even give you more options for growing your credit as you repair the damage from your bankruptcy.

Righting the Wrongs in Your Credit Report

You should also take a look at your credit reports to make sure that the debts from your bankruptcy were discharged properly and that all information is accurate. An error on your credit report can really work against you. To do correct inaccuracies, the Federal Trade Commission says that you will need to obtain a copy of your credit report from each of the credit reporting agencies and inform them in writing of any inaccuracies. You may need to provide proof of the inaccuracy if possible, and it may be necessary to tell your creditor that you are disputing the entry. Hiring a credit repair company can make the process easier. They handle the paperwork for you and handle the dispute on your behalf.

Once you begin to take steps to improve your credit score after bankruptcy, you can start to see modest improvements pretty quickly. As long as you are careful with your credit, choose the right lenders and maintain accurate credit reports, you can repair your credit after bankruptcy.

Sources

  • Federal Reserve Board, “5 Tips for Improving Your Credit Score” http://www.federalreserve.gov/pubs/creditscore/creditscoretips_2.pdf
  • Federal Trade Commission, “Coping with Debt”, November 2012. https://www.consumer.ftc.gov/articles/0150-coping-debt
  • Federal Trade Commission, “Free Credit Reports”, March 2013. https://www.consumer.ftc.gov/articles/0155-free-credit-reports
  • Small Business Association, “How to Restore Your Credit After Hard Times”, Marco Carbajo, May 2013. https://www.sba.gov/blogs/how-restore-your-credit-after-hard-times
May 19
0

Pay Off Debts – 9 Affects on Your Credit Score

By | Ask a Credit Expert, Bankruptcy, Consumer Rights, Credit Laws, Credit Repair, Credit Reports, Credit Scores

Credit Repair - Pay Debts

Are you wondering how paying off your debt could affect your credit score? There’s no doubt that paying all of your debts is the ideal thing to do, but sometimes it just isn’t possible. If you’ve lost your job or suffered other hardships, you may have to choose which bills to pay. Here’s how each course of action will affect your credit score.

1. Paying in Full

You may be unable to pay in full now, but it’s worth considering in case you win the lottery, find a higher paying job or have some other windfall. When you start paying on time again, you’ll have positive payment history added to your credit report.

Unfortunately, any past late payments or other negative remarks will not be removed from your credit report when you bring the account current. They may affect your credit score for up to seven years from when they happened.

2. Paying Only the Minimum Payment

Paying the minimum payment due by the due date keeps your accounts current and avoids late payment penalties. Even when money is tight, make paying the minimum payment on every account your first priority.

When possible, you should pay more than the minimum. In addition to saving interest, you’ll also be improving your credit profile.

Paying only the minimum payment can lead to your credit card utilization ratio increasing, which will lower your credit score. Credit card companies also have internal models that flag accounts with only minimum payments as high risk, and they may reduce your credit limit or close your account.

3. Paying Late

Paying late should never be an option. Even if you’re trying to pay off a higher interest credit card first, don’t skip paying the minimum payment on your lower interest cards.

If you absolutely can’t make every minimum payment, you should understand the two payment deadlines. The first is the actual due date that must be met to avoid a late fee, while the second is for credit scoring purposes. Late payments aren’t reported to the credit bureau as long as you make the payment within 30 days of the due date.

4. Ignoring Your Bills

If you can’t make your minimum payments and have already had a late payment reported on your credit report, don’t just ignore the bill. It will only get worse.

Unpaid debts will be reported as charged off or result in a lawsuit and judgment against you. These have a much bigger negative impact on your credit report than late payments.

If you’re sued, you’re also at risk of having your wages or bank accounts garnished and losing even more control over your finances.


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5. Using the Debt Snowball Method

The debt snowball method is a strategy you can use once you stabilize your finances and are able to make more than the minimum payment on your credit cards. With the snowball approach, you focus on paying off one credit card at a time — either the lowest balance or the highest interest rate.

The downside to the snowball method is that your credit score may not rise as quickly as it could. It’s typically better to have moderate balances on all of your cards than to have one or two with no balance and the rest almost maxed out.

