Protect your credit score with 4 tips this season
Our favorite time of the year is here. The holiday season is a time of warmth, joy, and spending time with loved ones, and, yes, it’s also a time of gift-giving. But as you make your shopping list and check it twice, make sure you’re thinking about your long-term financial health – especially if you’re trying to buy a home in 2024.
In an effort to help those potential buyers be successful so we can provide closing services on their future dream home, our teams are providing some basic reminders related to credit. We’re not trying to be a Scrooge (or make you into one), but your credit score is a significant factor in determining whether you can qualify for a mortgage and at what interest rate. So, while embracing the festive spirit is important, it’s equally vital to protect your credit score while doing so.
Make a budget and stick to it. While Santa might not have a spending limit, most of us do. One of the best ways to ensure your credit score doesn’t take a hit during the holidays is to set a realistic budget and stick to it. The rule is to avoid racking up high credit card balances, as this can lead to a higher credit utilization rate, which is a factor that makes up about 30% of your credit score.
Pay off balances regularly. Paying off your balances more frequently is a great way to keep your overall credit utilization rate low. If that seems daunting at first, try making multiple payments throughout the month instead of waiting for your due date. Doing this can give you a better overall picture of your general spending habits.
Don’t open new credit cards. Taking advantage of store credit cards that offer tempting discounts might sound like the perfect dose of Christmas cheer, but opening new credit accounts can negatively impact your credit score. Each time you apply for a new line of credit, a hard inquiry is made, which can lower your score temporarily. Plus, too many of these inquiries can be a red flag for lenders.
Monitor your credit reports. With the increase in online shopping, the holiday season can also be a prime time for identity theft. Keep a close eye on your credit reports to ensure there are no unauthorized transactions. Most credit card companies offer free credit monitoring services, so take advantage of these. Sites like Credit Karma can be a great tool too.
As you deck the halls, remember that protecting your credit score is one of the best gifts you can give your future self. With these tips in mind, you’ll be well-equipped to enjoy holiday shopping without jeopardizing your future. We can’t wait to see you around our closing table.
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