Don’t Let Christmas Ruin Your Credit
Did you know Americans spent $789.4 billion on Christmas last year? That’s a lot of gifts, treats, traveling, personalized stockings, food, and more! Christmas can be the most expensive season of the year. It can also lead to credit problems if you aren’t careful. Here are some common mistakes you should avoid.
Online Shopping at Unsecured Websites
It’s best to shop online at reputable retailers, companies, and stores that you trust. Hackers can easily gain access to your payment details if you don’t have a secure website. It’s important to only provide this information on secure sites. Even with nationally known retailers, anytime you use your credit card for a holiday purchase, double check that the URL address of the website starts with “https” and not just “http.” The letter “s” lets you know it’s a secure site.
Don’t Miss A Payment
All of us want extra cash for the holidays. But, whatever your situation, don’t borrow money from your credit card payments budget. Late payments are the most serious credit mistake you can make. A missed payment on a credit card could cause a drop in your credit score up to 100 points. Never exceed your holiday budget to the extent that you are unable to pay your bills on time. Make sure you use your credit card responsibly and pay your bills on time.
Although it’s tempting to receive 10% or 15% off your new card when you shop for Christmas, opening multiple store credit cards is a bad idea. A new credit card will show up as an inquiry on your credit report. No matter how small the credit application, an inquiry is made and your score may take a slight hit. Your credit score can be temporarily lowered by each inquiry, which could result in a drop of five to ten points.
Charging Up A Low-Limit Credit Card
Did you know that your credit score will drop the closer your balance to your credit limit? If you spend $1,500 on a credit card with a limit of $2,000, it will look much worse than charging the same amount to a card that has a $8,000 limit. Although your credit score will not be affected by the amount you spend and how much credit you have, it can lead to a drop in credit scores. Even more important is the fact that credit reports will show this high-risk ratio if you plan to pay off holiday purchases over several months.
Applying for a Payday Loan
Even if it seems like a great plan to get some extra holiday cash by obtaining a Payday Loan, think again. Payday loans are controversial due to their high interest rates. Payday loans can hurt your chances of becoming homeowner. Many banks and lenders believe regular use of payday loans may suggest you are either financially stretched or unable to manage your finances.
Draining Your Savings
Avoid spending your savings. You could end up with financial disaster if you spend your savings to increase your holiday spending budget. You can save yourself stress by creating a holiday budget without using your savings. It’s a good idea to make it a point to save money for Christmas every year.
Need Help With Your Credit?
If you find that you have overdone it and need help with getting your credit and spending habits on track, contact us! If you’re not sure where to start, contact us for a free consultation where we will order a copy of your credit report and analyze the results with you. Together we will identify the negative times on your report and dispute them with the credit bureaus. We will also provide you with educational credit resources to help you strengthen your knowledge and use best practices. We strive to help get you and your family into your dream home!
Originally published at https://lifeguardcreditsolutions.com on December 19, 2021.