The credit card companies that you’re only paying minimum payments to may also get nervous, as explained above.

6. Taking Out a Loan to Pay Off Credit Cards

Taking out a loan to pay off credit card debt may or may not be advantageous. The biggest positive impact it will have is to bring up your credit score by reducing your credit card utilization ratio.

However, a loan will often have higher monthly payments than your credit card minimum payments. This puts you at greater risk of making late payments unless you’re absolutely sure you can meet the new payment amount.

Of course, you’ll also need to compare the interest rate of the loan to your credit card rates to see if it’s worth it. This is more likely to be the case if previous late credit card payments have pushed you up to the penalty APR.

7. Offering a Settlement

If lenders believe there is a risk they won’t be paid in full, they’re often willing to accept a lump-sum settlement or a modified payment plan. Legally, you won’t owe them any remaining balance, but your account won’t be reported as in good standing on your credit report.

Your credit report will also reflect that you settled the account for less than what you owed. As with other options, past negative history is not deleted.

8. Paying for Deletion

Paying for deletion is a type of settlement where you ask the creditor to remove negative items from your credit report in exchange for your payment. You may also be able to ask that the account be marked as paid in full rather than settled or charged off.

Technically, the credit bureaus don’t allow this practice, but many creditors bend the rules if it helps them get paid. If you’re successful, the negative items will be removed from your credit report, and your score will be the same as it would have been if they were never added.

9. Declaring Bankruptcy

A bankruptcy in itself has one of the largest negative impacts on your credit score, and it also doesn’t erase negative history. However, bankruptcy will stop collections and prevent new negative marks from being added to your credit report.

If you can’t keep up with your payments, bankruptcy may be the best option to stop the damage and allow you to focus on rebuilding your credit score.

Sources:

  • https://www.consumer.ftc.gov/articles/0152-credit-scores
  • http://www.consumerfinance.gov/askcfpb/317/what-information-goes-into-my-credit-score.html
  • http://www.federalreserve.gov/pubs/Bulletin/1996/796lead.pdf
  • http://www.sites.ext.vt.edu/newsletter-archive/fmu/2002-04/factors.html
  • http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.203.3472&rep=rep1&type=pdf
  • http://www.myfico.com/crediteducation/whatsinyourscore.aspx
May 08
0

Credit Myths Debunked

By | Credit Laws, Credit Repair

If you don’t work in the financial industry, it’s likely you are confused about at least one or two items that affect your credit. There are so many myths floating around about credit scores, credit reports, and the factors that contribute to a high score, that even the most educated consumers are still confused on certain items. We’re here to help debunk some of the popular myths and help set the record straight.

  • Closing your oldest account immediately improves your credit. Since the length of your accounts determines fifteen percent of your credit score, many people believe that closing their oldest account will immediately affect their credit. However, the truth is, that account will remain on your report for several years and will still be taken into consideration when determining your score. Closing your oldest account will lower your average length of credit history; therefore, it will actually end up lowering your credit score.
  • Medical debt has a different effect on your score. Many people believe that medical debt that has gone to collections does not affect your credit score. However, all debt reported to collections, including medical debt, is generally reported. In general, debt that is in collections will have a negative impact on your FICO score.
  • Carrying debt is necessary to build credit. Many consumers believe that they must carry a certain amount of debt in order to continue to build their credit. But, it isn’t necessary to overload yourself. What is important is demonstrating responsible use of credit rather than not using credit at all. In addition, it’s important to ensure that you limit your credit use to keep your credit utilization ratio down.
  • Short sales are better than foreclosures. Despite popular belief, short sales and foreclosures have the same impact on your FICO score. The reason is that both are considered to be defaults on your obligations.
  • Lenders are required by law to report your account activity. There are actually no laws that require lenders to report your activity to credit reporting agencies. The only law surrounding this subject is that what lenders report must be accurate.

