Don't wreck your credit this Christmas!
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If you are rebuilding your credit after bankruptcy, don’t let Christmas shopping throw you off track! Today, we’ll take a look at some common traps that can mess up your credit score this holiday season and how to avoid them so your FICO score doesn’t start the New Year at an all-time low.
#1 Think Hard Before Opening New Accounts
Christmas is the prime time for card offers, particularly those from retail stores. These stores push hard in advertising, store signage, and at the register for discounts if you take a store card today. They also may offer zero interest if the card is paid off by a certain date or other premiums to entice you into taking high-interest financing. You might be tempted to take the deal rather than spend cash, but it can cost you a lot in the long-run because opening too many new accounts tanks your FICO score.
#2 Don’t Take a Payday Loan or Cash Advance
Although payday loans are not allowed in North Carolina, there are still online lenders that offer money to NC consumers and predatory lenders right across the state line. Using horribly high-interest cash for Christmas is not the way to go. It may give you a happy holiday with lots of presents to open, but then you’ll have lots of money owed, interest racking up, and you could still be paying off this Christmas when next Christmas rolls around.
#3 Charge Carefully, and Don’t Max Out Your Cards
You should never end the month owing more than 30% of your loan balance on a card. Using your cards regularly and then paying off in full is the best way to stay in your creditor's good graces. Maxing out your cards will lower your credit score, make it harder to pay down your balances, incur high-interest charges, and wreck your efforts to rebuild your credit score after bankruptcy.
#4 Don’t Miss Payments Because You’re Overextended
It can be easy to get caught up in the spirit of giving and overdo it. This goes for food, drink, and money. But when you overspend on Christmas—even if you’re using cash, not credit—it can mess up your budget and your credit score. If you don’t have the money to make a credit card, car loan, or other financing payment, then you will see a hit to your credit score. Even one missed payment can knock your credit score for a loop.
#5 Watch For Scams When You Shop
North Carolina consumers should also be on the lookout for scams that could wreck their finances and their credit score. Many emails and web links offer tempting holiday bargains, but they can take you to scam sites that steal your money, credit card info, or install malware on your computer to steal your private information. All these can cause credit score issues.
Improving your credit score is an ongoing activity that requires work. You should always keep an eye on your score by setting up alerts through a free or low-cost service. Also, be vigilant about where you share your credit card numbers online and stick to well-known secure sites—but even that is not a guarantee since major sites like Home Depot and Target have been hacked. Monitoring your score and card activity are the best ways to know if someone has access your info.
To find out more about improving your credit score after bankruptcy, contact Credit Score Keys today for a free consultation. Call 919-495-2365 today to speak to a legal professional about your credit score issues.