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applying for a credit card Archives | Ovation Credit Repair Services

5 Credit Mistakes You Need to Avoid

By | Your Credit

It doesn’t matter whether you’re trying to improve your credit or build a positive credit history from scratch, there are a few financial moves you should almost always avoid. Even one small misstep can result in lasting damage, undoing all the hard work you’ve already achieved.

Take a look at five of the most common credit mistakes and how you can prevent them from hurting your own credit report.

1. Making Late Payments

The largest factor determining your credit score is your payment history, making it extremely important to avoid paying any of your bills late. Obviously this includes any type of financing payments, like credit cards, student loans, mortgage, car loans, and any other kind of personal loan. But even things like your cell phone bill or utility payments have the potential to impact your credit report if you leave them unpaid for too long.

How much leeway do you have with your payments?

Your creditor can of course charge late payments according to your user agreement, so it’s always smart to pay by the due date. If you do happen to miss that, you have 30 days until the late payment can be reported to the credit bureaus. Once a negative item like that appears on your report, it can stay there for seven years, unless there’s been some type of credit error.

2. Reaching Your Credit Limit

Another credit mistake to avoid in order to fix credit or build it is to balance your credit utilization. How much you utilize each line of credit available to you also has a major impact on your credit health.

For instance, maxing out $5,000 on a single credit card is generally more harmful to your credit than spreading that same amount over multiple cards. The is because your finances seem more precarious if you don’t have much of an emergency buffer through your various lines of credit.

A quick credit repair tactic is to either pay down your maxed out cards or ask for a credit limit extension. If you take that route, just make sure you don’t actually use the extra room on your card.

3. Closing Accounts for the Wrong Reasons

When you have problems with accumulating credit card debt, your immediate reaction may be to shut down your accounts. But that can actually hurt you instead of helping to improve your credit. Here’s how:

First, your average account age is part of the calculation determining your credit score. When you close a credit card, the card eventually drops off your credit report and lowers the length of your credit history.

Second, when you close one line of credit, that automatically increases your overall credit utilization if you still have outstanding balances on other accounts.

Avoid this credit mistake – when is it a good idea to close an account?

If you’re paying an annual fee and not getting any kind of benefit, it might be time to say goodbye. Additionally, you may want to close a card after a credit dispute over a fraudulent account.

4. Applying for Multiple Credit Cards or Loans at Once

Every time you apply for any type of financing, you’ll see a new inquiry appear on your credit report. Some lenders or credit card companies start off the pre-approval process with a “soft check,” which doesn’t hurt your credit repair efforts. But once you fill out a formal application, they’ll usually perform a hard check.

These inquiries stay on your credit report for two years and can damage your credit for one year. Even though the drops are usually just minor, several inquiries can really start to add up. If you want to fix your credit, pay attention to how many hard pulls are being done.

5. Ignoring the Need for Credit Repair

Getting help with the credit repair process is oftentimes a good choice for many Americans. In fact, the FTC has performed lengthy studies indicating that at least 70% of the population believe they have unresolved credit disputes plaguing their reports.

At Ovation Credit, it’s easy to find out if you would benefit from professional credit repair services. See if it’s the best option for your personal situation by signing up for a free consultation on our site.

Sources:

https://www.myfico.com/credit-education/whats-in-your-credit-score/

https://www.ftc.gov/news-events/press-releases/2015/01/ftc-issues-follow-study-credit-report-accuracy

Financial Milestones – Roadmap For Success

By | Personal Finance

While there are many financial milestones to celebrate at every age, some of the most significant milestones could be life-changing.

From getting that first paying job to putting a college degree into practice, these milestones can form some of the greatest memories and set a financial foundation for success later in life.

Knowing what financial milestones are important will help you get a head start on planning and be able to work toward a successful financial life.

Your Financial Milestones Roadmap

Financial Milestones

Becoming an Adult (18-29)

What many people don’t realize is that between the ages of 18 and 29, you should be working on your first financial milestones. On top of landing your first job and buying a new car, you may take out student loans to attend college. To qualify for good interest rates, you’ll need to start building your credit. You could take out a line of credit or get your first credit card, as long as you use it responsibly. If you’ve already made some mistakes with credit, don’t stress too much, you are still fresh in the financial path so use this time to invest in credit repair to get yourself back on track.

Pay any loans or student debt on time each month, and be mindful that any debt you obtain will need to be paid back in the end. You may also plan to move out of your parents’ house and want to start looking for a home to rent or buy. Having good credit will make these goals easier to obtain. A great way to build credit while paying rent, is to use a rent-reporting service to get your rent payments on your credit report.

You should also start planning a budget and learn about investing. You may have the opportunity to start a 401(k) — especially if it is available through your employer and sometimes they will match a certain percentage, you should definitely take advantage of this. If a 401(k) is not provided through your employer you can look into a Roth IRA for your investments, if you have the option to do both, you should. This will give you a solid financial foundation that will carry you far later in life.

