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6 Ways Your Credit Score Impacts Your Life

By | Credit Scores

If you’re like most people, you won’t know your credit score until you suddenly realize it’s important. Normally, this happens when you apply for a mortgage or another large loan.

You see, you might be ignoring your credit score, but banks, businesses and other lenders aren’t. For these users, your credit score is a vital snapshot of your financial well-being and trustworthiness, and it enables them to manage their risk when lending to you, hiring you or selling you their services. It’s the culmination of every large financial decision you’ve ever made — and it can have a significant impact on your future decisions.

Let’s take a look at some of the significant ways in which your credit score impacts you.

1. The Interest Rate on Your Mortgage

Your mortgage is likely to be the biggest loan you take out in your life, and your credit score plays a significant role in determining which mortgage you can get and how much it is going to cost you. Applicants with a low credit score, indicating potentially risky financial behavior, are likely to have to pay a higher interest rate on their loan and, in some cases, may be rejected outright.

A small change in the percentage of interest you pay might not seem like much, but with many mortgages stretching from 25 to 35 years, it represents thousands of dollars of extra spending.

2. Whether You Get the Rental Property You Want

Not bought a house yet? Your credit rate still affects your choice of home. After your earnings-to-rent ratio, your credit score is the most important factor in deciding whether your rental application is accepted. Given the choice of two applicants with similar earnings, the one with the higher credit score will always win — landlords know that by reducing their risk, they save money.

3. The Car You Drive

In 2017, the average auto financing loan had an APR of 4.21 percent, with most loans falling between 3 percent and 10 percent APR. The difference between a great credit score and a very poor one is even bigger: Someone with a very bad record might receive as much as 20 percent, while some users with a great record can still get zero percent APR. The difference between the two can easily amount to hundreds or even thousands of dollars per year.

4. Your Refinancing Options

As interest rates change, what seemed like a good deal a few years ago can quickly become expensive; by refinancing your mortgage or student loan, you can save a lot of money. Unfortunately, if you have poor credit your ability to do this may be limited or nonexistent.

It doesn’t matter what your credit score looked like when you first got the loan, either. Many borrowers have a good score when they get their mortgage, then fall into bad practices. When they try to refinance, their now-reduced credit score limits their options and gives them a nasty shock.

5. Your Employment Opportunities

Many employers like to credit-check job applicants before making a hire, particularly if the role comes with a large amount of financial responsibility. Although they’re not lending you money, the business is exposing themselves to risk of another kind by putting their finances and reputation in your hands. By screening out applicants with a poor credit score, businesses aim to reduce workplace theft and fraud.

6. Taking Out a Student Loan

If you’ve already borrowed the maximum federal student loan amount, it’s likely you’ll need to turn to a private loan to make up the difference to cover your tuition. These private loans (issued by a bank, credit union or school) are affected by your credit score, just like a mortgage or auto loan. This can come as a shock to students who have only dealt with federal loans before (which aren’t affected by credit score).

You’ll probably be paying off your student loan for years to come — a poor credit score could add thousands of dollars to the amount.

The Impact Can Be Positive or Negative

We’ve primarily focused on the negatives of having a poor credit score in this article, but at the other end of the spectrum are a bunch of people who get great deals on everything. Their above average credit score enables them to get better mortgages, cheaper loans, and superior work and housing opportunities. And because their interest rates are lower, maintaining their score is easier — it’s an unfortunate fact that the high interest rates those with a low score receive make it harder for them to improve that score.

Achieving Your Desired Credit Score

There’s no such thing as an irredeemable credit score; with time, effort and discipline, anyone can improve their score and access better rates. But, it doesn’t happen overnight — it takes time. Which means that the best time to improve your score is always now. You need to start preparing your credit score in advance if you want to get the best deals on a mortgage.

Unfortunately, the information on your credit profile doesn’t always tell the whole story — through no fault of your own, this information can be incomplete or even inaccurate. When that happens, your best bet it to repair your credit profile.

Ovation Credit Services helps the 79 percent of consumers whose credit reports contain a mistake of some kind. Sign up today and take the first step toward repairing your reputation!

Build, Grow & Repair Credit

By | Your Credit

Whether you’re new to having credit or you’ve had credit cards for years, growing your credit, protecting it and repairing your credit takes work. This guide can help you manage all of your debts and improve your credit score.

