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Repair Your Credit to Rid Your Medical Debt

By | Credit Repair, Payment

Medical expenses can plague a person’s credit and peace of mind for years.

If you’re one of the few Americans who have successfully paid their medical debt after falling behind, your credit score is affected for seven years afterward, jeopardizing your ability to receive future loans and making it difficult to improve your creditworthiness.

This is why several groups are asking Congress to consider the Medical Debt Relief Act (H.R. 1767).

  • Oregon Sen. Jeff Merkely and California Sen. Maxine Waters introduced this bill in January of 2013. Passage of this legislation would ensure any paid—or settled—medical debt less than $2,500 will be removed from a credit report 45 days after it’s paid. Currently, the legislation is with the Banking, Housing and Urban Fairs Senate Committee for debate.

In essence, advocacy groups argue that consumers are being wrongly burdened by former debt and/or inaccurate credit scores because of a system flaw that allows this misinformation to remain active on a person’s credit score, even when debt is settled. This flaw significantly reduces a consumer’s credit score and therefore his/her borrowing ability.

Sen. Waters articulated the reasoning of the proposed legislation:

“The consumer should not continue to be arbitrarily penalized. The solution to this problem is simple and fair; information about a medical debt should be removed from a credit report once it is fully settled or paid. This information should not linger on a consumer’s credit report, like an albatross around their neck, making it more difficult for them to obtain credit for years to come.”

People with health care costs using credit cards to make payments, or who are borrowing money to pay these debts, should care about this bill for the following reasons:

  • Pay less expensive borrowing fees
  • Pay less expensive interest rates
  • Achieve an improved credit score

If you have lingering health costs that are ruining your credit, you can take steps to paying your debt to strengthen your credit score.

Decrease Your Medical Debt

Have you considered a credit repair agency to help you manage your medical debt? We can help. Call 1-866-639-3426 or browse our website to learn about how we can assist you with improving your credit score as well as reducing your health care balance.

 

Why Minimum Payments Don’t Work

By | Budgeting, Credit Cards, Payment

Credit card payments can be stressful, to say the least. Unfortunately, many people adopt a false sense of relief when making minimum payments each month. What they don’t realize is that this tactic does little to make any headway in terms of escaping debt. A minimum payment may keep your head above water, but it won’t actually save you from drowning.

With the minimum payment, you are safe in that your payments are on time, but it is the accruing interest that is of the most concern. The longer you have a balance, the more interest you are going to pay. Credit card companies are also notorious for their fees, and one late payment can earn you a $29 late charge and may even increase your interest rates. At this point, it is all too easy to exceed your spending limit. Before you know it, you are hit with an over-the-limit fee on top of everything else.

Once you begin paying fees in addition to your interest, your debt can quickly spiral out of control. A large payment is needed somewhere, but most people don’t have the available funds to stop the debt from accumulating. It is only a matter of time before you’re buried so deep in debt that minimum payments are not enough to dig you out.

If we run some numbers based on our current economy, we can clearly see how paying only minimum payments is harmful to our credit card health. With a $2,000 balance at 9.9 percent interest, the minimum payment is $40. At that rate, it would take 10 years to pay off the balance, and you would have paid $997 worth of interest – that’s almost $1,000 in interest paid for spending $2,000 you didn’t have in the first place.

But most people don’t have 9.9 percent interest rates – they have 18 percent interest rates and balances closer to $5,000.  With a minimum payment of $100, it would take you 35 years to pay it off. And for the privilege of having that $5,000 to spend, you would pay $12,863 in interest alone.

Minimum payments might seem like the easy way to budget, but they only benefit the credit card company.

By the time you pay off a credit card using minimum payments, you won’t even remember what it was that was so important to buy at the time. Employ proper spending habits and don’t be fooled by marketing schemes. You may get five cents off per gallon with the use of your card, but at 10 percent interest, it’s not quite the benefit you were expecting. Remember: If you can’t afford it with cash, you cannot afford it with your card.

11 Months ‘Til Christmas…Are You Ready?

By | Budgeting, Credit Cards, Credit Repair, Debt, MasterCard, Payment, Personal Finance, Visa, Your Credit

Christmas season revelers were singing, “Bring in the noise, bring in the funk.” Funk is right! But the aftermath – high interest rates on credit cards – bring a different kind of funk to the months of January and throughout the year. Spending on Black Friday may have sounded like a good idea at the time, but overspending is never more prevalent than at Christmas. The months following yuletide bliss can be ferocious, especially for those drowning in high interest credit card debt. It’s so easy to justify that extra credit card debt at Christmas, but recovering from the spending can take you right into the next Christmas season. It’s possible that high interest rates on credit cards may have more to do with winter depression than lack of sunshine.

