Ask a Credit Expert

What to Do When a Company You Do Business with Has a Security Breach

By | Ask a Credit Expert, Fraud Protection

The cleverness of the criminal mind never ceases to amaze. Recently, it was reported that thieves targeted Barnes & Noble, stealing consumer credit card data by rigging the POS PIN pads (the machine where you swipe your card to pay for your purchases) at more than 60 stores across the country.

If you shopped at one of the affected Barnes & Nobles stores, your credit card data, and even your identity, might be at risk for theft. Barnes & Nobles is only one of many companies to have had a data security breach, putting consumer credit card data at risk of theft. The question is: What do you do to protect yourself after the fact?

Carefully review your credit card statement every month

When your credit card statement becomes available, carefully review it to make sure the information on the statement matches the purchases you actually made. Better yet, if you have online access to your credit card accounts, don’t wait for the statement. Log in right now to review recent purchases and make sure all of them are legitimate.

Monitor your credit card usage going forward

Check your credit card usage regularly, and if you have a PIN associated with the account (a debit card or a credit card that allows you to obtain cash using a personal identification number), change that PIN with your credit card company right now. You should also (whether or not your account has been compromised) change the passwords you use to access your online billing regularly. Secure passwords should contain a combination of uppercase and lowercase letters, numbers and special symbols.

Request a copy of your credit report

It is a good idea to review your credit report regularly anyway, but any time you’ve conducted business with a company that has experienced a security breach, you should request a copy of your credit report from each of the three major credit reporting agencies, to make sure there is no fraudulent activity. If you are a victim of identity theft, report it to the police immediately.

Managing your credit reputation requires taking a proactive approach, to minimize potential risk. Ovation can help; contact us today for a free consultation.

Are Christmas Club Accounts a Good Idea?

By | Ask a Credit Expert, Featured, Revolving Debt, Save Money

A Christmas club savings account is a special account you can set up to help fund Christmas gift purchases. Many employers offer these accounts, making it easy to have the money automatically withdrawn from your paycheck, while many banks have stopped offering Christmas club accounts. It is possible that the lack of profitability in offering such an option to consumers has come into play. Why offer a way for consumers to save money to fund Christmas when you really want them to use their credit cards?

Fortunately, credit unions still believe in the Christmas club account – and so do we, especially if it means you’ll set aside cash to pay for Christmas instead of charging everything you buy.

While Christmas club accounts will not earn you a lot of interest, they do provide the discipline that most of us are lacking, because you typically cannot withdraw the money from the account before the holiday season begins. Whether you set aside $5 a week or $100 a month, putting money into a Christmas club account might be a good idea. If you have existing credit card debt, however, you’ll be further ahead in the long run if you take the money you would have set aside in a Christmas club account and pay it toward the balances on your credit cards instead.

Christmas club accounts earn little, if any, interest, so if you are paying 14 to 28 percent interest on your credit card balances, you save a lot more by paying down that debt. The question is: Can you pay down your credit card debt and still have the discipline to avoid using credit cards to fund your holiday spending?

If discipline is an issue (and don’t feel bad, it is for most of us during the holiday season!), then opening a Christmas club account might be a New Year’s Resolution you want to make. But if you choose to pay off your credit debt and can keep from maxing out your credit cards again, you may be giving yourself the best Christmas gift of all: better credit scores and less of your monthly income earmarked for making credit card payments

If you are looking for the best way to pay off your credit card debt and give yourself the gift of more available income each month, check out Ovation’s credit card payoff tools. We have tools to help you achieve your goals, whether you need to get rid of high-balance cards, cards with high interest rates, or a combination of the two.

4 Reasons to Give Thanks

By | Ask a Credit Expert, Credit Scores, Debt, Personal Finance

As the holidays approach, it’s good to take a moment to think about those things in our lives that fill us with gratitude. Ordinarily, we are so busy with our daily lives that the simplest joys of life often slip under the radar. There may still be monthly bills on the table, but set aside those concerns long enough to consider four reasons to give thanks this November:

1. The elections are over. After more than a year of campaigning and political ads, we’re glad to see it come to an end. Let’s hope that our newly-elected and returning officials can roll up their sleeves and get to work!

