For many families, tax time is not as painful as it could have been, since last minute measures were enacted to protect some tax credits that may put money in your pocket. But before you get too excited about how to spend that money, we’d like to suggest doing something painfully responsible with your tax return.

We know, the dream vacation or the new car would be a lot more fun.

But a good tax return can really help to turn a bad credit score into a good one, and taking advantage of tax time in such a practical way doesn’t mean you have to give up your dream – just postpone it for a year. You’ll not only improve your credit score, but what financing you do get the next year will cost you less because of it. And really, given how quickly tax time comes each year, the time will fly by.

Depending on the size of your return, you can either pay off some smaller credit card balances completely or you may want to pay off enough on the balance of each of your credit cards to make sure they are each at less than 50% of the limit available. There is no one measure more critical to your credit score than keeping at least 50% of the credit line free.

In the short term, your tax return might by you some fun, but in the long term, if you put it to work for you by putting the return toward your credit card balances, it can significantly change your financial future. Better credit scores mean lower interest rates, better auto insurance rates, and better refinancing options for your home. Better credit ratings can even mean getting that job versus being overlooked (except in California, where it is now illegal to use credit scores in making hiring decisions).

This tax season, invest in yourself and your financial future. And next year, you can send us a postcard from Europe as you enjoy your dream vacation that is costing you less thanks to better credit!

When filing a dispute, the most common item the consumer will receive is a “stall letter.” When disputes are submitted by consumers, the bureaus will send out a vague response that most commonly says something like, “We’ve already verified this item” or, “We find this dispute to be frivolous.” To frustrate a consumer further, they are not informed how the bureau came to that conclusion, but these are the only statements bureaus are allowed to make as efforts to reject a dispute. An investigation costs money for both the bureaus and creditors, and they will use every power within their means to halt a dispute in the early stages. This irritating tactic is often a defective deterrent that buys time or chases the consumer away.

Do not let their “frivolous” statements discourage your efforts to dispute. Once the credit company realizes that their stall letter is not working – which requires you to send another letter disputing the item more aggressively – what usually follows is a request for proof of your identity. By having proof of identification on hand ahead of time, you can respond immediately and thwart the credit company’s efforts to stall for extended lengths of time. Do not let their evasive methods fool you; these companies are required to look into your dispute and investigate it as many times as you deem necessary, whether you have proof or not. As a consumer, you have the right to verify the information on your credit report and the bureau is required by law to accommodate. The burden of proof lays on them, not on you.

As a consumer, although you have the right to dispute multiple items as you see fit, this is not typically the most effective maneuver. When several disputes are received at once, you are more likely to get stall letters than anything else. The bureau will attack with their frivolous statements once again, but this time they will have reason to believe that your disputes are frivolous or designed to misdirect. Multiple disputes may also trigger internal concerns that slow the whole process.

Our advice? Be smart about what you dispute as a consumer, but never shy away from keeping creditors on their toes.

(2)  Drink less coffee

(3)  Spend more time with the kids

(4)  Finally buy a new car

Sound familiar? Yeah, those were our new year’s resolutions too.

Much has been said in the news lately about the average age of cars owned in the United States reaching an all-time high of almost eleven years old. While cars may be more durable and resilient that ever before, many of us want, or desperately need, a new car. Unfortunately, our credit score or errors on credit reports may be keeping us from realizing this dream.

Cleaning up those credit reports to help people achieve their resolutions of owning shiny new cars (or other dreams) makes the first quarter of each new year a blissfully busy time at Ovation.

It usually takes 6 to 8 months of dedicated work to navigate the cumbersome but time-tested dispute process with the three major credit bureaus and clear blemishes and mistakes from the credit reports of our clients. So if we start working on that new year’s resolution now, many clients will smell that new car smell by September – still plenty of time to fulfill that resolution (we don’t make any promises about the 15 pounds).

Coupling credit repair with a healthy tax return will make payments on that new ride more manageable. The tax return will provide the big down payment that will help to lower the principal payments or allow us to reach a little higher up in the automotive echelon. However, whether the down payment is $1,000 or $15,000, the cash down does nothing for the interest rate. It is our credit report and credit score that drives the interest rate, and it significantly affects the monthly payment, especially over a longer-term loan. Better credit means lower interest, leaving more money in your wallet each month for gas to feel the torque of that new engine.

Perhaps it isn’t a car that gets your engine going? Perhaps you are perfectly happy with the dependable subcompact in the driveway. The first quarter of the year is still a great time to get our finances in order, check the three major credit reports for errors, pay things off, and dream of our financial goals for the coming year. This can only help you realize your dreams, whatever they are – practical and pragmatic or romantic and whimsical.

Once the credit reports are tidy, remember to park the new car (or the old clunker) in the garage, slam a cup a green tea, and go on a long walk with the kids.

For those not familiar with the story, the granite memorial, which was dedicated last fall, featured a quote of King’s that had been condensed from 45 words down to 10. The problem was that the truncated version actually conveyed the opposite meaning of the “drum major” speech it was taken from. After poet Maya Angelou and others disputed the abridgement, Interior Secretary Ken Salazar finally ordered the park service to correct it.

“Yeah,” you might be saying, “but they could prove THAT error. How am I supposed to prove an error on my credit report is wrong?”