While retailers coast into the new year on your Christmas purchases, you’re stuck in a midwinter depression, paying interest on the purchases you made the day after Thanksgiving. You know the problem, but here is something perhaps you do not know: Your case is not hopeless. Getting out of the winter credit card funk will take a little work, but we can help you create a plan to pay down debt quickly.

Our suggestion? Start with the card that has the highest interest rate and pay it off first. This sounds radical since some financial advisers may encourage just the opposite: paying lower balances first. However, a financial payoff plan that targets high interest rates first is a good idea. Why? Let’s say you pay off the card of lesser interest first. While you are doing so, the higher interest is piling up fast. You will pay more in the long run on a higher interest loan that is left idling on minimum payments than you would on a lower balance card. Paying off the higher interest loan will result in less total interest piled on to your debt. When the high interest loan is eliminated, you can then concentrate greatly on the lesser loan, even adding the difference paid from the higher interest loan, which is now happily paid off.

Paying off high interest credit cards can help positively affect your credit rating, especially if you get the balances on the cards under 50%. Outstanding debt accounts for 30% of your credit score, so paying off those high interest cards can make a difference.

Ovation specializes in diffusing the funk on high interest loans. Our payment tools will take the guesswork on how to get started.

Lower Your Interest Rates and Pay Off Credit Debt Faster

By | Credit Cards, Credit Scores, Debt, Payment, Revolving Debt, Save Money

Sometimes, all you have to do is ask. This is true whether you’re looking for a room upgrade at a hotel or could use the leg room of first class on a business flight. The same principle is true with credit card interest rates. Sure, we all go around with the mind set that the interest we pay to the credit card companies is just the cost of being able to buy things we wouldn’t otherwise be able to afford. But even a small reduction in the amount of interest you pay can get you moving quickly toward something we all like to see: zero balance.

There are a few tricks to getting your credit card companies to consider lowering your interest rate.

  • Pay your bill on time every month. If you have late payments or skipped payments, it will be unlikely that you will be able to convince the credit card company to lower your interest rate.
  • Pay more than the minimum payment each month. Even if you are only paying $5-10 more than the minimum, it shows a sense of responsibility that the credit card company is likely to recognize.
  • Start with the credit cards you’ve had the longest. Customer loyalty goes a long way in any business, and as competitive as the credit card industry is, it matters to them, too.

Before you call the credit card company and request a reduction in your interest rate, do some homework. If you’ve received offers from other companies for credit cards with lower interest rates and similar features, keep them handy. Know your credit history and credit rating.

When you call, be armed with some facts. Let them know that you can switch to another company and get a better rate, but that you would prefer to stay with the company you’ve been doing business with for so long. Point out that you have a stellar payment history with them.

And, don’t take “no” for an answer, at least not from the rep who answers the phone.

The people answering the phone are gatekeepers – they answer the basic calls, have a set script from which they work, and have limited authority to make changes. If they can’t do anything for you, politely ask if you could speak to a supervisor to have your request reconsidered.

When it comes to credit card negotiations, persistency pays. You have to do your part by paying on time, but credit card companies don’t want to lose you. It never hurts to ask.

4 Great Tips for Tackling Christmas Debt

By | Budgeting, Credit Cards, Debt, Featured, Payment, Personal Finance, Your Credit

When it comes to Christmas, people often throw their budgets out the window. Credit card companies sing carols in the halls as the debt piles up and their bonuses get bigger. People just assume they can take care of it next month or decide they’ll figure it out after the holidays because Uncle Fred really needs that food dehydrator.

Once the presents are unwrapped and reality sets in, you realize that your credit cards are bulging with debt and you need to make some decisions on how to get it paid off before next Christmas.

Pay Off as Much as Possible Right Away

Odds are most of the Christmas shopping was done recently, so the interest hasn’t been applied to it yet. Try and take care of as much of the debt as possible before that interest hits. It doesn’t matter if you make a payment every week or so, as long as you are paying down that debt. You should start with the highest interest rate cards first and work your way down. Do not pay only the minimums as this can take literally years to pay off the debt.

Make a Plan

Call each of your credit card companies and find out exactly who much you owe on each card, what their monthly interest rates are and when payments are due. If you have any credit cards that may go over the limit because of interest, then take care of them first. Make a plan to pay down and eliminate the debt each month. The last thing anyone wants is additional over the limit fees. Also, make sure you pay your bills on time and save yourself late fees.

Consolidate the Credit Debt

If you have a home equity line of credit or can get a home equity loan, then you can completely pay off the credit card companies, and instead, make a single loan payment. The interest rate on the loan is likely to be much less than the credit cards and you don’t have to worry about juggling several different payments. If you do chose this option, then try to stay away from using the credit cards until the loan is paid off. You don’t want a large monthly loan payment and credit card payments as well.