2. We are grateful for the health of family and friends, and the opportunity we all have this time of year to spend quality time with loved ones. For many, Thanksgiving is a day off from work, which means you can eat and nap to your heart’s content.

3. Speaking of eating, Thanksgiving is always associated with delicious food. This season is officially the end of any diet you may be on for the year, but New Year’s resolutions will start soon enough.  Tasty food doesn’t have to break the bank either. You can still make a fantastic Thanksgiving dinner on a budget.

4. We are grateful that there is still time to make a plan that will allow you to stay in control of your budget as Christmas approaches. Retailers may be urging you to spend all you have and charge even more, but this is the most important time of year to leave your credit cards at home. Decorations and presents will tempt, but they are not worth a mountain of debt.

Here are some tips for surviving the holidays:

  • As you prepare for Christmas shopping, make plans to spend only what you can afford to pay for in cash: analyze exactly how much money you have to spare and divide that by the number of people you wish to buy for. This will encourage you to both consider how many presents you can afford as well as force you into staying within a specific price range for each person.
  • Instead of buying new decorations now, use the old ones for one more year and then get ready for the next Christmas by buying decorations for 50% – 75% off in the days after Christmas.
  • Black Friday sales can give you a way to save money, but beware of the traps. Stores typically advertise one or two phenomenal deals surrounded by twenty not-so-great ones. If you shop smart, this can be a great money-saving opportunity, but only if you avoid the flat screen TVs that may be “on sale” but are still too expensive to be worthwhile.
  • Be wary of the uptick in fraud, credit card and identity theft, as the ghouls that come out on Halloween don’t go in until after the holidays.

Thanksgiving is a joyful time. We each have a lot to be thankful for, and here at Ovation, we are grateful to all of you for letting us be a part of your journey to better finances. We hope you have a wonderful holiday. Get some much-needed rest this Turkey Day, monitor your spending, and feel free to eat more than you should.


Why You May Want to Dump Your Bank and Hook Up with a Credit Union

By | Ask a Credit Expert, Personal Finance

Is your bank unavailable to you when you need them most? Are your needs being ignored? Do you feel that your bank is all take and no give? If so, you might be in an unhealthy relationship with your bank. Banks are not the only place you can open checking accounts and obtain mortgages; credit unions offer services nearly identical to banks, with advantages that banks can’t match. Here are a few of the reasons to love banking with a credit union.

They Will Listen To You

A credit union is a cooperative financial institution. That means that everyone who banks with that credit union is a member and a shareholder. The loans and services offered by a credit union come from the pooled resources (deposits) of its members. Also, because each member of the credit union is a shareholder, members have voting power and a say in the direction and decisions made by the executives.

They Don’t Get Greedy

Credit unions are non-profit organizations, which allows them to focus on providing the services that their members need, instead of generating profits to boost their stock price. The lack of a profit incentive also enables credit unions to pay higher interest rates on savings accounts and charge lower fees and interest on loans. The non-profit status of credit unions makes them eligible for government tax breaks, further reducing their need for member-generated revenue.

You Will Receive the Personal Attention You Deserve

This is perhaps the most popular reason that people choose to bank with credit unions. Credit unions are smaller institutions, and decisions can be made by local management. Not only will the employees of your branch remember your name, but they will be able to respond to your needs or changing circumstances with a simple conversation.

Unlike at a bank, where you might be denied the best rates on a new loan because the “computer says no,” credit union loan officers and managers have the ability to negotiate directly with you because they know you. If you have a less-than-perfect financial history, a credit union will listen to your personal circumstances and work with you to help you out. Also, once you have a history with your credit union, they are more likely to accommodate special needs, such as allowing a temporary overdraft or delaying a mortgage payment.

Of course, all good relationships thrive on compromise. While there are many benefits to credit unions, you may need to relax some of your standards. Because credit unions are generally smaller in size than banks, they usually have fewer branches, fewer ATMs, and fewer online banking options. If these characteristics are not a deal-breaker for you, then a credit union may be a perfect match.

Making Progress as You Pay Down Debt with Ovation Tools

By | Ask a Credit Expert, Debt, Revolving Debt

Making consistent monthly payments is a great step towards eliminating debt, but it can be a dreadfully slow process. Without the right payment schedule you, could be paying off whatever you charged long after the item is actually of any use to you. Unless you want to accumulate an amount of interest that would equal the price of a new car, it’s time to switch things up with one of our favorite tools.