Topics in This Guide:

Build or Rebuild Credit at Any Age:

  • Access and Review Your Credit Reports
  • How High Balances Affect Your Credit
  • How Long Does it Take to Repair Credit?
  • How to Avoid Paying Credit Card Interest
  • How to Improve My Credit Score
  • How to Repair Credit Mistakes
  • How to Repair Credit When You Don’t Have a Job
  • Identity Theft and Your Credit
  • Using Your Tax Refund to Pay Off Credit Cards

Credit and Mortgages/Refinancing a Home:

  • How to Pick the Best Type of Mortgage
  • Refinancing a Home and How it Affects Your Credit

Let’s begin!

Build or Rebuild Credit at Any Age

If you’re in college, you might ask yourself, am I “too young” to start building credit? The best time for credit-building is when you have a reliable job and pay your bills on time every month.

Your credit report is the history of your credit payments, and items stay on your reports for up to 10 years, or longer for student loans. Typically, you’ll have credit cards, lines of credit, student loans and installment loans. To build credit, use credit moderately and pay the balances quickly.

Access and Review Your Credit Reports

You can receive a free credit report annually from using a secure, private computer. You need to enter your social-security number, address and date of birth. Then you can view credit reports from Experian, TransUnion and Equifax and make copies of your report. Remember never to save it on a public computer.

Familiarize yourself with your credit report. It shows accounts that are open, closed, paid-off and in collections. It also gives your payment dates. It may include student loans, installment loans, bankruptcies or other accounts.

Tip: You can access a free credit report from

How High Balances Affect Your Credit

When you carry high debts, you can damage your credit score even if you pay minimum balances on time. High balances let creditors know that you might be struggling to make payments.

How Long Does it Take to Repair Credit?

To repair your credit, businesses have 30 to 45 days to respond to disputes. After that, disputed items like collection accounts are removable.

How to Avoid Paying Credit Card Interest

If you pay your full balance each month, then you won’t have to pay interest. Always pay on time to avoid late fees.

How to Improve My Credit Score

Your credit-card payment history makes up 35 percent of your credit score. To improve your score, keep your balances low. Pay on time and never let accounts go into collections or charge-offs that are 180-days past due. If you fall behind, then make the payment as soon as you can.

How to Repair Credit Mistakes

Maybe you’ve done a search online for “how to fix my credit.” First, review your credit reports and flag anything that you don’t recognize or anything older than seven years. To dispute credit mistakes, select the option “dispute” when your credit report is open and give the reason. For example, maybe you don’t recognize the account, or it’s older than seven years.

Creditors have 30 to 45 days to respond, but you might hear back from them sooner. If they don’t respond, then you can often remove disputed items from your account’s report.

How to Repair Credit When You Don’t Have a Job

If you’ve lost your job and fallen behind on payments, talk to the collection agencies about making smaller payments. You may be able to remove collection accounts older than seven years if you dispute them on your report. Never discuss bills older than seven years with collection agencies because any correspondence reopens the account.

For further help, check with Ovation Credit for credit-repair assistance.

Identity Theft and Your Credit

If you want to know how to dispute credit report charges you don’t recognize when you’re on a credit-report site viewing your report, then select the option to “dispute” on your screen and give further details.

If anyone has stolen your identity, then contact the credit-reporting bureau and your credit-card company. You may need to file a police report to block any further fraudulent transactions on your account. Having a company that monitors your credit is very beneficial to avoid situations like this.

Using Your Tax Refund to Pay off Credit Cards

Use tax refunds to pay off credit-card debts. The average refund is $3,000, and you’ll improve your credit score. With better credit, you can get lower interest rates.

Credit and Mortgages/Refinancing a Home

How to Pick the Best Type of Mortgage

To pick the best mortgage, talk to your bank about mortgage options. FHA mortgages or those by the United States Department of Veterans Affairs can be more-affordable options. U.S. Department of Agriculture mortgages and the first-time buyers program are also worth considering.

Refinancing a Home and How it Affects your Credit

Refinancing your mortgage is taking out a new loan to replace your current loan. People take this step to lock in lower interest rates. When banks run a credit report, it can lower your score slightly. If it’s only one inquiry, then it may not affect your credit that much.