Answer: You don’t have to.

No, really. The burden of proof is on the credit bureaus and creditors, not the consumer. The Fair Credit Reporting Act ensures that when you contact the bureaus with a dispute about your credit report, their responsibility is to contact the creditor, and the creditor has to verify it.

The only exception is that sometimes you’ll need to prove your identity. The bureaus frequently will require proof of identity — a photo ID with your current address, something with your Social Security number, and something else confirming your current address — if you’ve moved within the last couple of years. Creditors, too, will sometimes require completion of a fraud affidavit if an account appearing on your credit report isn’t yours.

One last thing to remember: The bureaus can’t tell you to stop disputing, or that they won’t investigate a dispute anymore. As a consumer, you always have the right to dispute. For us, if a bureau responds to a client’s dispute by saying, “Yeah, it’s verified, and it’s correct the way we’re reporting it,” if the client says it’s still not correct, then we continue to fight on that item and continue to dispute.

Ultimately, whether you’re talking about faulty credit reports or botched memorials, there’s no reason people should feel powerless to correct bad information. And fortunately, unlike the King quote, credit reports aren’t written in stone.

One of the best ways to curtail your discretionary spending is to examine how often you eat outside the home. Your job may demand a daily quick trip through the doughnut shop or coffee shop drive-through, you may make enough money to afford lunch out each day with your co-workers, and your family schedule may be hectic enough to make pizza delivery or fast food a blessing. These combined expenses, however, dramatically impact your household budget. Some research suggests that half of our food budget is allocated to eating outside the home. You can save money by avoiding the daily latte, the lunch with co-workers, and the fast food hamburgers. Pack lunches and plan meals ahead of time to better manage your time, expenses, and your diet.

As you examine your dining habits, also take a look at your entertainment expenses. Do you need 200 or more stations, or are you paying $50 per month for the privilege of watching your two favorite channels? Consider online websites that often offer free streaming movies and television programming. Alternatively, you can pay a monthly fee that is a fraction of what you might pay your local cable or satellite provider for streaming services like Hulu and Netflix. As well, the expense of renting a movie and making popcorn at home is far less costly than taking the family to a movie theater. Your family evening is also more intimate when sharing a movie at home, and you can avoid twenty minutes of advertising and movie previews.

Other methods of reducing spending include walking or riding a bike instead of driving your vehicle, monitoring your utility use (electricity, water, and heating are often wasted, yet controllable expenses), and cutting back on impulse buying that is often triggered by sales found in department stores (get what you went to the store for, and get out!).  All of these items by themselves might seem trivial, as may the relative cost of a cup of coffee, one food item, or a quick drive to the store. These items calculated collectively, however, represent a significant portion of your budget that would best serve you by being assigned to your monthly credit card payment.

While retailers coast into the new year on your Christmas purchases, you’re stuck in a midwinter depression, paying interest on the purchases you made the day after Thanksgiving. You know the problem, but here is something perhaps you do not know: Your case is not hopeless. Getting out of the winter credit card funk will take a little work, but we can help you create a plan to pay down debt quickly.

Our suggestion? Start with the card that has the highest interest rate and pay it off first. This sounds radical since some financial advisers may encourage just the opposite: paying lower balances first. However, a financial payoff plan that targets high interest rates first is a good idea. Why? Let’s say you pay off the card of lesser interest first. While you are doing so, the higher interest is piling up fast. You will pay more in the long run on a higher interest loan that is left idling on minimum payments than you would on a lower balance card. Paying off the higher interest loan will result in less total interest piled on to your debt. When the high interest loan is eliminated, you can then concentrate greatly on the lesser loan, even adding the difference paid from the higher interest loan, which is now happily paid off.

Paying off high interest credit cards can help positively affect your credit rating, especially if you get the balances on the cards under 50%. Outstanding debt accounts for 30% of your credit score, so paying off those high interest cards can make a difference.

Ovation specializes in diffusing the funk on high interest loans. Our payment tools will take the guesswork on how to get started.

In a 2009 discussion for National Public Radio, evidence is shown to support the claim that employers indeed use credit ratings to determine the trustworthiness of a candidate, as well as to judge the character of a person they consider qualified to work for them.  While you may consider this to be unfair, unethical, and in some instances illegal, as a potential candidate for any job, your goal is to present the best image possible. Right or wrong, if you want to present such an image, one way to do that is to ensure that your credit score is not considered less than acceptable.

Ovation offers numerous financial tools that can help you manage your payments, save you money, and improve your credit score. From the start, a common-sense approach to your finances will help you avoid a poor rating. Credit is a necessary evil in our society, but you can manage credit by using it regularly yet sparingly. Pay your bills on time, and pay more than your minimum balance. If you have multiple credit payments, pay towards the credit card with the highest balance and the highest interest rate. Do not over-extend your credit, and manage your spending habits. By taking these steps, you will be better able to manage your credit score, thereby putting yourself not only in control of your finances, but also in control of your professional future, regardless of where you want to be employed.

Ultimately, legislation may be drafted compelling employers to ignore your credit score.  Regardless, do not take that risk with your future. Your choice today to manage your credit rating responsibly will demonstrate that you are a professional regardless of the circumstances.

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.

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.

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.