Its the most wonderful time of the year! Or should I play that damn Temptations Christmas Album my mom would wear out!!! LOL!!! Ahhh, those were the days. Anyway, I want to go over how to Maintain Good Credit During The Holidays and maintaining a good credit score while still shopping for gifts and such. By no means am I promoting going into more debt but some consumers have already decided on buying items with their credit cards and thats ok. Just make sure you know how to do it properly. Lets go!
1. Ask For A Limit Increase
Utilization is the number one factor when dealing with credit cards. When you want to maintain good credit during the holidays. For those of you what have yet to read my article “How Credit Cards Work“, you are in for a treat. Utilization is calculated by the Balance divided by the limit. The best rule of thumb is to never go over 30%. For example: if your credit card limit is $1000, then your balance should never go over $300. If it does, your score will start to decrease. Why? Because you are using too much of your available credit. With that being said, if you plan on using your credit cards, be sure to ask for a limit increase before going shopping. This will give you more room to swipe your card with your credit score being affected that much.
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2. Apply For A 0% Credit Card
Some credit card companies gives a 0% on all purchases as a perk for A SHORT PERIOD OF TIME! This can be as long as 18 months and as short as 6 months. The reason you want to go with a 0% promotional offer is simply because if you decide to carry a balance, it doesn’t grow interest during the 0% period. Carrying a balance is when you receive a bill but you only decide to pay the minimum which leaves a balance for the following month. Normally, that carried balance will accrue interest unless you have a 0% promo offer. The best course of action is to pay the balance off before the promo period ends. Otherwise you will accrue more interest.
3. Pay Your Credit Card Bills On Time
The highest percentage of what makes a credit score comes from Payment History – 35%. In short, pay your bills on time. If you dont, your credit score will suffer dramatically.
4. Increase Your Score Back To Before
If you decide to max out your credit cards, remember, it’s not recommended but it’s also not the end of the world, but it does hurt your score if you are trying to Maintain Good Credit During The Holidays. All you have to do is pay the balance down which will bring the utilization back down, and then your score should be back to normal. I know consumers who get credit cards simply for the holidays but they never pay those balances down and end up with low credit scores because of it. My rule of thumb is 10% utilization. So if your limit is $500, get that balance back down to $50 asap! It doesn’t make sense to have a balance carried over time and I have seen some people carry it to the following year! Now you know.
The Bottom Line
Now you know how to Maintain Good Credit During The Holiday season. Since we don’t know what we don’t know, it’s always best to share great information like this article with others. Too many people have low scores because of bad habits during the holidays. I am always here to help and educate.
Saving your money and budgeting correctly are two of the foundational tasks needed to take control of your finances. If you need additional support, I invite you to check out my budgeting course and my savings course.