Work With A Credit Counselor or Repair Expert

If the debt is overwhelming and you don’t feel like you can take on the debt yourself, then you can work with a credit counseling or credit repair service. Credit repair services like Ovation specialize in helping people with large debts make the right decisions and will even work with credit card companies to help save on interest rates and monthly payments.

Christmas is a time of great joy and celebration, but for many it’s also a time for large debt. Don’t get stuck in the quagmire; follow these tips for getting your life back on track after the holiday season.

Choose a Payment Schedule to Fit Your Needs

By | Credit Cards, Credit Repair, Credit Scores, Debt, MasterCard, Payment, Revolving Debt, Visa, Your Credit

The holidays are over, and if you’re like a lot of folks, your credit cards got quite a workout. As 2012 rolls in, you’re probably wondering how can you best handle the extra charges that’ll show up on your next statement. Ovation’s Payment Scheduling Tool can help you find a solution that fits your needs and goals. Ovation’s payment scheduling tool is available to everyone; Ovation customers have the added option of being able to save and download their queries. Anyone can run scenarios to determine the best course of action:

Pay highest interest first: If your goal is to avoid interest payments, this is the right scenario for you. Let’s say you have a couple of cards that charge 20 percent interest and you have a couple of cards charging 10 percent interest that have higher balances. You’re better off paying your higher interest cards first because you’ll pay a lot less money in interest and then you can focus on paying down the balances on the other cards.

Minimum payments only: The scheduler will tell you how long it will take you to pay the cards off.

Minimum payments with a snowball: This option tells you how long it’ll take to pay off the cards if you add an additional amount to the minimum payment each month.

Highest balance first: Another option is to pay off the card with the highest balance first to get rid of the bigger debt. You’ll have to apply more of your income to it, but once it’s paid off you can split that amount over several accounts. That way you can get four or five accounts paid off after you pay off one big one.

Lowest balance first: This option will give you the satisfaction of actually paying a credit card off and free up some cash to apply to another card’s balance.

Split Discretionary Evenly: This might be the option for you if your goal is to increase your credit score and the only thing holding it down is a card or two with a balance that’s more than 50% of the card’s limit.  Focus on those cards, get them below 50% debt to limit ratio, and then switch your focus to your high interest or high balance cards.

Bi-monthly payments: Choose this option and the amount of your bi-monthly payment, and the Payment Scheduler will tell you the most effective way to split your payment amount to get everything paid off.

We invite you to try Ovation’s Payment Scheduling Tool. It’s easy to use, helps you find the best way to manage your credit card balances, and puts you in control of your financial future.

Credit Repair: Tips to Help Maintain a Good Credit Score.

By | Credit Cards, Credit Repair, Credit Reports, Credit Scores, Loan, Payment, Personal Finance, Revolving Debt

Accurate negative information generally remains listed on your credit report for up to seven years, while bankruptcies remain for 7-10 years.   However, there are things you can do to gradually improve and maintain a good credit score, such as the following:

  • Fix any inaccurate information.  This is one of the most important things you can do to maximize your credit score.  Up to 79% of credit reports contain errors.
  • Update old accounts.
  • Request that old inquiries be removed (older than 2 years).
  • Pay your bills on time. Delinquent payments, even if only a few days late, and collections can have a major negative impact on your score.
  • If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your credit score. Older credit problems count for less, so poor credit performance won’t haunt you forever. The impact of past credit problems on your score fades as time passes and as recent good payment patterns show up on your credit report.
  • Be aware that paying off an accurate collection account will not remove it from your credit report. It will stay on your report for seven years.
  • Keep balances low on credit cards and other “revolving credit”.  High outstanding debt can affect a credit score.
  • Pay off debt.  The most effective way to improve your credit score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
  • Don’t close unused credit cards as a short-term strategy to raise your score. Maintain your accounts for a long time.  The longer your credit history, the more it helps increase your credit score.  Closing older accounts can actually lower your score.
  • Don’t open a number of new credit cards that you don’t need, just to increase your available credit. Apply for and open new credit accounts only as needed. Don’t open accounts for the purpose of providing a better credit picture – it probably won’t raise your score and, in some instances, may even lower your score.
  • If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.
  • Do your rate shopping for a loan within a focused period of time. FICO scores distinguish between a search for a mortgage or auto loan, where it is customary to shop for the best rate, and a search for many new credit cards.

 

Can I Raise my Credit Scores by Paying Off my Credit Cards and Closing the Accounts?

