With the holiday season right around the corner, it is imperative that you take precautions to protect your credit score. Your Credit Score is one of your biggest financial assets. If your credit score is high, your borrowing rates will be low and therefore save you hundreds of dollars.
The big mystery is how to maintain a high credit score when trying to shop for family and friends. Well if you want to maintain your credit score, you are in luck! It can be as simple as taking a few precautions to protect your credit score this holiday season.
1. Check Your Credit Score Before You Start Shopping
There are services online that will allow you to check your credit score, and with one of the official companies, you can see what your credit score is prior to your shopping spree. This will help you determine what you can really afford to buy without messing up your credit.
2. Avoid Department Store Offers for Instant Credit and Don’t Open Up New Lines of Credit
“Would you like to save 10% today on your purchase today?”. We have all been asked that question when paying for our purchases. Every store under the sun would like to offer you their own credit card. This is not good for your score.
The damage to your score you’ll incur by opening up a new line of credit is just not worth the few dollars you might save. Department score credit is poor quality credit and the credit scoring system frowns on it.
Just don’t apply for the card. You may want or need to apply for a new car loan, a new home loan, a re-finance a home loan. By applying for store credit to save a couple of dollars, you could be hurting your chance of getting an important loan at a good rate until the middle of next year.
3. Avoid Overspending
Spending affects credit. 30% of your credit score is made up of how you manage your debt, and when your credit card balances exceed 30% of their available limit, the credit scoring system red flags you, and your score goes down instantly.
The logic behind this is that if you suddenly max out your credit cards, it looks to the system as though you are in financial trouble. Only charge if you can pay the balance in full before the next statement date.
Plus, overspending and overcharging will also cause you to carry larger balances longer. It is best to keep your balances low at all times.
4. Pay Your Bills On Time
Payment history is 35% of your credit score. One 30-day late can cost you 50 points or more. December is traditionally the busiest time of the year. Active calendars filled with work and social commitments for family and friends and the frenzy of the season can preoccupy you and cause you to be late in paying your bills.
Make staying on top of your bills a priority. Put all of your bills in a file and make sure you pay them on time. In doing so, you will save points on your credit score and ridiculous late charges as much as $39 or more.
Additionally, when you are late in paying your bills, you nullify any preferential finance rate and your account will default to a dramatically higher interest rate.
A ding to your credit score, a high late fee, and a huge increase in interest rates are all big incentives to make sure you are on time with your bills. I recently got a call from a customer who had been late, but not 30 days late and the rate jumped on his card to over 30% annually!
5. Take the Time to Plan and Prepare Your Gift Giving
We all do it. We walk into a store ready to buy a specific item and end up getting lured into a spending vortex. Panic spending because the store does not have the item you went in to buy; deciding that if you buy this item for this person, then you have to buy this item for another person; succumbing to the temptation of the latest must-have gadget.
You can prevent this well-woven retailer trap by doing your research online. By preparing before you even darken the automatic doorstep of the alluring retail establishment, you can determine where you can purchase specific items and for what price. In doing so, you can avoid the retail traps and retain control of your spending (and your sanity).
Online shopping sites have grown tremendously in popularity. Traffic to those sites is up more than 30% from just last year. There is a wealth of information on the web. In fact, you can find out all of the hottest holiday items and who sells them and for how much.
Remember, if you pay your credit card bill prior to the statement date, it will help your scores.
6. Manage Your Credit Wisely
Keep track of your credit card balances and keep them as low as possible. Studies show that as consumers increase their credit card balances, they become increasingly apathetic about their balances and even about adding new debt.
By tracking balances, you will maintain a sense of control over your credit score and your finances. Write out a chart of who you owe, how much you owe, and what the minimum payment is. It will help you to get a handle on your bills, and help start planning how to pay them off.
Protect your credit score because it can mean everything when making financial decisions in the future or trying to get some capital for whatever purpose you need it for.
It is not hard to raise your credit score, it is hard to maintain it. If you can purchase a credit score monitoring service, it will protect you from fraud and help inform you of ways to increase your credit score when needed.
Are you ready to protect your credit score this holiday season? If so, check out the resources recommended to you by Inker Street Consumer Credit Advice.
- Household Budgeting: Will show you how to stick to your budget. So, soon you will have a monthly surplus, and you will see your savings start to grow.
- Debt Consolidation Strategies: When it comes to debt consolidation, you need to practice techniques that are a little unique and very much focused on getting you out of debt within a stipulated period of time.
- Debt Destroyer: Finally you can fully equip yourself with these “must-have” tools for busting debt and live a life without having to worry about debt collectors!
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