Avoid a Holiday Hangover… For Your Credit Rating
It’s that time of year again! The holiday season is generally a time when we slow down for a few days and spend time with friends and family. It’s also a time of massive stress for some, and with stress comes a tendency to make poor decisions. Take, for example, holiday shopping for gifts and supplies for entertaining at home. Holidays can be expensive, but if you have been struggling to rebuild your credit rating after a period of financial difficulty, it’s more important than ever to rein in holiday spending and protect your credit rating.
Are you wondering how you can do that? Well, for starters you can avoid the behaviours that likely contributed to damaging your credit rating in the first place. Here are some of our favourite tips to help you sidestep the common credit mishaps that often go hand in hand with the holiday season.
Pushing it to the Max
We’re not talking about your workout routine here, because who has time for exercise over the holidays anyway? We’re talking about maxing out your credit card to deck the halls, and buy presents, and stock the bar and the fridge. What’s the harm as long as you can make the minimum payments until you get your tax refund, right? Well, as it turns out, your credit card usage habits make up about 30% of your credit rating. Your credit limit should be a place that exists only in theory, especially if you’re trying to repair your credit. Besides, if you are paying off that holiday debt slowly every month it’s going to make paying other expenses, like your housing costs and your car loan, that much more difficult. Keep an eye on your balance and your spending in check to avoid giving yourself a “gift” that keeps on giving you credit troubles.
Opening Store Credit Cards
It’s SO tempting at the cash register when you learn that you could save 10% or more on your purchases just for getting a store credit card. Why not? After all, savings are savings! Did you know that every time you make a credit application, your credit rating takes a little ding? Just like when it’s on your car, one little ding may or may not be a big deal, but a lot of dings are going to be a problem. If you opened three or four store credit cards for what really isn’t a significant savings on your purchase, when you apply for something important like automotive financing, your credit rating isn’t as good as it could be. Now, you can still get approved for a car loan when your credit isn’t exactly perfect, but opening multiple credit card accounts is just never a good idea. If you end up carrying a balance on those cards, the interest payments will quickly eat up any savings you may have achieved.
Locking Into Ongoing Contracts
It seems like a great idea at the time to get a shiny new smart phone for your teenager or your significant other. It will make them so happy! Except… That brand new phone comes with a shiny new contract that needs to be paid every month. Who is going to be responsible for paying that ongoing monthly bill? Unless your teenager has a part-time job or a whole lot of babysitting gigs lined up, that’s probably going to be you! On a two-year contract for $50 a month, that $200 phone just became a $1,400 gift. Ouch. That’s probably a little more than you planned to spend, isn’t it? It’s one more bill to pay, and one more thing that could get you into credit trouble.
Holiday Credit To Do List
With all the doom and gloom of what you shouldn’t do for the holidays, it can feel rather like all the joy has been sucked out of the season. It doesn’t have to be that way. When you’re hoping to enjoy the holidays happily and affordably, a few little tricks can really help.
- Make a budget. You can’t know when you’re going over budget if you don’t have one in the first place. Make a list of who you need to buy for and an approximate dollar amount per gift. You may be shocked by just how much you have been spending on presents. If that number is too high, lower the per person amount until it’s something manageable. Try to hold back about 10% for surprises, like a host’s gift for an unexpected party invitation.
- Pay your bills on time. In the holiday chaos, make sure you don’t let a bill payment fall through the cracks. Set up a payment through your online banking system or an alert on your phone; just do something to make sure the payments happen. The computers at your creditors’ offices really don’t know it’s Christmas time at all.
- Keep a close eye on your statements. Mistakes have been known to happen. Before you pay your monthly credit card bill, make sure you look over all the charges. This is a time that’s well-loved by fraudsters, and busy retailers have been known to ring things through twice. If you notice anything out of place, let them know right away.
The holidays are a busy time, and the hustle and bustle of the season is harder to manage without reliable transportation. If you think it’s time to make the leap to vehicle ownership, don’t let fears about your credit history stop you – apply for a car loan today. At Auto Loan Solutions, we have been helping people just like you get behind the wheel since 1959. We are ready, willing and able to send you on your way in a new car or truck.
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