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6 Easy Ways to Build Your Emergency Fund

By | Budgeting

It’s smart to have an emergency fund set aside for those expenditures that come out of nowhere. For many people, this is one of the reasons why they have credit cards, but if credit cards are your financial backups, you may just be creating another headache for yourself further down the road. Using credit cards in a time of need may provide temporary relief, but if you can’t pay it off in a reasonable amount of time (or even make the monthly payments), your credit score is going to suffer.

The one surefire way to avoid going into credit repair mode is to have a financial war-chest that you can turn to in your times of need. How much you put aside is up to you. Some financial experts suggest a $500 emergency fund while others insist you have at least six months’ worth of expenses saved up. There’s no right answer, but obviously you should put away as much as possible while still also saving for future goals and expenses.

If you don’t have anything set aside, and are also suffering from bad credit, here are six ways you can quickly build up your emergency fund.

1. Start With What You Have

Add up how much you spend on your mortgage, car payments, student loan payments, travel expenses, insurance, phone, internet, groceries, and utilities. These are things you can’t change. What you have left over should go toward your savings. This is what you have to work with and should be considered your “bare minimum” monthly savings goal.

The first step toward improving your credit begins with what you already have.

2. Don’t Spend Your Tax Refund

A lot of people are able to get by without their tax refund for a majority of the year; however, when they get it, it’s quickly spent. If you’re lucky enough to get a refund, try not to throw all of it at credit card debt or car repairs, and certainly don’t use it to upgrade your TV. Instead, put as much as you can into a savings account. Even if it’s just 25%, every little bit helps.

Before you start the process of improving your credit, you have to have a little bit saved up. A tax refund that’s set aside can get you there fast.

3. Cut Out Redundant Monthly Expenses

What do you consider worth your money? Do your monthly expenses reflect only needs, or do they also reflect wants and impulses? If you have nothing set aside, you’re going to have to cut down on spending until you have an emergency fund in place. Only you know what you can cut back on. Common examples of redundant spending habits include: having a landline and a cell phone; buying coffee on the way to work when you have a full bag at home; paying for Netflix and cable TV; or eating out when you have a refrigerator full of food.

Basically, it comes down to conveniences. Cut out all conveniences until you have a better financial footing.

Of course, you may not have redundant spending. If this is the case, analyze your grocery bill. Are you spending a lot of money on frozen dinners and prepared foods? Could you save money by making more of your family’s meals yourself? Could you go from a $300 weekly grocery bill to a $150 one? If it’s hard, start off small. Do every other week until you and your family adapt.

4. Limit Credit Card Usage While Improving Credit

Come up with a monthly allowance for yourself and set aside that amount in cash. Leave your debit card at home, and keep only one credit card on you for emergencies (until you have your war-chest established, that is). This is all the money you are allowed to spend each month on groceries, gas, and other needs you may have. Doing this trick has helped a lot of people cut down on spontaneous, impulse spending and can also help your credit score.

5. Save Your Change

If you go an all-cash route, you’re going to have change left over. Put it in a jar. Don’t consider it surplus for next month. Instead, deposit it straight into your savings account—every little bit helps.

6. Find Supplemental Income

Work as a tutor, find some online freelance work, or even drive an evening or two as an Uber driver. If you want it, there is work out there to accommodate your schedule and expertise. It will take away the time you would normally spend with family or friends, but remember it is only temporary until you have enough money saved up.

You’re Not Alone

Here at Ovation Credit, we’ve helped over 150,000 credit profiles resolve credit disputes and fix credit errors. Visit our site for a free consultation so you can start repairing your credit.


Emergency Fund: What It Is and Why It Matters

How Long Bankruptcy Affects Your Credit

How Long Bankruptcy Really Affects Your Credit

By | Bankruptcy

Going through a bankruptcy can be a hugely stressful situation. But while it certainly impacts your credit for some time, it’s comforting to know that this financial event won’t stick with you forever. Find out exactly what to expect in terms of your credit report and score if you’re planning on filing Chapter 7 or Chapter 13 bankruptcy. And if you already have filed for bankruptcy, we’ll share our top tips for starting over on the right foot so you can repair your credit as quickly as possible.

What Happens to Your Credit Right After Bankruptcy?

Once your bankruptcy hits your credit report, your score can drop as much as 200 points. The higher your existing credit score is, the more your score will drop. If you have a lower score, you might not see your score change quite as dramatically — though it will still be significant.

The severity of your bankruptcy also impacts your credit score. The more debt you have discharged, for instance, the more your score could drop. You may want to sign up for a credit monitoring service so you can track exactly where your credit score is headed throughout the recovery process.

