The holiday season is here. Before you whip out that eggnog and gear up for a marathon shopping trip, pause and make sure that you’re not practicing behaviors that could jeopardize your credit. Getting caught up in holiday cheer and the charge frenzy is how many of us get into trouble. Here are four ways to keep your credit in tip-top shape during the holidays.
1) Don’t apply for store credit cards. Getting a 10% discount on your purchase really isn’t worth it in the long run. Opening a new account could spell trouble for your credit score. This is because the length of your credit history makes up 15% of your FICO score. The older your credit age, the better, as it shows a long history of credit management. Opening a new credit card account will lower your overall credit age, and consequently, your score. Applying for credit also means that there will be an inquiry on your report. Inquiries make up 10% of your FICO score.
2) Be cautious when shopping online. If you’re shopping for gifts online, make sure that you only visit websites that you’re familiar with or that you’ve done business with in the past. Don’t just give anyone access to your credit card number.
3) Don’t overcharge. Be mindful of how much you’re spending. If you won’t be able to repay the amount you charge at the end of the month, reconsider your purchases. Charging too much on your card will cause the amount you owe to spike. Amounts owed account for 30% of your FICO score.
4) Don’t forget to pay your bills. It might seem obvious, but it’s easy to forget to pay your bills when you’re traveling and visiting relatives for the holiday break. Set up reminders in your calendar or automatic bill payments so that you won’t miss a payment and get a negative mark on your credit report. Your payment history accounts for 35% of your FICO score.
For more on how to shop smart this holiday season…
Sheiresa Ngo is the multimedia content producer for consumer affairs at Black Enterprise.