The most important thing consumers need to understand and realize is that if it’s in your credit report, it will be used to calculate your score. Your credit score is calculated by software systems. The software must be written in a way to identify and consider new items. Calculating your credit score is actually a science and not subject to human interpretation or error. Knowing and understanding your credit score is intimidating, but crucial for your financial success.

If after learning your credit score, you determine that you are not in a good position for financial success, you may be a good candidate for credit repair solutions. At Ovation, we are here to help. Our credit repair plans are customized to meet your unique needs.

Contact us today to see how we can help.

 

Dec 30
0

More Credit Myths Debunked

By | Credit Cards, Credit Laws, Credit Repair

Here at Ovation, we feel that knowledgeable consumers are empowered consumers, which is why we spend so much of our time and effort providing education about credit laws, credit cards, and credit repair. We want you to be informed, perceptive credit users who use credit as a tool instead of being a slave to credit.

Part of being a savvy credit consumer is being able to move beyond the myths that surround credit. Your credit score is more than just a number; it is your ticket to better interest rates, strong purchasing power, and sometimes a better job. Today, we’re busting a few credit myths and bringing you the truth.

I can boost my score by cancelling credit cards.

While it might seem logical that closing accounts would boost your credit, the opposite is actually true – especially if you close accounts you have had for a long time. Credit history carries a lot of weight – 35% of your credit score – so closing older accounts can actually be very bad for your overall credit score.

I can’t apply for credit because too many inquiries are bad for my score.

While it can be detrimental if you’re always applying for new credit cards and opening new accounts every month, credit-reporting agencies recognize when a consumer is simply shopping. If multiple mortgage or auto credit inquiries come in during the same 30-day period, the credit agencies will assume you’re on the hunt for the best deal and it won’t count against you.

I pay my bills on time every month, so I don’t need to check my credit reports.

Every single person absolutely must take responsibility for actively managing their credit and reviewing the information on their credit reports. Even if you are paying all of your bills on time every month, you should be making certain that no one else is using your good credit and that your efforts are being properly reported. You can request a free copy of your credit report from each of the three reporting agencies once per year.

As long as credit myths keep popping up, you can count on us here at Ovation to keep peeling away the layers of confusion so that you can be an empowered, informed consumer in charge of your own financial destiny. If you have questions or concerns about your credit, feel free to contact us today for a free consultation.

 

Mar 19
0

Proper Spending Habits will Protect Your Credit Card Health

By | Credit Laws, Credit Repair, Credit Scores

When we bag our groceries, we are encouraged to choose paper over plastic, in the effort to protect our environment. We suggest you do the same when protecting your credit card health: choose paper, not plastic.

Banks make their money from plastic. Every time you as a consumer use your credit card instead of cash, a percentage of your purchase goes into the coffers of the bank.  Subsequently, banks want you to use plastic as much as possible. They will bribe you to use your credit cards even when you don’t need to – or when you shouldn’t – use plastic instead of cash.

Points are often awarded to frequent credit card users. As travelers are awarded points for flying with a particular airline regularly or frequenting a specific hotel, credit card users are awarded points for regularly using a particular credit card and often for a particular purchase.

Seasoned credit card users realize that a different interest rate is assigned to cash advances; this rate is higher, and fees are often added to this higher rate. In contrast, lower interest rates are assigned to balances transferred from a competitor’s credit card, as the lender offering the lower rate wants your business. In their efforts to remain competitive, however, banks are now awarding points, double points, and triple points.

One lender may give you double points if you use their credit card for gas. Perhaps the lender may give you double points if you use their credit card for groceries. Another lender may offer triple points if you use their credit card to pay utility bills. Beware!

Banks will try a multitude of tactics to get you to use their credit cards and to continue using them on a regular basis. You will find that you are developing habits that will cost you more in the long run, and unless you are a credit card user that pays off your full balance every month, you are building interest that increases the cost of the service or item for which you are paying.  Develop habits that will protect your credit health.

