Welcome To The Ovation Credit Services Blog

We talk a lot about paying off debt and getting out from under large interest payments. Indeed, financial health and a good credit score make managing the financial surprises in life so much easier. It is important to remember though that debt isn’t the enemy – it is a tool.

Judicious use of debt is what allows us to live in a house where we can paint our walls and plant a garden instead of renting an apartment with loud neighbors and a nosy landlord. Utilizing a credit card for regular expenses you are going to make anyway and then paying off that card every month can actually improve a credit score (aka lower interest rates in the future) and rack up some frequent flier miles for a much-needed family vacation.

It is in using our available credit, being mindful of that magical 50% debt to limit ratio, and making timely and consistent payments that we get to fully utilize debt as a tool for bettering our lives. Having this tool available to us will help us ultimately realize our dreams of traveling through Africa, driving our own speedboat, or my favorite – Not ever having to pay an unreasonable bank fee again.

The question is: How do I get there? How do I turn debt around from evil dragon breathing down my neck to almighty sword available at my command?

The answer is:  It is hard work, it can take a long time, and there can be a frustrating feeling of sacrifice as we buy that used Subaru instead of a new Lexus. But consider this – Each and every one of those financially sound decisions is a building block toward financial security. Each time we opt to forego a third black sweater in the closet and instead make an extra $50 payment on a credit card, we place another solid block in the financial foundation of our life. When we make do with the computer we have for one more year and put a little extra away in savings, we secure a safety net for ourselves against the unknown.

These aren’t sacrifices – these are the stones we move to create a financial sanctuary where we are free to do as we like with our money. The three little pigs is more than a quaint children’s story, it is an allegory for how we can secure our future with some effort and frugal choices today.

Once we are in control of our finances, we have a full tool belt – sword and pet dragon included – for managing our future. Banks and credit cards will rally for our business. Car dealerships will compete for our attention with low interest rates and free extras. We will get to make our own decisions once again, and financial freedom is the ultimate reward.

Let’s get real. You might make that resolution to workout more, eat less, lose weight, and be the healthier version of you…but by the next holiday season, you’ll just be tempted all over again with those favorite indulgences, whether your taste buds can’t resist mashed potatoes and gravy or pecan pie. This year, instead of worrying about the number on the scale, why not make some resolutions that will impact what might be considered a far more important number: your credit score.

Ovation proudly presents our top ten credit repair resolutions for 2012:

10…Request a copy of your credit report from all three of the major credit agencies and make sure the information reported is accurate.

9…Create a budget. Make sure you create a budget you can live with that allows you to pay all of your bills, every month. Start by cutting out the daily latte and go from there.

8…Prioritize savings. Put enough money in savings to cover at least three, but preferably six months of bills just in case the unthinkable (job loss, catastrophic illness) happens.

7…Avoid the credit trap. Just because the credit card company gives you a line of credit of $5,000 doesn’t mean you should spend it. Keep your balances at 30-50% of the total credit available.

6…Use Ovation’s payment tools. You can use our tools to develop a plan to get out from under your debt. You can create a plan that works for you, targeting the card with the highest balance, the one with the highest interest rate, or something in between.

5…Sleep on it. Before you use your credit card to buy that new phone, TV, or other device that’s tempting you, sleep on it. Think about whether or not the cost plus interest will still be a good deal…or if it will just be another burden.

4…Take identity theft seriously. Shred, don’t toss. Don’t apply for credit over the Internet just because someone offers you easy credit through an anonymous email. And revisit resolution #10!

3…Don’t use credit as income. Using your credit cards as a way to extend your monthly income is a certain sign of trouble. If you’re having trouble making ends meet, work a few extra hours, cut spending wherever possible, and

2…Don’t be afraid of using your credit cards as a tool. Use credit cards sparingly, as a way to build your credit rating, by charging small amounts that you can easily pay off each month. If you do have to charge something large, like a car repair, make a plan to pay it off in a few months’ time.

1…Pay every credit card bill on time, every month, all year. Whenever possible, pay more than the minimum payment.

Sometimes, all you have to do is ask. This is true whether you’re looking for a room upgrade at a hotel or could use the leg room of first class on a business flight. The same principle is true with credit card interest rates. Sure, we all go around with the mind set that the interest we pay to the credit card companies is just the cost of being able to buy things we wouldn’t otherwise be able to afford. But even a small reduction in the amount of interest you pay can get you moving quickly toward something we all like to see: zero balance.

There are a few tricks to getting your credit card companies to consider lowering your interest rate.

• Pay your bill on time every month. If you have late payments or skipped payments, it will be unlikely that you will be able to convince the credit card company to lower your interest rate.
• Pay more than the minimum payment each month. Even if you are only paying $5-10 more than the minimum, it shows a sense of responsibility that the credit card company is likely to recognize.
• Start with the credit cards you’ve had the longest. Customer loyalty goes a long way in any business, and as competitive as the credit card industry is, it matters to them, too.

Before you call the credit card company and request a reduction in your interest rate, do some homework. If you’ve received offers from other companies for credit cards with lower interest rates and similar features, keep them handy. Know your credit history and credit rating.

When you call, be armed with some facts. Let them know that you can switch to another company and get a better rate, but that you would prefer to stay with the company you’ve been doing business with for so long. Point out that you have a stellar payment history with them.

And, don’t take “no” for an answer, at least not from the rep who answers the phone.

The people answering the phone are gatekeepers – they answer the basic calls, have a set script from which they work, and have limited authority to make changes. If they can’t do anything for you, politely ask if you could speak to a supervisor to have your request reconsidered.

When it comes to credit card negotiations, persistency pays. You have to do your part by paying on time, but credit card companies don’t want to lose you. It never hurts to ask.