Split Discretionary Evenly is an Ovation tool that lets you create a payment schedule designed to dwindle your debts faster than by simply meeting the minimum obligations of your creditors. What is unique about this payment plan is that it utilizes discretionary funds, which are monies used in addition to your monthly payments. The goal is to set aside an amount, separate from what you already pay, and then split that amount evenly among all your debts.

Using this payment schedule, what will eventually happen is that one debt will be paid off with the extra payments made. Then, the money that initially went toward the monthly payment for that debt can be placed in the discretionary fund pool. This can again be split evenly between the remaining debts, paying off your balances at an even higher rate than before. This trend continues until all debts have been successfully paid off.

One benefit of Split Discretionary Evenly is that payments are continuously being administered to every debt held. When payments are not being made, interest rates soar to unnecessary levels, making it even more difficult to pay off what is owed. An even split is also much easier to keep track of, so you won’t have to worry as much about what amount of money should be going where.

Setting aside funds in addition to your monthly payments may seem overwhelming, but it is completely possible. As always, do not go beyond your financial capabilities. Instead, consider ways in which you can reduce spending elsewhere. You would be surprised at how fast that morning coffee adds up. The less you spend on beverages, fast food and other frivolous items, the more you can contribute to ridding yourself of debt.

You may be making monthly payments, but if you truly want to escape debt, the bare minimum isn’t enough. A conscious effort must be made to live frugally. By doing so, payment schedules such as Split Discretionary Evenly are remarkably effective. Of course, this payment schedule is only one of the many Ovation Financial Tools available to pay off debt sooner. Find the one that meets your financial needs, and start on the path to debt recovery.

4 Types of Credit and How They Impact Your Credit Score

By | Ask a Credit Expert, Personal Finance, Your Credit

We’ve all been there: butterflies in our stomachs, sitting at that desk, waiting for the fast-talking guy to come back and tell us whether or not we’re approved for a loan.

Having good credit is important in today’s society, as our homes, the vehicles we drive and many other aspects of daily life are dependent on having and maintaining a positive credit score. There are several things that lenders are looking for that can impact your score, including your payment history, outstanding debts, length of credit history, whether or not you have new credit and the types of credit you use.

Loans are the kind of credit used when either cash or goods are advanced to a person, with the understanding that the loan will be repaid. The lender often makes the ultimate decision based on the factors above, and this type of credit can be very risky, depending on the terms they set up, in particular the interest rate. Typically, you need to have good credit or a down payment equal to 20 percent of the total loan or both to qualify.

Utilities, such as electric, water, garbage and sewer, are called service credit. This kind of credit is almost always established when you move to a new place, as utility companies often require a deposit of some sort, which is typically credited to the account within 6 months to a year. This type of credit almost always has set due dates, as well as late fees if not paid on time.

When financing is set up on a purchase, installment credit gives you a chance to actually keep and use the item, with your promise to make payments on it until it is paid off. If there is a lapse in payments, the lender can repossess the item.

Credit cards, often the most used and most accepted form of credit, provide upfront monies that the user is billed for monthly. Banks, retail stores, businesses and credit card companies provide a wide variety of credit cards to apply for, but examine the terms and conditions closely, because creditors do charge interest that can rapidly increase your credit card balance if not kept under control.

These types of credit are often distinguished by two factors: 1) whether it is secured or unsecured credit and 2) whether it is revolving or non-revolving credit. Secured credit, such as a secured credit card, is a safer option for lenders, because you provide the funds up front, and it allows you to both establish and build credit without preapproval. All secured credit lines charge an annual fee, so watch for it and make sure you understand the terms and conditions.

No collateral is required for unsecured credit, but lenders will approve your application based on your credit score, length of employment and annual income. Examples of revolving credit include credit cards and department store cards. Non-revolving credit, however, demands a specific payment on a specific date, until the loan has been fully satisfied. Also called installment agreements, examples of these types of credit include student loans, home loans and car loans.

Before you apply for that loan, educate yourself about these different types of credit and how they can affect your credit score. With this knowledge, you may be able to avoid those butterflies in your stomach.

