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Credit Archives | Page 2 of 5 | Ovation Credit Repair Services

18 Quick and Easy Tips for Boosting Your Budget

By | Budgeting, Credit Repair

Isn’t it nice to reach into your purse or pocket and find a few extra dollars you didn’t know you had?    We all love reaping the rewards of hard accomplishments, so here are some great tips for saving yourself a bit of cash to do some fun things, including taking a trip, buying a new wardrobe, or starting to save for retirement.

  1. How many nights do you spend in front of the TV with its 800 channels and absolutely nothing to watch?  Narrow your cable and internet package and start lining your pockets with green.
  2. Weather-proof your house.  Seal the gaps around doors and windows to keep out drafts.  Plant shade trees to save on air conditioning. As a bonus, with some repairs and improvements, the energy company may offer some rebates. Uncle Sam may even give you tax breaks.
  3. Don’t go crazy with the thermostat.  Keep it just a little warmer in the summer and a little cooler in the winter.
  4. Wrap your water heater in an insulation blanket to prevent heat from escaping.  Pair this with taking shorter showers to maximize your savings.
  5. Plug appliances into a power strip, then turn the strip off when the appliance is no longer in use.  Even when the appliance isn’t in use it continues to drain energy.
  6. Instead of spending $5.00 each morning for that latte, make one at home.  With so many inexpensive home varieties available, there’s no reason to give money to the franchise on every corner.
  7. Consider dining at home more.  This is a huge way to save money.
  8. Plan your meals and prepare a list before you go to the grocery store so you don’t overspend. We suggest taking a calculator along to keep track of your total.
  9. Get a membership to a wholesale club like Sam’s or Costco and buy household necessities and groceries in bulk.  The prices are lower and you’ll save gas running to the grocery store each week.
  10. Before spending time and gas running to the store, check prices online and see where you can get the best deal.
  11. Shop on eBay, Craigslist, thrift stores, and at garage sales.  Things are often gently used or brand new and can be a big savings.
  12. Only get a gym membership if you will really commit to it.  Otherwise, be realistic with yourself and invest your money elsewhere.
  13. Plan fun family activities that cost less.  Have a picnic in the park and play ball.  This is much less expensive than going to a movie or amusement park.  Entry to most museums is free and educational, as well.  Be creative and come up with new ideas for date nights that are less expensive but still fun.
  14. Take a trip to the library rather than buying books.
  15. Teach your children how to handle money so they grow up financially responsible.  Allow them to earn a small amount for performing chores.  When they are old enough, teach them how to open a checking account, how to record checks, and how to reconcile their account each month.
  16. Talk to your cell-phone provider about your plan and reduce it to the lowest amount you really need each month.  Put a monthly reminder in your calendar to review your bill and verify that your usage is adequate to your needs.  Make any necessary adjustments.
  17. If you have a mortgage, consider your interest rate.  If it is high enough, it may be worth refinancing.
  18. How fuel efficient is your car?  If you are spending too much at the pump, consider trading it in for something more fuel efficient.  If you have public transit available, take it to work or look for others who live near you and start a carpool.

Some of the savviest of savers had difficulty getting started.  If you’re still overwhelmed or feel stifled by planning a budget, perhaps a call to Ovation might put your mind at rest.  The key is to try to take control early so you can enjoy your life now and in retirement.

 

Is It Possible to Partner with Your Credit Card Statement for a Healthy Financial Future?

By | Credit Cards, Your Credit

You may have noticed that your wallet is a little thinner because you’re carrying fewer credit cards. It may also be thinner because the minimum monthly payment for each credit card is more than ever before. The reason for the change is the Credit Card Accountability, Responsibility and Disclosure Act, or CARD Act.

“This is a well-intended law, and it came at a time when the country was having a hard time economically,” says Brian Riley, senior research director in retail and banking at CEB TowerGroup.  As a result, cardholders are managing their accounts more responsibly, paying on time, and making larger payments.  More cardholders are able to keep their accounts current and pay off balances faster.

