With the holiday season upon us, you might be wondering where all the time went. Me too. Expenses (both planned and unplanned) are piling up. You may also be wondering how, through the madness, you can maintain your credit score, improve upon it, or, at the very least, keep it from going off a cliff. Maybe you’ve got an upcoming home or car purchase on your mind. Whatever your reason, working on building/maintaining your credit is never a bad idea. Okay holiday credit warriors, listen up. With these 8 credit tips to improve your score, you just may escape this season with a better credit score than ever.
#1 – Take Inventory
Did you know that you’re entitled to one free copy of your credit report every year from each of the three nationwide credit companies? Just head over to annualcreditreport.com.
A good credit score is anything over 700. An average credit score is anything above about a 650. If your score is below that, you have some work do. But don’t worry, there are still plenty of businesses that will work with you, and working on your score is exactly what we’re doing here.
#2 – Available Credit
Your credit score is directly related to how much of your available credit you’re using, so be sure to take note. For example, let’s say you have three credit cards with a maximum balance of $10,000 each, you’ve spent $5,000 total, and you’ve spent roughly $1,500 on each. You’re in great shape in this scenario because you aren’t coming close to your total maximum balance or the maximum balance of any individual card. If you have plenty of room on your cards, there is no cause for concern. If you’re getting close to your maximum on any, you may think about getting a 0% introductory rate credit card for holiday purchases. You will likely need somewhat decent credit to qualify for these cards, but the savings are worth it if you do. Just make sure you will be able to pay it down before the introductory rate expires.
#3 – Length of Credit
You may be wondering whether now is a good time to close out those cards you’ve had for a while and don’t really use. The answer to that would be no, especially if you’re thinking about an upcoming purchase requiring good credit.
Some people seem to think that paying down and canceling credit cards will raise their score. This is simply not true. The credit world is mysterious that way. I’m definitely not telling you to keep your cards open forever, but if you need to use your credit in the near future, it’s best to wait on completely paying off and/or closing accounts.
#4 – Retail Store Rewards Cards
Particularly if you cannot qualify for a credit card with a 0% introductory rate, retail store rewards cards can be helpful to take advantage of offered savings while building credit. A word of caution, never open too many cards of any kind at one time. Doing so will hurt your length of credit history, part of what makes up your overall credit score.
#5 – Reporting Payments You Already Make to Credit Bureaus
If you’re looking to boost your credit score or add more to your credit report, you might try reporting payments you already make to the major credit bureaus. You can accomplish this by researching apps for recurring payments you make. For example, reporting rent you already pay each month is possible with the help of several apps and programs dedicated to the service.
#6 – Use Someone Else’s Credit Card
I’m joking, right? No, I’m not. By becoming an “Authorized User” on someone else’s credit card (someone that trusts you…like, a lot… that also has good credit), you can have access to that card’s funds while building your own credit. The best part, you will remain without legal obligation to make regular payments on the card.
#7 – Installment Loans
You have a big present in mind for that special someone, but don’t want to spend all your holiday cash or tank your credit cards. Installment loans can be a great credit builder. And if you’ve already set aside all the money you’ll need to make the payments, this becomes an incredibly nifty little credit trick. Installment loans are commonly used for jewelry purchases. With this tip, you might find yourself building credit while expanding your holiday budget at the same time. Look at the budding credit pro you are becoming already!
#8 – Credit Card Reward Points
Instead of racking up new debt, spend some time reviewing rewards already available to you on the cards in your wallet. You can use travel points to offset holiday visits to relatives, use retail or flexible points to buy gift cards and make purchases that otherwise would have blown your budget. The better you know your rewards programs, the more creative you can get this holiday spending season.
Hopefully these 8 credit tips will help you not just survive the holiday season, but help you improve your credit score. With Tax Return season around the corner, you may now find yourself in a great position to make that big purchase that previously seemed like a dream. Happy Holidays and happy shopping!!