10 Ways to Improve Your Credit Score

By | Ask a Credit Expert, Credit Repair, Credit Scores

Credit scores are like financial report cards, and almost everyone would like to have a better grade. Good credit scores are rewarded with better interest rates on all types of lending, from credit cards to mortgages. The better your credit score, the more money you can save in interest, sometimes amounting to thousands of dollars over the life of a loan. If you wish that your score of 550 was a little closer to 750, here are 10 ways to improve your credit:

1. Make Payments on Time

Of course this is an obvious tip, but you may not know that payment history is the largest factor (35 percent) in determining your credit score. Paying your bills on time and making (at least) the minimum required payments are the best things you can do for your credit.

2. Don’t Use All of Your Available Credit

Just because you have a line of credit on your credit cards doesn’t mean that you should max them out. Using less than 50 percent of your available credit tells lenders that you don’t need credit to survive.

3. Pay Down High Balances

If you are already in violation of #2, start tackling higher balances first. Thirty percent of your credit score comes from outstanding debt; lowering your debt will raise your score.

4. Focus Your Credit Shopping

Applying for different kinds of credit in a short period of time can hurt your score because it looks like you are desperate for credit to survive. Try and do as much research as possible about products and providers to limit your number of loan applications.

5. Apply Smart

Just because you qualify for more credit doesn’t mean that you need more credit. Opening new accounts can bring down your score. The next time you receive a pre-approved credit card offer in the mail, throw it away.

6. Old Accounts Are Good

This is another reason to ignore those credit card offers. The length of credit history makes up 15 percent of your credit score, so the longer you have an account in good standing, the better. New accounts will reduce the average age of your credit accounts.

7. Time Does Heal Over Time

If your payment history has been somewhat inconsistent in the past, it may take many months before your diligence is reflected in your credit score. Keep paying your bills and have patience.

8. Start Rebuilding

Secured credit cards or loans from a credit rebuilding agency or bank are good ways to improve credit that has been severely damaged. Making regular monthly payments on products like these is one of the fastest ways to rebuild your credit history.

9. Check Your Report for Errors

The best payment history in the world can’t help you if your credit report is wrong. Remember to request copies of your credit report every year, and report any errors to the reporting agencies.

10.  Use Ovation Tools & Resources

Ovation offers a number of tools to help you better manage your credit. From paying down credit cards with the budget constraints you currently have to helping you understand and improve your score, Ovation is here to help. Contact us for a free consultation today.

You don’t have to be stuck with a low credit score. Following these 10 tips can greatly increase your chances at getting the best interest rates on any future borrowing.

Why Did My Credit Score Go Down?

By | Ask a Credit Expert, Credit Scores

You finally found a good job, working for a reputable company in a booming metropolis. The pay and the benefits are good, you drive a company car and the view from your apartment is spectacular. Congratulations! Your professional decisions and your determination have truly paid off.

Now you want to begin enjoying the spoils of your hard work and determination. Undaunted by fancy brand names and hefty sticker prices, you begin defining your personality and outfitting your personal world in such a way that equals the pride you feel for your success.

You begin your first day off by shopping at some of your favorite stores, applying for a number of in-store credit cards. You have demonstrated to each of the credit departments that you are gainfully employed and responsible. Many of the stores eagerly issue store credit to you, and while a few of the stores deny you credit, that is to be expected.

With credit at your disposal, you being shopping with some enthusiasm. Although you consider yourself to be a responsible shopper, you do permit yourself to max out one card and use more than 50 percent of the available balance of your remaining cards. You carry some high balances on your credit cards, but you have the income and the job security to make minimum payments. Life is good.

Life is also unpredictable, and you could not foresee that your direct deposit information was somehow transferred incorrectly to the bank’s computers, delaying your pay. You have managed to keep up with your credit card payments up to this point, but because of the delay in receiving your pay, a credit card payment is late. In your efforts to gain control of the late payments and the subsequent late fees, a handful of other payments become past due. Concerned about your credit rating, you attempt to mitigate the potential damage to your credit by closing credit cards that you are not using.

Six months later you are still employed, and your performance rating has earned you a raise. You have satisfied the credit card companies by rectifying the late payments. With those incentives, you begin shopping for a car. Having found that perfect car, you begin the application process, only to find that you have been denied credit. You are surprised to learn from the credit representative at the dealership that your credit score – once at 704 – is now at 610.

