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Is Your Credit Prepared for Holiday Shopping?

Is Your Credit Prepared for Holiday Shopping? Consumer credit card spending often increases at the end of the year as people check items off their Christmas shopping lists. However, be aware that all of your holiday buying may have a negative impact on your credit score. However, it isn’t required. With a little forethought, you may boost your spending without jeopardizing your credit score.

Rewards, sign-up bonuses, and special financing options make getting a new credit card during the holiday season a good idea.

With less than a month until the holiday shopping season begins, here are some quick fixes to improve your credit and keep it healthy in the months ahead.

1. Examine your credit report

Whether you want a new credit card for the holidays or want to safeguard your credit, you should first check your scores. Credit.com offers two free credit scores and a credit report summary that shows which components of your credit improve (or hinder) them. For example, if you have a lot of credit inquiries, you shouldn’t seek new credit around the holidays. (You may get free copies of each of your three credit reports from AnnualCreditReport.com once a year.) Read on to learn more about Is Your Credit Prepared for Holiday Shopping.

2. Request an increase in your credit limit

To be clear, just because costs are higher around the holidays doesn’t mean you should overspend. Because credit card interest rates are so high, a little overspending can cost you hundreds, if not thousands, in interest.

If you’ve budgeted for the increase in spending and plan to put it on credit cards, be careful not to max out your cards. Credit utilization is a major factor in credit ratings (how high your balances are relative to your credit card limits). Many experts advise using less than 10% of your available credit to keep your credit ratings in good shape.

If you expect your credit card balances to rise around the holidays (even if only temporarily), you should approach your credit card provider for a credit limit increase. This will allow you to spend a little more without increasing your credit use. Keep in mind that requesting a credit limit increase may result in a hard inquiry on your credit report, which can negatively impact your credit score. Read on to learn more about Is Your Credit Prepared for Holiday Shopping.

3. Get rid of your debt

Large loan balances or excessive credit use may already be harming your credit ratings. How do you improve your credit score before applying for a new credit card? By paying down your debts as much as you can in the weeks before the holidays.

4. Make a financial budget

Protecting your credit scores from the impact of future debt is an important part of Christmas credit preparation, but if you haven’t developed a plan for your holiday spending, you may be in danger of overspending in the coming months. This could result in greater credit card balances, lowering your credit score.

Now is a perfect opportunity to figure out how much you can afford to spend over the holidays (and how much you need to save in the coming weeks to afford that). Remember to account for travel, presents, social gatherings, party hosting, and any other expenses that you only spend during the holidays.

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