In Your 30s

By your 30s, you should be enjoying a comfortable place to live and perhaps owning your own home. You may have several retirement accounts, whether you have a 401(k) or a Roth IRA, continue making contributions to those funds and increasing that amount when you can in order to get the most return. If I said I would give you free money wouldn’t you take it? Keep improve your knowledge of investing by studying up on exchange-traded funds, stocks and bonds, as well as funds that can be matched by your employer. If you are fortunate enough to work for a company that has matching 401(k) make sure you are maxing out that opportunity.

This may be a good time to diversify your investments, choosing from a variety of stock options and markets, such as real estate or commodities. You should also be investing in yourself, pursuing an advanced degree or professional development that will accelerate your career.

In Your 40s

By your 40s, your retirement accounts will continue to accrue, and you should have started investing or saving money for your children’s college expenses. Look into a 529 plan or other college savings plans to see which one suits you best. Max out your retirement funds so that you can leverage them later in life, and contribute up to 6-8 percent of your earnings to get the most out of employer matches.

Reward yourself for achieving financial stability, make sure to make a “vacation” savings account so you can be enjoying this hard work you have been doing. Discuss health care needs with your parents in order to avoid surprises later on. Also it may be a good idea to start an investment account that is separate from other accounts, and set it up to automatically draw funds. With the help of a financial advisor, you can turn these funds into moderate-risk investments that you’ll benefit from down the road.



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In Your 50s

By your 50s, you may have started thinking about retirement and be counting down the years to the big day. Sit down and make some calculations to determine your family’s current financial needs, how much you will need in your retirement, and what your goals are for this stage and on in your life.

For your financial milestones, consider buying a vacation home, timeshare or rental property, which you can lease out in order to generate extra income. Learn about financial options available, such as Social Security, Medicare and pension benefits. Resist the urge to withdraw funds from your retirement accounts prematurely, unless you are prepared to pay large penalties.

In Your 60s

By your 60s, you may decide to retire. Your golden years can also be a time of resilience or unpredictable life changes, so each individual will face something different at this stage. You can start collecting Social Security and planning for the long term, so your retirement and health care funds last as long as you need them. Make sure your will is filed and updated. You may also want to consider changes at home, whether that means modifying your house to age in place or moving to a retirement home or supported community.

In Your 70s and Older

By your 70s, you will likely be well into your retirement years. It might even be beneficial to produce hobby work on the side and sell it at community fairs. This is a crucial time to look at your finances to decide if you need to cut back on spending or if you can be generous with charitable gifts. Ensure that any withdrawals follow a predictable, stable plan, and use your money wisely. By your 80s or 90s, your life will have changed more than you ever imagined it could. This might be a good time to downsize and move into a smaller home that suits your life as it is now. If your retirement funds have made it this far and you can still afford some degree of charitable giving, you’ve done well.

Tracking your financial milestones and setting goals, will help relieve the financial stress that pursues when you have not prepared yourself. With careful planning, saving and investing, you can ensure that both you and your family will be cared for well into the future.

Resources:
Reuters
Money
The Balance
Clark

Credit Cards: What You Need to Know Before Applying

By | Consumer Rights, Credit Cards, Credit Reports, Credit Scores

Think you know everything there is to know about your credit history and how it will impact your access to credit? In 2013 it was reported that 5% of consumers in the U.S. had an error on a credit report that led to them paying a higher interest rate on a loan.

Out of all the disputes credit card companies faced 16.5% of them were about billing. That’s more than double the amount of disputes regarding interest rates or fees.

That tells us that consumers don’t fully understand and utilize credit reporting. By habitually checking your credit report you can prevent errors and fraud and save money on fees and interest.

If you’re in the market for a new credit card, there are a few steps you should take first. By following these steps you can secure a good interest rate and possibly be approved for a higher line of credit.

Prioritize

Determine what your goals are before shopping for a credit card. If you need to pay down debt on a credit card with high interest, look for credit card promotions that offer 0% balance transfer fees. If you need to make a big purchase look for cards that offer 0% interest for 12 or more months to provide ample time to pay down your debt before interest kicks in.

Shop Around

According to a consumer satisfaction survey first reported in US News Money, consumers are most satisfied with American Express. Credit Card companies that fall short include Wells Fargo and Capital One. Shop various credit card offers before applying.

Compare Rewards

Credit card point programs can be rewarding if you choose the right card. If you travel often and are looking to earn additional travel points go with a card that offers additional rewards on purchases made at hotels and on flights. If you tend to make a lot of small purchases, look for a card that rewards every day purchases like trips to the gas station or market.

Check Your Credit Score

Use a site like CreditKarma.com to get your credit score and review your credit history. If your credit card utilization is high, you may want to pay down some of your debt before applying for a new credit card. If you’ve already paid down your debt, but your score hasn’t refreshed wait for this to process before applying for an additional line of credit. By waiting you could save yourself money paid in interest later.

Access to credit can be a great thing when used responsibly. Always make sure to practice financial responsibility before applying for additional credit. Review the terms of a credit card agreement before signing up. Be aware of interest rates and due dates to stay on top of your bills and avoid late fees.

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