1. Avoid Department Store Offers for Instant Credit, and Don’t Open Up New Lines of Credit
“Would you like to save 10% on your purchase today?”. We have all been asked that question when paying for our purchases. Every store under the sun wants to offer you their credit card. This is not good for your score. The damage to your score you’ll incur by opening up a new line of credit is not worth the few dollars you might save. Department store credit could be of better quality, and the credit scoring system would frown on it. Just wait to apply for the card. You may want or need to apply for a new car loan, a new home loan, or a re-finance of a home loan. Applying for a store credit to save a couple of dollars could hurt your chance of getting an essential loan at a reasonable rate until the middle of next year.
2. Avoid Overspending
Spending affects credit. 30% of your credit score is made up of how you manage your debt, and when your credit card balances exceed 30% of their available limit, the credit scoring system red flags you and your score goes down instantly. The logic behind this is that if you suddenly max out your credit cards, it looks to the system as though you are in financial trouble. Only charge if you can pay the balance in full before the next statement date. Overspending and overcharging will also cause you to carry more significant balances for longer. It is best to keep your balances low at all times.
3. Pay Your Bills On Time
Payment history is 35% of your credit score. One 30-day late can cost you 50 points or more. December is traditionally the busiest time of the year. Active calendars filled with work and social commitments for family and friends and the season’s frenzy can preoccupy you and cause you to pay your bills late. Make staying on top of your bills a priority. Please put all your bills in a file and ensure you pay them on time. Doing so will save points on your credit score and ridiculous late charges as much as $39 or more.
Additionally, when you pay your bills late, you nullify any preferential finance rate, and your account defaults to a dramatically higher interest rate. A ding to your credit score, a high late fee, and a massive increase in interest rates are all significant incentives to pay your bills on time. I recently got a call from a customer who had been late but not 30 days late, and the rate jumped on his card to over 30% annually!
4. Take the Time to Plan and Prepare Your Gift Giving
We all do it. We walk into a store ready to buy a specific item and get lured into a spending vortex. Panic spending because the store does not have the item you went in to buy; deciding that if you buy this item for this person, you have to purchase this item for another person; succumbing to the temptation of the latest must-have gadget. You can prevent this well-woven retailer trap by doing your research online. By preparing before you even darken the automatic doorstep of the alluring retail establishment, you can determine where you can purchase specific items and for what price. In doing so, you can avoid the retail traps and retain control of your spending (and your sanity). Online shopping sites have grown tremendously in popularity. Traffic to those sites is up more than 30% from last year. There is a wealth of information on the web. Www.pricegrabber.com lists all of the hottest holiday items and tells you who sells them and for how much. Remember, paying your credit card bill before the statement date will help your scores. www.froogle.com is another excellent site to find the item for less.
5. Manage Your Credit Wisely
Please keep track of your credit card balances as low as possible. Studies show that as consumers increase their credit card balances, they become increasingly apathetic about their balances and even about adding new debt. By tracking balances, you will maintain a sense of control over your credit score and your finances. Write out a chart of who you owe, how much you owe, and the minimum payment. It will help you to get a handle on your bills and help you start planning how to pay them off.
