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Boo! Credit Scores Can Be Scary, Fear Not with These 5 Secrets

By | Credit Scores, Uncategorized, Your Credit

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Credit Scores can seem scary when you think about how that three-digit number can affect so many financial decisions in your life. Frightening enough, that score can then scare away lenders when you’re applying for a loan or a mortgage. The ones not frightened away give you a horrifying interest rate!

Before you go and hide under your covers, here are 5 ways to calm your fears and improve your credit score.

1. Pay Off Your Balances, Especially Large Ones, Quickly

This pointer might sound obvious, but the sooner you can eliminate your balances, the healthier your credit score will be. If you make a hefty purchase with a credit card, try to pay it off right away, even if you must sell a favorite possession to obtain the funds. When you do so, you might find that your score goes up substantially. Plus, you’ll lower the interest rate you’re paying. At the very least, try to pay down your highest balances to the greatest extent that you can.

If you’ve routinely paid your credit card bills late, don’t fall into despair and assume that punctual payments won’t do you any good now. Instead, start paying those bills on time. Despite your history, your credit score will eventually reflect your newfound effort. What’s more, you’ll get into a good habit.

Remember as well that you can use an online service that will automatically pay your credit card debts each month. Such a tool will ensure that you won’t ever forget one of your bills.

2. Consider a Debt Consolidation Loan

You could speak to a financial expert about taking out a debt consolidation loan. This solution isn’t ideal for everyone, but perhaps you’d benefit from one.

First, you might find it easier to pay off your credit cards by combining the amounts of money you owe to various credit card companies into one sum. It might feel less painful to make a more substantial payment each month rather than a series of smaller payments. Plus, you won’t accidentally overlook a payment that you owe. Even more appealing, your overall interest rate will be lower. And taking out such a loan might soon result in a higher credit score.

3. Bring Your Credit Utilization Ratio Down

Your credit utilization ratio is the portion of your total credit limit that you spend every month. This ratio should be less than 30 percent. Of course, that number might sound low, especially if your limit is less than $1,000.

Keep calculating your credit utilization ratio each month. If you find that it exceeds 30 percent, try to pay more with cash or a debit card. You could also try to make fewer purchases, rely on coupons and discounts more often or start shopping around for less expensive products and services.

Another way to improve your credit utilization ratio is to ask for a higher line of credit. That way, you might not need to reduce your spending rate. If you have any credit cards that will grant such an increase without investigating your credit, consider making this request. Just be certain that none of those companies plan to do a hard credit check; having such an inquiry performed lowers your score a little.

4. Don’t Be Afraid to Use Your Credit Cards

Even though it’s important to keep your credit utilization ratio down, you should still be making regular purchases with all of your credit cards. Spending with your plastic and then making your payments in full is a highly effective way to raise your credit score. By contrast, when you completely avoid taking your credit cards out of your wallet or purse, you’re not doing anything positive for your credit report. And closing one or more of your credit cards could actually hurt your score.

On top of that, using your credit cards might allow you to collect exciting rewards. Possibilities include securing special deals on airfare and hotel stays as well as getting cash back when you buy certain items. Why pass up those goodies?

5. Seek Help from an Outstanding Credit Repair Service

Finally, a dependable credit repair service can help you boost your score and maintain that higher number over the long haul. It can keep careful track of your credit report and identify any mistakes or irregularities that might be unfairly damaging your credit.

The experts who work at such a company could also sit down with the credit card companies and other parties you owe money to. And they might be able to hammer out new agreements that are more lenient and favorable to you.

So there you have it: five financial tricks that can lead to real credit treats. These actions could provide you with the monetary rewards ― including better loan terms and insurance rates ― and the peace of mind that come with a healthy credit report.


Improve Your Credit Score with Debt Consolidation

By | Credit Cards, Debt

Debt Consolidate Credit repair

Debt consolidation isn’t something that many people know about, but it can be a great way to improve your credit score and help you improve your overall credit profile. Why should you consider debt consolidation? The best reason is to better manage your credit, which can improve your credit score. For example, you may have a number of credit cards that are nearly maxed out. Having to manage multiple credit cards can cause stress and negatively impact your credit score.

How Debt Impacts Your Credit Score

According to FICO, a key element of your credit score is the amount that you owe to creditors. FICO says that 30 percent of your credit score is made up of amounts owed. Credit reporting agencies look at credit utilization as a factor in the amount that you owe. For example, using most of the credit line that you have available can reflect negatively on your credit score. If you have multiple cards that are near their limit, your credit utilization is high, and this can further deflate your credit score.

Ways to Consolidate Debt

You can consolidate debt in a few ways.