Do you really have to ask why your credit score went down?

Although you have good-paying, secure employment, you realize that unseen creditors may perceive you as a credit risk if you open (or close) too many credit cards accounts, carry high balances on your credit cards or make late payments. Even being denied credit can adversely affect your credit score. If you do find that your credit score has dropped and you are unsure why, or if you find that you do not know how to repair your credit, we can help. At Ovation, we have the experience and the tools to help you mend and maintain your credit.

Statute of Limitations Guide

By | Ask a Credit Expert, Consumer Rights

While defaulting on a credit card can destroy your credit rating, you still have some protection against creditors. Your creditors only have a limited period of time in which they are able to sue you for not paying your credit card debt. That period of time is determined by each state’s statute of limitations.

According to the FTC, all states have a statute of limitations period on debts that is between three and 10 years. Behind every statute of limitations, there is a legal agreement that binds the consumer and the loan provider. The most common agreement associated with credit cards is an open-ended account, and although the length of the statute of limitations varies in every state, the clock starts at one of two instances: either when you fail to make a payment, or when the credit card company requests for the amount owed paid in full.

Once the time period for suing has expired, your debt is then referred to as “time-barred.” Such cases are typically dismissed within court, which is why it is important to know the state-specific laws. Once the statute of limitations has expired, a creditor can no longer sue you for the money owed, but they are still within their rights to collect the debt. If a collector calls you to collect on a debt that you believe is past the statute of limitations, you do not have to pay it. If you do make a payment on the debt, it can reset the clock on the statute of limitations and allow the creditor to sue you.

Most of the states have a clear-cut indication of their statute of limitations, but others are more difficult to identify. A given state code may have a set limit, but if there is a court case that has set a precedent different than the statute, it is likely that any decision will defer to that court ruling.

It isn’t surprising that credit card companies try to capitalize on old debt, but if their time has run out, you can use your knowledge of the statute of limitations to prevent them from suing you. The statute of limitations is in place to protect you as a consumer, so awareness of your state’s statutes can prevent collectors from benefiting from an already frustrating situation.

At Ovation, we like to help people stay on track with credit debt so that you never have to worry about the statute of limitations. With the right tools and knowledge you can escape debt altogether.




Make Money with Credit Cards

By | Ask a Credit Expert, Credit Cards, Personal Finance

Credit cards get a bad rap. They are often the accomplices to terrible spending habits and overwhelming debt. However, there is more to a credit card than meets the eye. By knowing exactly how a credit card works – and employing some serious discipline – it is entirely possible to make money using your credit cards. Making money by spending money is a skill that few master, because you truly have to see your credit as something you use in place of cash but not to extend your cash flow.

Several credit card companies offer incentives and rewards for using their cards. If you spend a great deal of time traveling, it may be beneficial to use a SkyMiles card or an airline credit card such as those offered by Southwest Airlines or JetBlue Airways. Since it is an expense you would have either way, using the card provides extra benefits. Additionally, Discover Card offers five percent cash back on different items each quarter, so there are times when it is acceptable to use the card for groceries, gas and other everyday items. American Express offers points that can be traded in for numerous household items and electronics.

What is the trick to making credit cards pay off? You have to pay off the balance you put on each card every month. As long as you are paying your expenses off in full at the end of each month, you can use a credit card for almost anything in your life. However, it is crucial that you are diligent with your spending. Treat your credit card as you would a debit card. By recording your credit card expenditures in a checkbook registry as tangible dollars, deducting the amounts from your actual available money, it is much easier to track your spending. At the end of the month, you can simply pay the amount that has already been deducted from your account to the credit card.

Using a credit card as you would cash or a debit card is more difficult than it seems. Limiting your spending to only what you can afford and actually paying off the credit card each month is challenging, even for the most disciplined. There are no benefits to a credit card, however, if you do not pay off the balance, because the accrued interest will cost you more than any incentive offered. Fully paying off your debt each month is also a great way to boost your credit score.

Credit card companies make millions of dollars off of the interest rates they charge for you to borrow their money, but you can beat them at their own game by taking advantage of all the incentives and paying off the debt each month before the interest accrues. With smart spending, your credit card can be your best financial ally.

Call Now for a FREE Credit Consultation