As easy as online shopping, or swiping a credit card can be during the holiday season, it almost feels as if it is play money, spending at will, until the statement comes in the mail. Although you will no doubt be hurting your bank account with all of the purchase, try to avoid hurting your credit score at the same time.
This Christmas shopping season is now underway as we pass Thanksgiving and the malls are starting to pack since Black Friday, and that can only mean one thing, the bills will start to roll in. Overspending is actually the one of the biggest ways to hurt not only your credit, but can have long term effects financially. You are spending beyond your means so the credit cards are being maxed out, and a large portion of your credit score is debt to available credit, so you will quickly see scores reduce. Not only that, but you will most likely not be able to pay the entire balance next month, and interest will begin to add up.
Skipping Bills to Free Up Cash
If you are trying to find a few extra dollars to spend on gifts, you might think a couple non-credit/loan related bills might be a good place to skip this month. Missing bills is not recommended in any way, as you are just making it harder on yourself the next month, catching up and staying caught up, but even utility bills are tied to your credit report, so missing a payment and you will get hit, which will take years to come off.
Closing Cards to Prevent from Using
You might be trying to act responsibly in closing a couple accounts that do not have a balance to avoid using this holiday season, but you actually are hurt yourself with a lower credit score. Not only will it reduce your available credit as mentioned already, it will also stop any continued credit history, which is important in the eyes of a lender. It will actually help you to cut up the cards but still leave the accounts open.
Using Cash Instead of Credit
Now normally using cash instead of credit is a great way to stick to a household budget, giving second thought to maybe some impulse purchases by seeing the cash leave your hand and into the cash register, but when it comes to your credit report, using cash actually hurts. Creditors want to see you handle charging and paying the balance each month, so if you are not using your account and only using cash, there is no transaction history.
Opening Store Credit Cards
As you go into the large retail stores you will most likely get asked at every purchase if you would like to open up a store credit card. Sure, they may save you 15% off this purchase and you think it may be a great idea, but every time you open a card and your credit is checked, an inquiry is place on your credit report, and too many may be a red flag to a creditor, thinking you are going on a spending spree.