Good News for Everyone

The CARD Act implemented requirements to billing statements that make it easier to understand what you owe.  Statements include payoff math detailing how long it will take you to pay off your balance if you only pay the minimum due, along with how much interest will be charged for the duration of the payoff period.  It further explains how long it will take to pay off your balance over a three-year period and how much money you will save in interest.

According to a survey conducted in February by Consumer Action, a consumer advocacy group, 45 percent of cardholders surveyed paid more on a monthly basis because of the new minimum payment warning and Credit Reporting Bureau, TransUnion reports that as a result of the CARD Act, the percentage of accounts delinquent greater than 90 days decreased to 0.69 percent in the first quarter as compared to 1.11 percent in the first quarter of 2010.

Under 21 = No Credit Card

Another effect of the CARD Act is that it is now harder for people under the age of 21 to obtain a credit card.  The purpose is to help young adults avoid debt; a goal which has been successful.  According to the Student Monitor, a college market research firm, more than one-third of students reported having their own credit card in 2009.  This year, only ¼ of students report having a credit card in their name.

Is It All Good?

Although the Act has added safety precautions for card users, the terms aren’t all beneficial to the consumer.  The most popular type of credit cards are those with variable rates, yet since its inception, the average annual percentage rate (APR) has increased one percentage point to 15.31.  Bankrate’s weekly interest rate data from August reports that it was only 14.3 percent when the act was implemented.

APRs aren’t the only figures on the rise.  Annual fees have also increased.  The average cardholder paid $80 in 2010 but that figure increased to $113 in 2012, according to Ipsos Loyalty, a research services company.

While cardholders are paying more for their credit cards, their account limits on existing accounts have been slashed by 17 percent.  Limits on new accounts have been cut by 30 percent since 2008 according to CEB TowerGroup.

Something’s Missing

The CARD Act is far-reaching yet not all-inclusive.  For instance, the Act overlooked small-business cards generally guaranteed by the cardholder.  Banks introduced new or enhanced small-business credit cards to attract business consumers.

Another concern of general importance was the lack of required notice when a cardholder’s limit is going to be reduced. Cardholders must receive notice if their interest rate, certain fees, or other significant changes are made, but that does not apply to credit limits.

Finally, the Act mandated that card issuers consider the individual’s income as compared to household income; making it more difficult for college students and non-working spouses to qualify for credit cards.

The CARD Act is helping consumers better manage their debt but it can only go so far. If you need help with your credit, contact us at Ovation today to discuss one of our customized solutions to meet your specific needs.

 

Natural Disasters and Credit Repair: What you Need to Know

By | Credit Repair, Uncategorized

Natural disasters are a rare but real threat. Earthquakes, forest and range fires, tornadoes, and flooding can be deadly. At the very least, these emergencies can disrupt public services and damage lives.

The September 2013 floods in Colorado are only the most recent example of natural disasters and the tragic impact they can have on communities and individuals. As the victims begin to repair their homes and lives, there are many details to account for in the recovery process.

Protecting your credit rating, or continuing steps toward credit repair, may seem like small details in the wake of a natural disaster’s destruction. But following a few simple steps can assure that credit-related details are properly addressed, with no needless additional damage to people who have already suffered.

Creditors and natural disasters

Most lenders already have in place policies for emergencies. These can range from procedures to set up temporary deferred payment plans, to guidelines for loan forbearance (temporary relief from having to make full payments on credit obligations).

When making their updates to credit reporting agencies, lenders usually include comments on any special payment arrangements associated with disaster recovery. This is important, because in this case your FICO score does not consider such comments as negative information that could hurt your credit rating.

Follow these simple steps to protect your credit score after a disaster:

Get in touch with lenders.

Let them know your situation and where you are in the recovery process. This is particularly true if you can’t pay bills or make scheduled payments for reasons tied directly to the disaster. There’s no reason for your good credit rating to be impacted, and in most cases lenders will work with you.

Ask about special payment arrangements.

What policies and services can the lender offer to protect your credit rating while you get your life back on track?

Check your credit score.

Safety and shelter come first. But as soon as feasible, it is recommended that disaster victims monitor their credit ratings. A copy of your credit report can provide a complete picture of your credit profile at the time of the emergencies and before any post-disaster updates have been reported.

