At the end of the year, there is always a spike in consumer credit card spending as people prepare for the holiday season. Your holiday purchases can have a large impact on your credit score. A little bit of financial planning can keep these extra expenditures from damaging your credit.
In addition, you need to take some precautions to protect your credit from outside forces, especially during the holiday season. After all, they want to have a good holiday too, with your money!
Here are a few tips to improve your credit for the time being and keep it looking good through the holidays.
1) Make a Detailed Plan
Review you Cash Flow and be honest with yourself. How much comes in and how much goes out. Make a list of whom, and how much you want to spend. Keep to your plan. You’ll be glad you did. Remember, this is the time of the year that we tend to get trapped in EMOTIONAL spending.
2) Check Your Credit
Whether opening a new credit card or focusing on protecting your credit, the first thing you should do is check your credit. If you notice any problems or mistakes with your credit profile, now is the time to get it fixed. (www.CreditScoringAdvisor.com) Also, if you have a high number of inquiries on your credit report you may want to stay away from applying for new credit.
You need to check, not only that the accounts that you have are reporting correctly, but that things that don’t belong to you are not on your report. Always check for wrong - addresses, date of birth, or social security numbers. These may indicate that someone is trying to use your credit.
3) Pay Down Your Debt
While checking your credit, you may have noticed some high balances on your loans or credit cards. If you’re looking to improve your score to apply for a new credit card, be sure to pay down your credit balances so you have the lowest credit utilization possible.
4) Ask for a Credit Limit Increase, or Apply for a 0% Interest Credit Card – if your credit is good.
Call your credit card provider and ask if they will increase the limit of your credit card. This tactic will allow you to charge a little more on your credit cards without impacting your credit utilization rate. That being said, just because you have a higher limit doesn’t mean you should spend more. This move is for protecting your credit score, not getting extra money. However, if the higher limit keeps you from maxing out your cards, then it will be worth it. Still, be careful not to spend too much as your credit cards carry high interest rates and you could end up paying a lot more for those holiday gifts.
5) Watch Out For Holiday Scams
Scammers want to make a living too.
· Bogus Websites – stay with recognized sites. If it sounds TOO GOOD it most likely is. They may look like your creditors or bank website but always check the web address. The address may have your creditors or banks name but look for another dot com address in the site address.
· Email Scams – they are becoming more deceptive. It may appear to be coming from a friend or your bank but again, check the address it was sent from. You may be surprised. If you don’t recognize the email address, DON’T OPEN IT.
· Fake Tech Support – I got a call recently from Microsoft about spamming emails being sent from my computer. The guy knew a lot about my system. He knew the operating system and other information. I called Microsoft and they knew nothing about it. I was informed that they would NEVER call to tell me that.
· Online Coupon Scams – steer clear of these from companies you don’t know or haven’t heard of. They just want to get your information.
· Anyone that wants you to pay via MoneyGram, Western Union or a Pre-Paid Card.
The pre-paid card is a favorite of the people running the IRS scam. They will never call, email or ask you to send money via a Pre-Paid Credit Card.
· Oh…as one of my clients went through, no one from any court will call you up telling you that you have to appear in court this afternoon, or, if you want to avoid going to court, call the collection agency suing you to pay them to avoid a judgment. Court employee NEVER will call you either.
6) Points to Keep in Mind for After the Holidays…
Pay down the highest interest credit cards FIRST.
· Especially after the Equifax hacking, you need to review each and every bank statement and credit card statement to catch any possible fraudulent activity.
· You will lose points if you have high balances to credit limits on your credit cards. Max out 5 or 6 credit cards and you stand to pose 100 to 125 points off your credit scores.
· You will lose points for having balances on more than 4 credit cards.
· You will lose points for opening too many credit cards too suddenly.
· You will lose points for a higher total debt on your credit cards.
· Avoid Department store card giving you a 10% discount Today. These cards charge higher interest rates and will quickly eat up any savings you get today.
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Credit Scoring Advisor Blog – Daniel Sater - Nationally Recognized Credit Expert & Credit Expert Witness