Bottom Line

Credit cards often lead to debts and huge responsibilities. By paying your credit-card bills on time, you can have a good credit score and better interest rates for years to come!



5 Reasons Why Paying Your Bills on Time Is Not Enough

By | Credit Scores, Uncategorized

Accounting for 35 percent of your credit score, payment history is the number one factor affecting your credit standing. A single missed payment could lower your credit score by 60, 80 or 100 points, depending on the date of the late payment and your current credit score. Generally speaking, higher scores are hit harder by late payments than lower scores and older late payments have less impact than recent ones.

If you want great credit, you must pay all of your bills on time — that’s a given. However, excellent payment history alone will not give you the credit score you desire. You must also pay attention to the factors that make up the remaining 65 percent of your credit score.

5 Factors That Influence Your Credit Score

Credit scoring models look at a variety of factors when calculating your score, including payment history, credit card utilization, length of credit history, mix of credit and inquiries.

1. Credit Card Usage

With the exception of payment history, credit card utilization impacts your credit score more than any other factor. A whopping 30 percent of your credit score depends on it. Your utilization score represents the percentage of revolving debt you have in comparison to the total amount of revolving credit available to you. Most revolving credit comes in the form of credit cards, but it can also include any other type of revolving credit, such as a revolving loan.

Ideally, your credit card utilization should be 30 percent or less. For example, if you have $5,000 in revolving credit, your total balances should add up to no more than $1,500. To find out your utilization percentage, divide your total balance by your total credit then multiply the answer by 100.

2. Length of Credit History

The length of your credit history accounts for 15 percent of your credit score. To calculate your length of history, credit scoring models determine the average age of all credit accounts listed on your credit report. Closed accounts that have fallen off of your credit report are not considered.

When it comes to credit history, there is no magical number you should strive for. However, the longer history you have, the better.

3. Mix of Credit

Accounting for 10 percent of your credit score, your mix of credit depends on the types of credit accounts listed on your credit report. A diverse mix that includes installment loans, revolving credit and secured credit is best. The following is a brief explanation of each type of credit.

  • Installment loans: Personal loans, student loans, furniture loans
  • Revolving credit: Credit cards, retail credit cards, gas cards
  • Secured credit: Auto loans, home loans, equipment loans

For the best possible score, maintain a mix of credit accounts but don’t go overboard. A single installment loan combined with two credit card accounts and an auto loan is sufficient to show how you manage different types of credit.

4. Hard Credit Inquiries

There are two main types of credit inquiries: soft and hard. Soft inquiries are initiated without your knowledge by companies screening you for pre-approved offers. They do not affect your credit score.

Hard inquiries, however, account for the remaining 10 percent of your credit score. Hard inquiries include any and all credit applications initiated by you or by a lender on your behalf. Scoring models look at two factors when considering hard inquiries: the number of inquiries present and the date they were initiated. Older inquiries carry less weight than newer ones.

5. Multiple New Accounts

Too many new accounts can lower your score by decreasing your length of credit history and increasing the number of hard inquiries appearing on your credit report. For this reason, you should avoid opening multiple accounts within a short amount of time. Strive to wait at least six months between credit applications.

How to Improve Your Credit Score

To improve your credit score, take steps to address and optimize all of the factors affecting your credit score. The following tips will help you.

Improve Payment History

Do this by making all payments on time. If you have late payments listed on your credit report, contact the lender to see if there is a remedy. You may be able to restructure your loan or set up a payment arrangement in exchange for the removal of the delinquency from your report. This only works if your account is not currently in collections.

Lower Credit Card Utilization

Do this by paying down your credit card balances or asking for a credit limit increase on one or more of your revolving accounts. Remember, balances should account for no more than 30 percent of your available credit.

Increase Length of Credit History

This can be accomplished by being patient and letting your credit profile age. Avoid obtaining new credit, as this will shorten the average length of your credit history. Also, consider leaving older accounts open even if you’re not using them.

Diversify Mix of Credit

You can do this by obtaining new types of credit. If you have two or more credit cards, do not apply for more revolving credit. Instead, consider taking out a personal loan.