  • Balance Transfers – One option is to move balances from one or more credit cards to one that offers a zero percent interest rate or a low interest rate on transfers. You can quickly go from having multiple credit cards with high interest rates to a single card with a low interest rate.
  • Home Equity Loans – Over time, as you pay your mortgage and as the value of your home increases, you build equity. A home equity loan allows you to borrow against this equity and take out a lump sum that you can use to pay off high-interest credit cards.
  • Debt Consolidation Loans – These are loans from banks and specialty lenders and are designed specifically for the purpose of debt consolidation. Interest rates are generally lower than what you pay on credit cards, so your monthly payment may decrease.

The most important thing to remember when using any of these options is that you still owe this money, but you’re consolidating it with a single loan. The idea is to lower your interest rate, reduce your credit utilization, and get out from under the weight of managing multiple lines of credit.

Debt Consolidation, Not Settlement

Be wary of companies that offer “debt settlement” services, which differ from credit repair services. The Consumer Financial Protection warns against paying upfront fees to companies that offer to settle your debts. Debt settlement firms may request that you stop paying your creditors as a way to negotiate with lenders. This can have an immediate and detrimental impact on your credit score. A better option is to use a firm that specializes in credit score repair and works with you to fix your credit score. Ovation Credit Services provides tools to dispute inaccuracies on your credit report as well as education and advice on how to improve your score.


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Maintain Good Credit Habits

A debt consolidation loan means some of those previously maxed out credit cards now have credit available. After working so hard to repair your credit score, the worst thing that you can do is to start relying on these credit cards too heavily. You’ll find yourself back where you started – or perhaps worse off – if you aren’t careful about managing your money. Once again, a good credit repair service will provide education and advice on how to maintain a healthy credit score.

Ultimately, debt consolidation is a good way to remove some of the challenges and stresses of managing multiple lines of credit. It can also lower your monthly payments. Consider debt consolidation as a way to improve your credit score and your overall credit health.





Consolidated Student Loans – 5 Things to Know First

By | Debt, Loan


You may think that your time at college was a priceless experience, but the people who loaned you money are all too willing to tell you exactly what that post-secondary education is worth. Dealing with multiple loans from either a private bank or from the government (or both) can be overwhelming. Consolidated student loans – or making those multiple loans become one single loan – can not only be more convenient, but it can also save you money.  But whether you’re trying to improve your credit score, get a lower monthly payment, or just consolidate into one single payment, there are some things you should know before considering loan consolidation.

1. Federal and Private Don’t Mix

Because of the low interest rates on federal student loans, they generally can’t be consolidated with your private student loans.  You can consolidate multiple federal loans into one loan and multiple private loans into a new single loan, for a total of two new loans. Keep in mind with federal loans that once consolidated, the original loans no longer exist. You will lose the borrower benefits offered by the government, such as rate discounts, principal rebates and cancellation benefits.

2. One New Monthly Payment

When you go to a bank or a private lender for a consolidation loan, that new lender pays off all of your outstanding loans. One new loan is then created by the lender for the amount they paid to close out the old loans, plus interest. Since a brand new loan is created, this means that you can negotiate the interest rate and the length of the loan. Often consolidated student loans offer a longer period of time over which to pay the loan back, which would reduce your monthly payment, but would of course increase the total amount you’re paying over the life of the loan.

Private lenders are much more willing to consolidate student loans than they have been in the past. They’re also offering consolidation loans with variable rates as low as 4.25%. Variable rates are beneficial because they generally have a lower starting rate than fixed rates. However, keep in mind that a variable rate will fluctuate– so your monthly payments may rise and fall over time.

3. What’s Your Number?

Your FICO number, that is. Your credit score will affect both your ability to get a consolidated student loan and the interest rates you’ll be able to secure. If you’ve been delinquent with paying your existing loans a new lender will see you as risky. However, if your FICO score has improved by 50 to 100 points, you’re a great candidate for a better interest rate on a consolidated student loan. If your FICO score is low, start making regular, on-time payments to your credit cards, student loans and utilities. In a year or two, your score should improve and consolidation may be more viable.

4. My Loan, Your Loan

When you first signed for your student loan, you may have needed a co-signor (probably a family member) who had better credit than you. When you apply for a consolidation loan, which is a brand new loan, you may still need a co-signor if your credit score hasn’t improved. However, some private institutions are removing co-signors from consolidated student loans after one-year of perfect re-payment.

If you managed to build your credit score while at college, you may be able to get the consolidated student loan on your own. Having the loan in your name only will further help you strengthen your credit.

5. Extra! Extra!

Always ask about any additional fees that you may incur by having a consolidated student loan. Will you have to pay a fee for closing your other loans early? Some lenders have penalties for pre-payment. A pre-payment is a monthly payment that exceeds the amount due – regular pre-payments can significantly reduce the principal of your loan over time, which means less money for the lender.

There are many factors to consider before consolidating your loans. You’ll want to do the math and see exactly what your savings will be, including any fees. But, if you’re having some difficulty paying all your loans on time, consolidation might be the best way to save your credit score – lowering your monthly payment and making re-payment more manageable. Remember, consistent on-time payments are the best way to dig yourself out of student debt and build your credit.