How long a bankruptcy stays on your credit report depends on what type you filed. A Chapter 7 stays on your report for 10 years, while a Chapter 13 stays on for just 7 years. Additionally, any financial history leading up to your bankruptcy, such as late payments or loan defaults, only stay on your credit report for 7 years from the time they were added to the report.

Luckily, even though these effects can be devastating, they won’t last forever; in fact, they won’t even last the entire length of time you see that negative bankruptcy entry on your credit report.

How Long Does It Take to Improve Your Credit?

Even if you just went through a bankruptcy, you can start improving your credit score immediately. There are a few different ways you can repair your credit over time, even with such a serious entry. First, don’t rack up any new debt. While it can help your credit score to open new lines of credit, don’t max out any cards or take on high-interest loans.

Instead, keep your credit utilization under 30% to maximize your credit score. Another huge factor in the credit repair process is making bill payments on time each month. Make sure you do this on a regular basis in order to keep your accounts in good standing and start to improve your credit.

How Do You Get New Credit with Such a Bad Credit Score?

There are actually several options for accessing new credit products regardless of your credit score. For example, you could apply for either a secured credit card or credit builder loan soon after your bankruptcy. Since both of those require a security deposit, the credit requirements for approval are minimal. As you continue to fix your credit with on-time payments, you can apply for loans and credit cards with better rates and terms.

You could potentially get into the 700+ range somewhere between four and five years after your bankruptcy, if you make consistently positive financial decisions. If you’re hoping to buy a house in the future, some home loan programs will qualify you after just two years from your bankruptcy. In some cases, you could even qualify after one year.

Can You Dispute a Bankruptcy on Your Credit Report?

Getting a bankruptcy removed from your credit report early is a difficult process. You’ll have the best luck if you can show evidence of a credit error. Find out by requesting a copy of your credit report and scanning it thoroughly for any inaccurate listings, particularly concerning your bankruptcy. If you find something wrong, you can submit a credit dispute directly with the credit bureau. They’ll have 30 days to respond to your request. Depending on your situation, they may simply update the entry or delete it entirely.

Petitioning the credit bureaus can be a long and cumbersome process. If you’d like professional help, consider working with a reputable credit repair firm like Ovation Credit. We provide a Free Credit Repair Consultation and Credit Report Summary with absolutely no obligation. During the call, our team can give you a better idea of the best way to improve your credit, whether it’s related to a bankruptcy or other negative items on your credit report.

Do’s and Don’ts of Disputing Items on Your Credit Report

By | Credit Reports

Disputing an item on your credit report is an undertaking that requires careful thought and planning—and even the most conscientious consumers might find themselves a bit overwhelmed. Thanks to the Fair Credit Reporting Act, credit bureaus and lenders are required to investigate the validity of a disputed item on a credit report. However, even with that regulation protecting you as the consumer, there are few standard guidelines in place for disputing something on your credit report. We’ve compiled some of the top dos and don’ts of disputing credit errors, so you can avoid some of the major pitfalls involved.

DO submit your dispute to the credit bureau.

You may choose to dispute the error directly with the lender or business that allegedly reported it to the credit bureau. That’s a smart move, but should only be done in conjunction with a dispute to the credit bureau. If you only submitted your dispute to the lender, you run the risk of the lender refusing to remove the item—and then you’re stuck. It’s better to have a record of a formal dispute with the credit bureau.

DON’T throw away your paperwork.

Keep a record, including all originals, of the error and all of the documents supporting your position. For instance, if you have received denials of loans based on the information in your credit report, print out and save a copy of the denials. A credit bureau or lender can always claim to have lost your paperwork—but as long as you have held onto the originals, you will always be prepared to supply the evidence they require.

DO submit credit reports via snail mail.

Nowadays, it’s easier than ever to submit a dispute of an item on your credit report. The three major credit bureaus now offer online portals created specifically so you can submit the dispute and track its progress in real time. But you don’t want to be lulled into a false sense of security, believing the process to be an “easy” one. It’s probably to the credit bureaus’ benefit to provide consumers the ability to submit their disputes online—after all, there is only so much space allotted for you to plead your case. Then they can always claim they didn’t have enough information to investigate your dispute. You can head off that outcome by taking the old-fashioned route and typing your letter up to send through certified mail. Sure, it might take longer, but at least you can be sure that you have fully explained the error. The more details and evidence you can provide in support of your case, the better.

DO determine if it’s an identity-related error.

