It seems every year we have clients who encounter damage to their credit score(s) over credit issues related to the holidays. Below are a few of the top holiday credit score killers we often see. Do your best not to let the hustle and bustle of the season ruin your credit score.
For many, the holidays are hectic. Be like Santa and make your own list. Add all your monthly payments on a list and, if needed, check it twice to be sure you make all your payments on time. Going 30 days late, even on the smallest of payments, can cause havoc to your credit score.
It seems more common than ever these days for a retailer to ask you to open a new credit card. Quite often retailers offer perks, like discounts, if you open a new credit/charge card with them. In this situation, take a second and weigh the pros and cons of saving a few dollars. The pro would typically be to save a few dollars, but the con may be the result the new account will have on your credit score. Opening new credit often causes your credit score to decrease in the short run due to a hard credit inquiry as well as lowering your average age of credit.
The answer to using cash over credit cards, or vice versa is tricky. Below are options to consider what would work best for you.
Credit cards provide more safety to the consumer than cash. Think about it, if you lose your credit card while shopping, you can get a new credit card mailed to you. If you lose your holiday bankroll of cash, you may be out of luck. At times, credit cards may offer you extended warranties on purchases as well as rewards for using their cards. Using a credit card may make it easier to return items, especially when you lose the receipt. Keep in mind, heavy use of a credit card can lead to lower credit scores due to increased credit utilization so be careful.
In one word, “Budget”. Like anytime you plan to spend money, it is best to do so within your budget. By using only cash, it is easier to stay on budget because when you run out of cash, you are done shopping. On the other hand, credit cards have a way of getting out of hand. Many consumers I talk to have experienced the shock of opening a post-holiday credit card statement to find out they spent so much more money than they thought they did. From a credit standpoint, using all cash will not have any impact on your credit score.
Sadly, scammers and thieves don’t take breaks over the holidays. Consumers often are at more risk over the holidays. If carrying cash, do so in smaller quantities and don’t flash envelopes full of cash. When placing packages in your car, try to put them in your trunk or cover them up for less risk of an auto break in. If you are making any donations to help others, do your homework and make sure that your donations are going to a real cause and not to a scammer. Just be extra careful to protect yourself and your loved ones.
I hope these credit score tips help you make good decisions over the holidays. These tips will help you improve your credit score and personal safety during this very busy time of the year.
If your credit needs help, take action. There are a lot of resources available on steps to improve your credit. You can get free information from the FTC or contact a professional credit repair company like CureMyScore.com. By taking action to improve your credit, you may qualify for the home of your dreams or a new auto while paying less in interest charges.
Call us at 412-564-5370 with any questions / comments or schedule a free program review. Like us on Facebook to receive future consumer credit tips.
Credit Reporting / Scoring Expert, Chris McConville is the President of Credit Education at CureMyScore.com and founder of myexpertcreditwitness.com where he works as an Expert Credit Witness in both Federal and State Court. With working in the credit and mortgage fields since 1991, he’s dedicated to sharing his knowledge to educate consumers.