By | Ask a Credit Expert, Credit Cards, Credit Repair, Debt, Payment, Personal Finance, Revolving Debt, Your Credit

The credit score was designed to show lenders how much of a risk a consumer can be.  The higher your credit scores are the lower the risk you are to creditors and obviously the lower your credit scores are the higher the risk you are.  When it comes to your credit and credit score, paying off your credit cards and credit accounts is always a good idea and can help raise your credit score.  However, closing your credit accounts does not always help your credit score, even if they are paid off.  Sometimes closing your credit accounts will even lower your credit scores.  Let me explain why.  When you pay off an account it helps raise your credit score in a couple of areas.  First, it helps the payment history to show that the account is paid and positive.  Second, it shows you have less money you owe on that account and on your overall credit. But, the downside is when you close your credit accounts you are stopping your payment history on that account, therefore shortening the timeframe of your payment history. If any of the credit accounts you paid off have been open for 2 years or less than you are ok to close them out because you are not getting rid of a long history. However, if you have had the card for 5+ years than I would recommend you keep it open so you don’t lose that payment history. Payment history counts as 35% of your credit score. What this means is that the longer you have your credit accounts (mostly credit cards because they are revolving) the better.  Your credit score takes an average of your payment history time frame, for example, if you had 2 cards for 10 years and 1 card for 1 year, the credit account that you have only had for a year is actually bringing down your average.  So, if you pay the accounts off that is great but don’t close them unless you have to and if you do close any, close the one you have had for a year so your average will go back to 10 years.  This will help your credit score!

Good Luck and with any other credit questions, ask our Credit Expert Kristi Thornton by emailing your questions to lynn@ovationlaw.com.  You can also call any of our Case Analysts at 1-866-639-3426 Option 2 or check out our site at www.ovationcredit.com.

When I pay off a collection or charge off account, will it start reporting as paid in full and as a positive account?

By | Ask a Credit Expert, Collections, Consumer Rights, Credit Cards, Credit Laws, Credit Repair, Debt, Payment, Personal Finance, Your Credit

When you pay off a collection or charge off account on your credit report that is great. It is always in a consumer’s best interest to pay off their debt. However, a lot of consumers think that once the account is paid that it is no longer negative and has actually become positive. That would be great, unfortunately that is not the case, and it is still a negative account. The creditor should update your account on your credit report to show that it is paid in full or paid collection/charge off.  By updating that information it will have a positive impact on your credit report and more importantly on your credit score. The amounts owed on your accounts is 30% of your credit score, so as you pay accounts off it will help to raise your credit score. By paying accounts off they no longer have such a bad impact on the credit score.

Your credit scores will improve when you pay off accounts because your reports will show you owe less money to creditors, it will stop the account from updating every month that it is not paid and it’s late, and it will keep the date of last activity as when it was paid.  When the account is paid off it stops the activity on the account so that it will fall off of your credit reports 7 years (for most items) from the date of last activity.  All collection, charge off, and late payments should come off your reports 7 years from the date of last activity. If you have accounts that have not updated as paid or have not come off your reports when they were supposed to, then give us a call.

If you have any other questions about items on your credit reports, how items are reporting, and when items will come off your credit reports, please call one of our Experts at Ovation Credit Services.  Call 1-866-639-3426 and schedule a FREE credit consultation! Check out http://www.ovationcredit.com/howItWorks/howWeHelp.php to see other ways we can help! We are here to guide you to a BETTER Financial Future!

Can I dispute an account on my credit reports that I know is my account?

By | Ask a Credit Expert, Bankruptcy, Collections, Consumer Rights, Credit Cards, Credit Repair, Payment, Your Credit

Yes, you can dispute accounts on your credit reports that belong to you.  Just because an account is yours, does not mean that it is reporting accurately or that all of the information reporting on the account is correct. Statistics show that 79% of credit reports in the United States contain errors.  If an account has incomplete or inaccurate information then you would want to dispute the account and any information reporting on it that is incorrect.  You can dispute the balance of the account, any incorrect dates reporting with the account, whether the account is open or closed, or any other information that is listed incorrectly. For example, if you have an account that is reporting as being 90 days late and you know it was never late, then you would dispute the late payment to get the late payment updated/removed from your report, not the entire account.  That is exactly why you want to review your report at least once a year.

As a consumer it is in your best interest to go through your credit report once or twice a year and review all of the accounts and the information reporting on each account. That way if you find inaccurate information and/or accounts, you can dispute them right away. Too many consumers wait and then review their credit reports when they are trying to finance a car or a home and then it is too late. If there are negative errors on your credit reports you run the risk of being declined or being approved but with a high interest rate or needing a co-signer. So, check your report and review each account that is reporting to make sure everything is accurate. If something is inaccurate or incomplete at that time then you can dispute the information and get it corrected before you need to use your credit.

If you need help disputing your credit reports, contact the Experts at Ovation Credit Services where you will get First Class Customer Service! Go to www.ovationcredit.com for more information, or call 1-866-639-3426!

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