Beware the Dangers of Debt Consolidation Loans

By | Credit Cards, Credit Repair, Personal Finance

When credit card debt becomes overwhelming, it can be tempting to ignore payments completely. Before you panic, you need to find a way to better manage the financial mess. One solution you might be considering is consolidation, but consolidation loans should only be considered only if you’ve already tried all other avenues to get out of debt.

Debt consolidation allows you to acquire a loan that pays off multiple debts and rolls them into one payment. In other words, you are borrowing money to pay off other borrowed money, and instead of having several smaller sharks circling you, now there’s only one very large shark. Although using debt as a means of paying off other debt may be your best option, it should never be done without serious consideration of the potential ramifications.

The first problem associated with debt consolidation is managing interest rates. Debt consolidation offers usually promise low rates initially, but the rate you receive is dependent upon your credit rating, similar to any other loan. The new interest rate may not be any different than what you are already paying for the individual debts, and if this is the case, the consolidated loan is not worth your time. Even in circumstances where the interest rate is lower than what you are currently paying in the beginning, because the consolidated debt is larger and often extended over a number of years, it make take longer to pay off. The longer you are making payments, the more interest you will be paying for the money you’ve borrowed.

Consolidating your debt is the right answer in certain circumstances: If you’re not able to use a snowball payment or make larger payments to start paying off the debt, and you’re going to be paying on these accounts forever, a debt consolidation loan maybe the best route to go. If you’ve defaulted on the debt you’re trying to consolidate, and your interest rate has gone up to 20 or 30 percent, getting a consolidation loan at 10 or 12 percent will definitely be worth considering.

Consolidation, however, may have a negative impact on your credit rating. Not only will your credit report reflect that you have opened a new line of credit, which  may lower your score, but it will also show the open credit available from what you’ve paid off, which can also lower your score.

The biggest danger, however, is that you will pay off your credit cards with a consolidation loan, then use the cards again, and end up with twice as much debt as you had before. Since closing the cards can negatively impact your credit score, because you lose your credit history, you have to be very, very disciplined in order to truly benefit from consolidation.

Debt consolidation loans are not for everyone. There is a lot of risk, and the last thing you need is more debt to manage. A safer course of action may be to utilize the many Ovation Tools available that will help manage your debt and reestablish good credit. Organization, discipline and proper spending habits can eliminate the need for a consolidation loan.

DIY Debt Consolidation

By | Credit Cards, Credit Repair, Debt, MasterCard, Revolving Debt, Save Money, Visa, Your Credit

With the U.S. economy still trying to find its sea legs, it’s no surprise people might sometimes need to turn to professionals for assistance with debt consolidation or credit repair.

But what if you’re not struggling to make monthly payments and have reasonably good credit? Is debt consolidation even worth thinking about?


At the very least, examining and managing your debt may help you save money (you like money, don’t you?), and at best it could forestall a creeping credit slide that leads to late payments, a damaged credit rating, or worse. Given the do-it-yourself craze that seems to have swept the land, with people making everything from marshmallows to homes on their own, there’s no reason you can’t take on debt consolidation yourself.

First, you’ll need to inventory all your debt. Sites like AnnualCreditReport.com can provide you with a free credit report to get started. Once you’ve listed all your debt sources, including interest rates, payments, and balances, you can develop a strategy for consolidation.

One approach is to divide your debt into groups, like good, bad, and neutral. “Good” debt might be such things as mortgages, business loans, and student loans (provided they don’t have high or variable rates). These have the potential to help your income down the road and are often tax deductible, so they have the lowest priority.

“Neutral” might include vehicle loans or fixed-rate personal loans. They don’t necessarily hurt you in terms of credit or finances, but they’re not necessarily doing you any favors either.

The debt you’ll want to concentrate on first is the “bad” stuff, which usually means they have variable or high rates, like credit cards or payday loans. Start with those with the highest rates, transferring them to accounts with lower rates. You might be tempted to transfer some of these to a new credit card with an attractive low teaser rate, but think twice about this. Will you be able to pay off the balance before the “real” rate kicks in? How high will that rate be? Also, you’ll effectively be adding more capacity for debt to your credit situation — is that really what you need?

If you have good credit, another option might be to call your card issuer and politely try to negotiate a new rate. Even if you shave off just 1 percent, that represents money you’ll be saving later. Transferring to a fixed-rate personal loan from a credit union or bank is another option.

If you’re carrying student loans, see where those rank on your hit list in terms of rates. Remember that federal student loans typically have lower rates, as well as deferral or forbearance options, so those will likely take a lower priority. That said, the federal government does have a site where applicants can attempt to consolidate their federal student loans and possibly lower their monthly payments.

Consolidating your high-interest loans into more reasonable ones — and strategically paying off the most expensive debt first — can reap dividends by saving you money and protecting your good credit rating in the future. By going DIY now, you can prevent your credit from being DOA later.

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