This is a case when it’s best to take up your claim directly with the credit bureau. It’s also a good idea to check the reports on the other credit bureaus to make sure the error hasn’t shown up on their reports as well. Although these types of errors are an inconvenience, they are also the most likely to be removed.

DON’T lose hope if the credit bureau denies your dispute.

Credit bureaus are allowed to deem certain disputes “frivolous,” if the consumer doesn’t provide enough proof or the information provided on the dispute is incomplete or inaccurate. In that case, the bureau must notify you that it has no duty to investigate the situation, along with its reasoning for determining the dispute frivolous. Even if that happens to you, you can still resubmit your dispute, but carefully reconsider your approach. It may be that your previous dispute was missing critical pieces of evidence that could be pivotal in your case. Either way, never resubmit a dispute with all of the same information that was already rejected. It’s a recipe for disaster.

DO consider asking for information about credit disputes to be added to your credit report.

This is another benefit of disputing directly with the credit bureau. If the dispute doesn’t end up in your favor, you can still request that the bureau add a statement to your report indicating the item has been in dispute. That way, you can demonstrate to potential creditors that you are actively trying to improve your credit.

Credit disputes aren’t easy, which is why so many consumers are leaning on credit repair firms like Ovation Credit to help them navigate the process of fixing their credit. We want to make this process as painless and stress-free as possible. Let us lend you a helping hand when you’re trying to rebuild your credit. Our team of professionals will walk you through the credit report review and champion your cause with the credit bureaus.

What’s Causing Your Credit Score Fluctuations?

By | Credit Scores

Once you’ve started to check your credit score on a regular basis, you may notice that the score tends to fluctuate. If you were to pull your credit report once a month, you might see changes in your credit score — or even on a daily basis (although that’s not recommended). The simple explanation is that your score is changing based on real-time updates to your credit report. If you check your score right before you make a payment on a loan or credit card, and then check it afterward as well; you might see slight differences. A number of factors could be at play, depending on your recent credit history.

Late Payments

The first thing you’ll want to consider is if you have had any missed or late payments recently, which tends to be the most significant reason that credit scores can fluctuate. Late payments remain on your credit report for seven years, even if you only missed the payment by a few days.

Changes in Credit Utilization Ratio

If you made a large purchase or paid off a substantial debt, your credit utilization ratio may change — which is part of the formula that the major credit bureaus use to determine your credit score. Your credit utilization ratio is calculated by dividing the amount of your debt on a credit card by your credit limit. For example, if you rack up $5,000 in spending on a credit card with a $7,500 limit, your credit utilization ratio will increase. On the other hand, if you made a large payment on a revolving credit card loan, that ratio would decrease, as you are now using less of your available credit.

Opening New Accounts

If you open a new account or take out a new loan, that typically shows up as a “hard inquiry” on your credit report, lowering your score. That is one reason why experts recommend not opening too many accounts at once. However, hard inquiries have less of an effect on your overall score than other factors.

Age of Accounts

As accounts grow older and cross certain thresholds, credit bureaus view them as less important in the overall calculation of your credit score. The bureaus consider the age of the oldest account, as well as the average age of all of your accounts. In addition, any credit “events” are deleted from your credit report once they pass the seven-year mark. So the fluctuations to your credit score could be the result of a negative event falling off your report or simply the passage of time lapsing since certain entries in your credit report.

Closing an Account

If you decide to close an account that you no longer use, that might cause your overall available credit to decrease, affecting your credit utilization ratio and therefore, your credit score. It’s typically recommended to keep old accounts open for that reason.

Changes to the Number of Loans or Accounts

To gauge your ability to pay debt responsibility, lenders want to see a diverse amount of open accounts and loans. Paying off a loan — even if it’s the largest one you have — will cause some changes to your credit score. Also, if you are opening a lot of accounts at once, your score may also take a hit as it may appear to lenders that you are struggling financially.

Word to the Wise

While regular credit report checks are a healthy part of credit management, you’ll want to resist the urge to check your score too frequently. And make sure you’re comparing apples to apples — your credit score can vary between the different scoring models, since each model uses its own specific formula. Fluctuations are normal over a daily or monthly basis, but it may take longer than that for your credit score to reflect your efforts to improve it. Keep in mind that slight changes over a brief period of time matter less than the overall picture.

It’s critical to check your credit report every so often to make sure the information being reported is both accurate and timely. Credit report errors are another common culprit of credit score fluctuations — and luckily, you can get them removed from your report. If you believe your credit report may contain errors that are causing your score to fluctuate without good reason, contact the pros at Ovation Credit. We’ll be happy to talk through your concerns, review the report, and work with the credit agencies on your behalf to remove the errors.

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