Dec 15 2011
Smart shopping tips to keep your credit healthy
Smart shopping tips to keep your credit healthy
(ARA) – ‘Tis the season to be jolly, but for most Americans, it’s also the season to shop. While the items on your shopping list are sure to make gift recipients happy, being mindful about financial stress and maintaining good credit should remain top-of-mind.
Going overboard on holiday purchases is all too easy when you’re caught up in the spirit of the season. As many as 14 million people responded to a recent Consumer Reports survey admitting that they’re still paying off purchases from last year’s holiday season.
“If it’s taking more than a year to pay off purchases, you’re possibly on the way to damaged credit,” says Barrett Burns, CEO of VantageScore Solutions, LLC. “The short term enjoyment that you might get from a purchase could be far outweighed by potential stress that could come later when those credit card bills come due. Resolve now to head into the new year with good credit, which will alleviate a lot of headaches and allow you to take advantage of record low interest rates.”
If you make smart shopping decisions now and throughout the year, you’ll be protecting yourself from financial stress down the road. But it’s also important to remember that even if you’ve already overspent this season, you can still make wise decisions about your credit going forward that can help you in the long term. During this holiday season, keep these credit score tips from VantageScore Solutions in mind.
When shopping
* Apply for credit sparingly. While there are plenty of tempting offers and advertisements for credit cards, every new credit card account will appear on your credit report. Too many new credit card accounts over a short period of time can potentially damage your credit score. While the temptation might be there, you should apply for credit with the same thoughtfulness you’d use when making purchases with a credit card.
* Plan ahead. Credit scores take into account how much available credit you have. If you are planning on making a large purchase on credit after the holidays to take advantage of favorable interest rates, consider limiting the use of your credit cards during the holiday. This will not only allow you to retain your available credit balance, but can help you in getting the best interest rate for that big purchase.
If you’ve overspent
* Reduce your balance. A lower balance can help to improve your score and leave room for unexpected expenditures. A good rule of thumb is to try to keep balances under 30 percent of your total credit limit. For example, if your credit card limit is $3,000, try to keep your balance under $900. While it is important to pay all of your credit obligations, try to put more effort into bringing down higher balances to under the 30 percent threshold.
* Make payments on time. Establishing a positive payment history by paying your credit obligations on time, each and every month can have one of the biggest impacts on your credit score. Don’t let one missed or late payment potentially damage your credit score that you have worked hard all year to maintain. Also by maintaining a good credit score, you can help ensure that you get the most favorable interest rates on your credit accounts.
Taking a thoughtful approach to shopping – and paying off your shopping bills – can help you not only buy what’s on your list, but keep your credit score in good shape for the future. To learn more, go to www.vantagescore.com and visit www.creditscorequiz.org to test your knowledge about credit scoring.
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