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.

The government has announced that they’ve generously granted everyone an extra couple of days to get their taxes filed this year, moving the due date from April 15^th to April 17^th.  If you owe taxes, that two days might cause a sigh of relief, but if you’re anticipating a refund, now is the time to act. Why let the government hold on to your money any longer than necessary?

We recommend that you complete your tax returns as early as possible – this month, if you can. If you find out that you owe, you can always wait to file until you have the money together to pay, even filing an extension if needed. But if you are owed a refund, you can file electronically and have the money deposited in as little as two weeks.

Your tax refund is often the single-largest chunk of money you will get during the year, and while you could use it to buy a new big screen TV or to put down on a car, you can literally put that money to work for you in a way that will transform your credit rating and your future purchasing power by putting the money toward your credit debt.

You can use Ovation’s payment tools to determine the best course of action for your specific situation. Whether you split the money between a couple of cards to lower the balance to below 50% or pay off the card with the highest interest rate, you’ll be employing a strategy that will directly impact your overall credit score in a positive way.

Why is your credit score so important?

It directly impacts the cost of the items you buy on credit, like cars, houses, and major appliances. The higher your credit rating, the lower the interest rate you are able to obtain on large purchases. Think about it: if you buy a $20,000 car at 9%, you will end up paying about $5,200 in interest. If you purchase the same $20,000 car but qualify for a lower interest rate because of your credit rating, you will save a significant amount of money. Your good credit could help you obtain a rate of 2.9%, and that would mean only paying $1,650 in interest. In terms of monthly payment, if you finance over 5 years, your good credit reduces your payment from around $455 per month to $390 per month.

Rather than make a list of wants on which you could spend your tax refund, consider using your refund as a tool to provide you with long-term purchasing power that will continue to pay you back.