Do not pay interest for gas. Do not pay interest for groceries. Both gas and food prices have increased enough over the past couple of years; do not make the situation worse.  If you must use your credit card, use the purchasing power of the card for larger ticket items, saving your cash for basic energy and grocery essentials. Also, realize your spending habits. If you are one to buy impulsively, train yourself to walk away from a prospective purchase. Give yourself 24 hours; you may find that you do not want a particular item as much as you originally thought you did. If you don’t need the item and you don’t have the cash, don’t buy it.

Credit card rewards are a bonus for those consumers who can afford to pay their balances and avoid hefty interest rates. These same rewards, however, are bait used to lure the user into a dangerous cycle of revolving debt that siphons additional money from the consumer that the user does not have.

Mar 16
0

Credit Card Act of 2009 Puts Consumers Back in the Driver’s Seat

By | Credit Cards, Credit Laws, MasterCard, Revolving Debt, Visa

Credit card companies have long been greasing the wheels of government with high priced lobbying, but in 2009 Congress struck a blow for the common man (and woman) – you know, the ones that actually voted for them. Few people know about the Credit Card Accountability Responsibility and Disclosure Act of 2009 and that’s exactly how the credit card companies would like to keep it, but this act puts the power back in the hands of the people and makes credit card companies accountable for their actions.

Follies of Youth

Most college students would likely contemplate selling a kidney if it meant a free pizza on Friday night. Money is tight and college cafeteria food is barely edible. It used to be that students going to sporting events or even walking around campus would be greeted by friendly credit card company reps who were passing out free stuff, from frisbees to t-shirts (letting laundry day wait one more day), just to get the students to fill out an application. It didn’t take long before thousands of college students had a lot of free shirts and a ton of credit card debt.

Credit card companies preyed on these groups because students were impulsive and an almost-sure money-maker. The credit card industry knew there were plenty of minimum payments and tons of interest to be collected from the free pizza generation. The Credit Card Accountability Responsibility and Disclosure Act of 2009 took away the credit card companies’ ability to market on campuses, much to the chagrin of dirty-shirted and hungry college students everywhere.  You can’t even get a credit card before you’re 21 anymore, unless you can prove you have income or have a co-signor. Credit card companies also can’t visit a sporting event or other venue to entice new customers without a valid reason for being there.

Interested in Interest

Credit card companies once had the ability to raise a person’s interest rates for almost any reason. Miss a few payments? Default on a previous credit card? Wear white shoes after Labor Day? Ok, so a fashion faux pas is a little exaggerated, but many people found their interest rates rising with little or no warning.  Your interest rate could jump by 18 points over night, and you were left holding the bag.

The Act has several provisions to protect the public from unreasonable interest rate increases. Companies now have to give 45 days notice before raising rates, so you can decide whether or not you want to keep the card. That 45 days is designed to give you time to pay off and close the card without incurring the new interest rate. It also keeps them from retroactively using the new rate on a balance in good standing.

We’ve all made credit mistakes, and credit card companies were taking advantage of that to increase rates if you were late on your payment by so much as a minute. The Act protects consumers by requiring a 45-day notice for increases in rate and, if you make six months of consecutive on-time payments, then your interest rate must be lowered back to the rate you had before the missed or late payments.

The main downfall of the Act is that it did not set a cap on interest rates. This means companies can still charge upwards of 30, 40 or even 50 percent interest if they want to.

Fees! We Don’t Need No Stinking Fees.

Credit card companies seem to have a fee for everything. There were late fees, over the limit fees and you-ate-too-much-chocolate-on-Thursday fees. The Credit Card Accountability Responsibility and Disclosure Act of 2009 gave credit card companies rules about when they are allowed to charge fees.  Before the Act, if you got your payment in too late at the post office or went one cent over your limit, they took the opportunity to rake you over the coals.

Now, credit card companies can only charge an over-limit fee for three consecutive billing cycles.  Also, payments made on the payment date before 5 p.m. cannot be charged a late payment fee.

Credit card companies are complying with the law, but they are counting on consumers not knowing about their rights. Grab the credit bull by the horns and turn your credit score around by exercising your ability to take control thanks to the Credit Card Accountability Responsibility and Disclosure Act of 2009.

Mar 13
0

When Do Interest Rates Vary?