Use credit repair strategies as needed.

Down the road, if you find that your credit rating has been affected by events related to the disaster, follow proven credit repair procedures to clean up your credit report and raise your credit score.

Regardless of the reasons for problems with a person’s credit rating, there are many aspects to building or repairing it. To learn more about how Ovation can help build your credit score, check out these frequently asked questions and contact us today.

 

The Good News about Soft Checks for the Credit-Conscious

By | Uncategorized

Let’s say you’ve been working hard on repairing your credit, and you are eager to check your own credit score to see how it’s paid off. However, you may have heard that checking too frequently will hurt your credit, so you hesitate.

But did you know that there are two different forms of checks, known as hard and soft checks? While it is true that hard inquiries do lower your credit score, checking your credit  yourself is one of a few forms of soft inquiries that will not affect your score at all. Let’s explore some differences between the two, so that you can peacefully build or rebuild your credit.

Soft v. Hard Inquiries

Whenever you apply for credit from financial institutions, you authorize them to take a “hard look” into your credit score. These inquiries are usually because you’re applying for a loan, a credit card, a mortgage, or even renting an apartment. Multiple inquiries into your credit might look like you desperately need credit, and thus lower the faith of potential creditors. Every hard check lowers your score by a few points; banks and lenders typically have to ask your permission to make a hard check. Therefore, you should try to limit your hard checks to one or two a year, to reduce these small dings on your credit.

A soft inquiry, on the other hand, means that your report has been viewed but you didn’t apply for credit. Examples include background checks by potential employers, pre-approved credit cards, and your personal review of your credit. If you find yourself in a gray area and are unsure if a situation will require a credit check, be sure to determine whether it will be a hard or soft inquiry by simply asking.

It is always important to be diligent and informed as you build your credit. Another wise move is to consider a credit repair company like Ovation for resources and advice. Our knowledgeable experts will help you wade through the credit lingo and make smart decisions about your finances.

 

Giving Your Child a Credit Education – Before College, Part 4

By | Credit Cards, Personal Finance

Oh, the numerous temptations of college life. No doubt, as a parent, you are going to prepare your kids to expect, and refuse many of these temptations. But none may affect your child’s long-term goals quite as much as their first credit card.

On-Campus Credit Card Promotions

Remember those promotional booths during freshmen orientation week that offered a free water bottle or a free box of cookies if you applied for a credit card? For many people, that is when their life-long struggle with credit card debt began.

These practices are less common today thanks to a new law designed to protect students:

The act contains new protections for college students and young adults, including a requirement that card issuers and universities disclose agreements with respect to the marketing or distribution of credit cards to students.” – Card Act of 2009

If you vaguely remember toting a promotional water bottle around campus, but can’t remember what became of that credit card, contact Ovation for a credit review to learn if any of your spontaneous college sign-ups are still haunting your credit report.

 

Pre-Credit Card Baby Steps

Just as your child won’t be allowed to enroll in immunobiology 410 until they have completed Biology 100, your college freshman should abstain from a credit card until they have learned the basics of managing a budget.

Having a job is the best way for students to understand the value of money. Even if you plan on supporting them with an allowance while they are away at school, a job is a good way to help them appreciate the money they are given – even if they only work a few hours a week.

Help your child create a budget that makes sense. Of course late-night pizza deliveries, occasional pub crawls, and keg parties will be part of the college experience, so it’s important to budget for these types of expenses. It may be best to encourage your child to withdraw a certain amount of cash each pay day for these “fun” expenses. When the cash is gone – the party is over.

 

Credit Card Security

When financial emergencies arise, it can feel great to have a credit card in your wallet to fall back on. If your child gets a credit card for emergencies, make sure it is only used for emergencies. Depending on your child, you may need to explain that running-out of cash during happy hour is not an “emergency”. A secured credit card or a low-limit card will probably work best for this purpose.

