Credit scores are important for your financial future, so it’s crucial to protect yours, especially through December.
The holiday season makes it easy for you to ding your credit score. Overspending or being too preoccupied with family and friends to pay bills can hurt your score and it could take months or years to build back your credit.
Here are three tips for making sure your credit score doesn’t take a huge hit this winter.
1. Don’t open up new lines of credit.
Every time you open up a new credit card or take out a loan, especially for shopping this holiday season, your credit score takes a hit. Even one extra line of credit could significantly increase your risk of overspending, which could ruin your credit if you don’t keep track of your purchases. Store credit cards are especially bad, since they have unfavorable interest rates and conditions.
2. Plan your bill payments
During the holiday season, you chances of missing a payment increase exponentially: with all the traveling, cooking, spending time with friends and family—who has time to check up on bills? That’s why, if you know you’re going to be busy for several days or weeks, to check your payment dates ahead of time and either schedule and online payment ahead of time, or pay right then and there.
3. Resist the urge to overspend
The balance you have on your credit cards as a percentage of your credit limit is crucially important to your credit score, and the factor alone determines almost one-third of your credit score. A general rule of thumb is to keep your balance and purchases below 25 to 30 percent of your total limit.
The holiday season makes it easy for you to ding your credit score. Overspending or being too preoccupied with family and friends to pay bills can hurt your score and it could take months or years to build back your credit.
Here are three tips for making sure your credit score doesn’t take a huge hit this winter.
1. Don’t open up new lines of credit.
Every time you open up a new credit card or take out a loan, especially for shopping this holiday season, your credit score takes a hit. Even one extra line of credit could significantly increase your risk of overspending, which could ruin your credit if you don’t keep track of your purchases. Store credit cards are especially bad, since they have unfavorable interest rates and conditions.
2. Plan your bill payments
During the holiday season, you chances of missing a payment increase exponentially: with all the traveling, cooking, spending time with friends and family—who has time to check up on bills? That’s why, if you know you’re going to be busy for several days or weeks, to check your payment dates ahead of time and either schedule and online payment ahead of time, or pay right then and there.
3. Resist the urge to overspend
The balance you have on your credit cards as a percentage of your credit limit is crucially important to your credit score, and the factor alone determines almost one-third of your credit score. A general rule of thumb is to keep your balance and purchases below 25 to 30 percent of your total limit.