By | Budgeting, Credit Cards, Credit Laws, Debt, MasterCard, Revolving Debt, Visa

You probably see credit card offers all over the place. They’re in the mail box, in your email, on TV, and on the web. Every one of them boasts about the great interest rate they’re offering, and the temptation to click and apply or fill out a form is great, especially when you need some financial relief.

Suppose you accept one of the offers. Will the sponsoring credit card company increase their rate after a couple of months? And what excuse will they use?

In the past, credit card companies could make changes with the wind, but new laws have stopped practices such as raising the rate on your card simply because a competitor raised your rate on their card. Credit card companies can still raise your rate, but they have to let you know when and why.

General Change of Rate: If you’re in good standing, your interest rate can change only if the credit card company changes the rate for everyone having the same kind of account with them, and they have to give you 45 days notice. The notice gives you time to pay the outstanding amount and cancel the card before the rate goes up.

Late Payment: Sometimes the credit card company will raise your rate to their default rate if your payments are late for two months. To do that, they have to give you the 45 day notice, and, if you make the required payments for six months – on time – at the new rate, then the company has to reduce the rate to the rate you had before the increase.

Cash Advances: A credit card company can offer a teaser rate coupled with a flat fee. After a period of time, the interest rate on cash advances can increase to a rate that’s higher than your credit card rate. What many companies don’t advertise is that your payments are applied to the minimum payment requirement on your credit account first. Only after that payment is made is anything applied to the cash advance, which is why we don’t recommend taking cash advances from credit cards.

Balance Transfers: Credit card companies will offer a lower interest rate on balance transfers to entice you to transfer your credit debts to their card so you have a bigger balance with them. They know that most folks won’t pay off large transfers during the teaser period and will end up paying the normal interest rate on the larger amount they now owe. Of course, you come out ahead if you do pay the transfer off during the teaser period, particularly if they offered you a zero percent interest rate.

Resist the temptation to fall for the pleas from credit card companies. Instead, take stock of the credit cards you currently have, work with them to lower your interest rate as much as possible, and focus on managing and reducing the debt you have instead of adding more.

Mar 07
0

How To Handle Domestic Fraud

By | Ask a Credit Expert, Credit Laws, Fraud Protection

You hear about identity theft all the time. There seems to be tons of stories in the news these days about someone hacking into a business and stealing data on customers or their credit card numbers. It’s easy to know what to do when a stranger steals your information and commits fraud, but fraud can also be committed against you by someone you know.  It might sound more like something that happens in a movie, but maybe your brother-in-law dug that pre-approved credit card application that came in the mail out of your trash and helped himself to your better credit and opened the account.

At Ovation, we’ve seen it all – from clients whose family members have opened cable accounts and cell phones in their names without their knowledge to family members who rack up thousands of dollars in credit debt. Until you get a bill for a line of credit or a service you never opened, or you see a delinquent account on your credit report, you may never even know they’ve done it.

When a stranger commits identity theft, there is no hesitation about phoning the police and filing a police report (the surest way to protect your credit). With domestic fraud, it’s not always that easy to call and turn in your brother, mother, or nephew. Sometimes, you can handle the fraud privately between you and the family member responsible. Try talking with that person to see if you can work out a way to repay the debt that resolves the problem without impacting your credit score or sending your loved one to jail.

While some creditors may not even ask you who committed the fraud or care if you do know who was responsible, it’s likely they’ll ask for a police report. Generally it makes it easier to prove fraud if there’s a police report, but we understand it can be hard to file one against a relative, even if they are that black sheep of the family who always seems to be looking for a free ride at everybody else’s expense.

If the “figure it out between us” approach doesn’t work, you may be left with no choice other than reporting the abuse.  You can try to handle the debt yourself, and you may have the resources to do this, but if you don’t and you end up with a delinquent account on your credit report, then you’ll need to consider calling the credit bureau and telling them that the negative account on your credit report is the result of fraud. No matter who committed the fraud – friend or stranger – you have the right to dispute the charges and repair your credit score.

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