Also ensure that your child knows to pay their credit card as soon as possible after they use it. Using a credit card can make it seem like you have more money than you do. If you pay your credit card account online shortly after making a purchase – you no longer have that money in your checking account – reinforcing the idea that a credit card is not “free” money.

If you’ve struggled with credit and debt in the past, don’t be afraid to share these cautionary tales with your children. It may be helpful for them to understand just how long financial mistakes can affect your lifestyle and how expensive they can be to correct. Check-out parts one, two, and three of this series to use as resources for your child’s credit education.

Giving Your Child a Credit Education – Before College, Part 3

By | Credit Reports

In the previous installment of this series (Giving Your Child a Credit Education – Before College, Part 2) we discussed the possibility of co-signing a private student loan. There are many risks associated with this course of action, so we’d like to dedicate an entire article to the topic.

 

When Financial Aid and Federal Loans aren’t Enough

A student may require a private bank loan to supplement their other financing options for school. Bank loans usually require a co-signor because the student doesn’t have an established credit history and/or a lower interest rate is only possible with the security of a co-signor.

 

All Risk No Reward

If you choose to co-sign for your son or daughter, you become entirely responsible for the debt. It’s as if the loan was yours alone. If you expect your son or daughter to maintain the loan and make on-time payments, this expectation must be clearly communicated. Missed and late payments on the loan will reflect negatively on you and your credit score.

Be aware that the student loan will be used against your debt-to-income ratio. If you have any plans for future borrowing or financing, co-signing a student loan may limit your personal borrowing possibilities. A new car or home renovation loan may have to be put on hold until the student loan is paid-off.

 

Repayment

Unlike federal loans that offer deferments and income-based relief for graduates who are unemployed or under-employed, private loans must be paid on time – like any other private financial product. If your student graduates without sufficient income to make payments on the loan, you need to be prepared to take over payments or suffer the negative history on your credit report.

While interest rates on student loans are currently quite low, this may not always be the case. Interest rates are usually variable for student loans and are therefore subject to rise in the future.

Consider the timing of the repayment plans for this loan. Where will you be in life?  Will you be ready to retire or semi-retire? Remember that this loan is your responsibility as a co-signor and unlike other borrowing; these loans cannot be discharged in bankruptcy. Prepare for the worst – meaning, prepare to pay the loan yourself.

 

Willing and Able?

If the reward of higher education for your child is worth the risk of re-paying the loan yourself, you may be willing to co-sign – but, are you able to co-sign? Consider contacting Ovation to get your credit report in the best possible shape – allowing you to secure the loan by co-signing and ensuring that you (and your child) have the lowest possible interest rates.

How Much is Your Bad Credit Costing You?

By | Credit Scores

There are many motivations for improving your credit score: lower interest rates, the ability to secure a loan or mortgage, higher credit limits and more credit card reward options. In the world of credit, the best deals go to the people with the best credit scores. But what is a good credit score actually worth in dollars?

More than $5,000 on a Loan

Whether the money is used to go to college or to buy a new car, almost everyone applies for private loans (from a bank) at least once. However, if you squeak by – meeting the lending requirements with the lowest acceptable credit score – it’s going to cost you. Compare the interest rates on a $25,000 loan that is to be paid off in six years (or 72 monthly payments).

Interest Rate Total Interest Paid Monthly Payment
5.5% $4,460 $413
7.5% $6,200 $437
12.5% $10,800 $501

The difference between the highest rate and the lowest rate is more than $5,000! However, there are still significant financial gains if you are able to improve your credit enough to shave off a few interest points – the difference between 7.5 percent and 12.5 percent is $4,600.

More than $500 per year on Credit Cards

Without a decent credit score, it can be difficult to secure a credit card. Many lenders have tightened their application requirements, and the best interest rate (after any promotional period) is 10.99 percent. If you are able to get your hands on a credit card with less-than-perfect credit, you will likely have an APR of 20.99 percent. How much in interest does that cost you? With an average balance of $8,000, the higher interest rate will cost about $60 more per month, or $720 annually.

