(BPT) – The holiday season is a great time for merriment – finding the perfect gifts for your loved ones and gathering with friends and family to celebrate the season. However, the holidays can cause a strain on your credit if you don’t take certain precautions. Don’t let this year’s celebration leave you with the credit blues come January.
Here are some tips to prevent damage to your credit score during the holiday season:
1. Resist opening new store credit cards
Those one-time discount offers are tempting, especially while you’re racking up large shopping bills at different department stores. If you have established credit, it might not be in your best interest to open multiple retail store-sponsored credit accounts. A good rule of thumb is to apply for credit only when you need it. If you were to open multiple accounts just for the holiday season to get those one-time, 5 percent-off discounts, the resulting negative impact to your credit score could last a long time. However, if you are trying to establish credit, department store or “branded” cards may be a good first step in establishing credit and positive payment patterns.
2. Avoid accumulating too much debt
Paying your credit card bills in full, and on-time, is key to maintaining good credit. But if you aren’t careful in your budgeting, you might find yourself needing to take a couple of extra months to pay off those holiday bills. The percentage of debt, relative to the borrowing limit on a credit card account, is factored directly into your credit score.
“It’s easy to overuse the credit card for all holiday purchases, and this behavior can negatively impact a credit score that will last for months or even years to come if you can’t pay that debt down in a reasonable amount of time,” says Barrett Burns, president and CEO of VantageScore Solutions, a credit score model developer. “Shoppers should carefully budget how much they’ll spend on holiday purchases, so they can avoid maxing out their cards and also be able to pay off the bills in full when they arrive.”
Burns advises to keep credit card balances under 30 percent of the maximum amount of credit available. For example, if your credit limit on a particular card is $1,000, try to keep charges on that card under $300.
3. Keep an eye on your cards
The holiday season is also the season for credit and identity theft. While it’s nearly impossible to completely prevent identity theft from occurring, shoppers can take steps to make it more difficult for thieves to steal their credit information for fraudulent use. Some tips include:
* When shopping online, check that the website has https:// in the URL address, or a lock symbol on the page showing that the page is secure.
* Only take one credit/debit card on each shopping trip, and only bring it out when making a purchase. Carefully conceal your card on your person, protecting against pickpockets.
* Be alert – looking for over-the-shoulder peepers or worse, someone with a camera.
* Only use secure ATMs at your financial institution.
* Save all receipts to compare with bills when they arrive. Once paid, shred all receipts. If the item is a gift, ask for a gift receipt so the recipient can use the gift receipt to make an exchange, if necessary.
* Monitor your credit report for any fraudulent activity once the holiday season is over. Take action immediately to report errors.
To test your knowledge about credit scores, what can negatively affect your score and ways to make improvements in your credit history, visit www.CreditScoreQuiz.org, which was created by VantageScore Solutions along with its partner, Consumer Federation of America. The online quiz is also available in Spanish at www.creditscorequiz.org/Espanol.