Decrease Hard Credit Inquiries

Do this by spacing out your credit applications. Only apply for credit if it’s absolutely necessary. Note: multiple inquiries for a car loan or mortgage are often grouped together and only considered as one inquiry, provided they occur within a reasonable time frame.

Credit scoring models are complicated and mysterious on purpose. Credit agencies do not want you to know or understand the exact formula they use to calculate your credit score. However, they offer enough transparency for you to optimize your credit profile in an effort to earn the best possible score. If you learn all you can and take steps to improve your credit profile, you will see your score improve over time.


Repair Your Credit With Your Tax Refund

By | Your Credit

Americans love to spend their tax refund on new cars or dream vacations. If your credit is in trouble, then this year you should consider using that tax refund to get your credit back in shape.

Tax Refund Credit Repair

Improving your credit score will help you get a lower interest rate on that car loan, and it can also help you get the credit you need for your dream vacation. A repaired credit score will pay for itself several times over, and all you need to do is make the right investments with your tax refund.

If you are planning any large purchases, (mortgage, car loan, home renovation loan, etc.), then it is important to repair your credit and achieve the highest credit score possible. Lenders like to see responsible borrowers who have taken the time to repair their credit and then have maintained that good credit for months or years. The sooner you get started repairing your credit, the sooner you can start reaping the rewards with lower interest rates that could save you thousands more in the long run.

Paying Down Your Account Balances

One of the biggest myths about managing credit cards is that you have to pay your balances off every month to keep a great credit score. For people new to managing credit, this idea may sound like it would cause stress and anxiety, but this is not true.

You can apply your tax refund to paying off portions of all your balances, and you will still help improve your credit score. It’s always helpful to leave a small unpaid balance on your credit cards each month to show the credit companies that you are committed to using your credit in a responsible way.

When your credit score is calculated, one of the major considerations credit reporting agencies make is how you manage your credit. The idea of maintaining a balance on your credit cards as opposed to always paying them off helps show your ability to manage your finances and regulate your spending.

Paying Off Old Accounts

While it is a good idea to leave a small balance on your active credit accounts to boost your credit score, that changes when discussing old accounts. If you have old credit accounts that have been closed but still have a balance, then you should use your tax refund to pay those balances off and get those accounts off your credit report.

The first place to start would be to contact the customer service department of the company that issued the old account. If the account is several years old, then it may have been sold to a collection agency. You can ask the account issuer if they can give you the information to contact the collection agency, or ask the issuer if they would negotiate a settlement to get the account off your credit report.

Paying off very old accounts can be tricky. The account issuer may negotiate a payoff balance with you, but they might forget to report the account as paid to the credit agencies. You should monitor your credit report every 30 days and make sure the paid off account has been removed. If it has not been removed after 30 days, then contact the issuer to get the account removed. Be sure to ask for everything in writing, and make notes of the calls you make to the issuer.

Buying a Car

Your bad credit is hurting you in many ways, especially when it comes to trying to buy a car. When you get your tax refund, you can use that extra money to get a better deal on a car, even with your bad credit.

With bad credit, you will have to pay a higher interest rate and possibly some extra fees to get a car loan. When you offer a larger down payment, you can get a better interest rate and offset many of those extra fees the finance companies will want to add.

Starting a Savings Account

A savings account, in and of itself, is not going to have a significant effect on repairing your credit. However, maintaining your credit account balances is critically important when you are trying to improve your overall credit score. Instead of spending that tax refund this year, it would be better to put it into an interest-bearing savings account and use it to help pay down your balances each month.

Credit card companies like consistency when it comes to paying your monthly bills. This means you need to pay your bills on time each month, and you need to make no less than the minimum payments. When you have a tax refund growing in an interest-bearing savings account, you have the financial reserves you need to make your payments. Over time, this will significantly improve your credit score and repair your credit profile.

You work hard all year and you look forward to enjoying your tax refund each year, which is a perfectly normal expectation. But if your credit profile needs repair, then you should consider investing this year’s tax refund into improving your credit. There are simple steps you can take yourself that will help get your credit back on track and raise your score.

Another investment you can make with your tax refund is to utilize the professional credit repair services of an organization such as Ovation Credit Services. With these kinds of services, you have access to the comprehensive and personalized advice you need to get your credit back on track.



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