More than $50, 000 on a Mortgage

Buying a home may be the most expensive purchase you will ever make, and with bad credit, it can cost you even more (if you can even qualify for a home loan). While the best rates go to the people with the best credit scores, the difference of even a few interest points can add up to big money over the life of a mortgage. Here is an example of three different mortgage rates, the resulting monthly payments and the total interest paid over the life of a 30-year mortgage:

Interest Rate Total Interest Paid Monthly Payment
2.75 % $140,005.67 $1,222.25
4.75 % $260,364.46 $1,556.58
5.66 % $319,621.06 $1,721.18

The difference between the best rate and the poorest highest rate is nearly $180,000 in total interest costs. However, improving your credit score from a rate of 5.66 percent to 4.75 percent can save you almost $60,000.

Having bad credit is expensive. Improving your score can mean huge interest savings over the life of your borrowing, as well as significant savings on a monthly basis. If you combine the three examples above, the difference between good credit and bad credit amounts to $645 in monthly payments, or a cost of $7,740 per year.

How much is good credit worth to you?

Home Lending Scores Explained

By | Home Buying

Did you know that there’s more to getting approved for a home loan than just the standard credit score? In fact, most lenders take a variety of scoring information into account when determining your ability to qualify for a home loan. The more you understand about the process, the better prepared you can be to get the home of your dreams.

Standard Credit Scores
One of the most popular methods of determining approval for a home loan is your FICO score. Based on several benchmark factors, including credit history and access to credit as well as income, you are assigned a number score ranging from 300-850. Your credit score tells prospective lenders what your potential risk factor is and whether you pay your bills late or not at all. The higher the score, the better chances you have of obtaining the best home loan.

eFunds DebitBureau
The eFunds DebitBureau can also help you when working toward a home loan. By collecting important consumer data from the DebitBureau, the eFunds score consists of specific economic factors, such as reporting how often your credit is checked, how many previous closures or bounced checks you may have and how much debt you currently have. With eFunds, your debit history score takes into account 78 standard data combinations. Using this risk model, many applicants are approved when typical credit scores may indicate potential trouble.

VantageScore
When the three major credit companies join together, you get the VantageScore, which is based on a letter system similar to grades in an academic environment. With a score ranging from 501-990, your VantageScore is a combination of data retrieved from your collective credit scores that reflects the depth of credit in your profile. Again, payment history is decisive, as it reflects more than 30 percent of the VantageScore.

It is never too late to make changes to improve your credit and get the house of your dreams. Every year, you should get an updated copy of your credit report – it is free to do so – to make sure it is reflecting your financial habits in a productive way that helps you build your life as you go. With so many options out there, you are sure to find the right home loan!

Credit Glossary

By | Credit Cards

Dealing with credit card companies and other lenders can be like traveling in a foreign country. The laws aren’t completely clear, and there’s a language barrier making things even more challenging. To navigate this unknown territory, it is important that you learn the language. The following glossary terms will prevent you from getting lost, and more importantly, will help you manage your finances.

Annual Fee – A yearly fee that accompanies some credit cards, which is not included in other fees or interest rates.

Annual Percentage Rate (APR) – This is the yearly interest rate that includes any fees associated with acquiring the loan. This rate is found by dividing the average compound interest rate over the loan term.

Balance Transfer – This is the process of moving unpaid debt from one credit card account to another. Consumers will sometimes transfer at the promise of lower interest rates, but there is a fee to disconnect from the initial account.

Billing Cycle – The span of time between billing statements, often ranging from 20 to 31 days.

Billing Statement – Typically created once per month, this statement lists all transactions made during the specified billing cycle, as well as fees, charges and credits.

Cash-Advance Fee – The fee banks charge when credit cards are used to obtain cash, either as a percentage or as a flat dollar amount. Cash advances also carry higher interest rates.

Chargeback – A transaction or payment that is returned either because of noncompliance with rules or because of a dispute made by the cardholder.

Charge-Off – When a creditor decides that the amount owed is unlikely to be collected. However, the debt is still owed.

Credit Dispute – The process of disputing a negative mark or other mistake on your credit report. You can dispute as often as necessary, with the burden of proof falling on the credit bureaus.

Credit Freeze – This stalls and prevents any transactions on a credit card account by establishing a security alert, often through one of the credit bureaus.

Credit Limit (Credit Line) – The total amount you can charge to a credit card account, often determined by your credit history.

Credit Repair – The process of fixing bad credit, whether you are disputing something on your credit report or recovering from debt.

Credit Report – This is a detailed report, prepared by one of the three credit bureaus, which is used to establish your eligibility for loans and other related credit. This includes your credit history, employment history and other relevant information.

Credit Score – Your credit score is a numerical expression, based on the analysis of your credit report, that determines your creditworthiness

Finance Charge – A charge that is applied for the use of the credit card, including interest costs and other fees.

Grace Period – Applicable only to those who do not carry a balance, it is an interest-free period of time the lender allows between the transaction date and the billing date.

Interest Rate Cap – This is the maximum amount of interest that a company can charge you, set in place by the federal government to protect consumers.

Minimum Payment – It is the smallest amount you can make towards your loans without the account defaulting. This will vary according to interest rate and the outstanding balance.

Over-The-Limit Fee – A fee charged to a credit card holder when the credit limit has been exceeded.

Pre-Approved – This is an initial sweep of potential applicants by credit card companies, not a guarantee. After an analysis of a credit report, a potential consumer may not actually be approved.

Secured Card – Often a tool for those trying to build credit, this is a type of credit card that is acquired with a deposit. This ensures payment if the account defaults.

Standard Interest Rate – This interest rate is relatively stable, but the credit card company does have a right to change its terms at any time.

Time-Barred Debts – Debts that have not been collected on after the statute of limitations are no longer viable, and you cannot be sued for the money that was owed.

Truth in Lending Act (TILA) – Federal Law established in 1968 that ensures full disclosure of credit terms, to prevent unfair billing and credit card practices. The consumer has the right to make comparisons between credit card companies.

Variable Interest Rate – The amount a borrower pays the lender for the use of their money, which may change as other interest rates vary.

“No Reason” Is No Excuse

By | Credit Laws, Credit Repair, Credit Reports

Looking at your credit report is a bit like being in an episode of CSI. You’ll need to carefully pick apart the scene of the credit crime looking for the right clues. “No reason” really means “I don’t know” when it comes to credit score drops, and it usually takes nothing more than a little old-fashioned sleuthing to discover the no-reason reason.

The first step in your CSI Credit Crime adventure is to request copies of your credit report, which are available free to you once per year by law. The first crime you should eliminate is length of credit history. Not having enough of a credit history is an often hidden clue. In the industry this is called a thin credit file.

Have you closed a credit card lately? Recently closed accounts also provide a reason for “no reason” credit drops. Solve this credit crime by opening new accounts and being careful about what accounts you close in the future.

To get away with a credit crime or two, you need to know how to close accounts when you need to. As with all things in credit, there’s a right way and a wrong way. Keeping between four and six accounts open allows you to show companies you are using credit regularly and responsibly. Use one, pay it off in full every month and pay down on the rest. This is what creditors and credit-reporting bureaus want to see.

Don’t, however, close the oldest account you have. This is one of the most serious credit crimes you can commit. It makes your credit history appear shorter than it is and can cause your credit score to take a hit. Definitely don’t cancel several accounts all at once and don’t over-consolidate your cards so that you have too much debt in one place. Another reason your credit score can drop for “no reason” is when you use too much of a single available line of credit. Keep your credit balance below 30% of the total available credit.

Many no-reason credit crimes are committed unintentionally. While it’s often stated that your credit score takes a hit due to inquiries, this is largely overstated. You credit rating likely receives several inquiries per month from people wanting to issue you credit. These have a negligible effect on your credit. Even an inquiry into your credit rating from an employer or credit card application has a minor effect on your credit rating. Don’t spend too many crime scene investigation resources looking into inquiries.

When your credit score takes a dive for “no reason,” chances are it’s taken a dive for a reason – just not one you understand. Investigating your credit report with the attention of a CSI unit allows you to better appraise what “no reason” is the reason for your credit score’s recent dip so you can make the necessary repairs.

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