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4 Ways the Holidays Can Rebuild Your Credit Score

November 2nd, 2015 · No Comments · Credit Rebuild

by Staff

4 Ways the Holidays Can Rebuild Your Credit ScoreIt’s time to stop assuming that your finances – and, in turn, your credit score – are going to take a hit every holiday season. Contrary to convention, you have absolute control over where your holiday money goes. Start acting like it and your credit score will follow.

1) Only charge to your credit cards what you can pay off every month.

When you’re trying to rebuild your credit, the last thing you need is a bunch of holiday debt following you into the New Year. It not only costs you in interest payments, but also raises your credit utilization ratio, which isn’t good for your credit score.

Plus, the higher the balance you carry, the more likely you’ll only be able to afford minimum monthly payments or, worse, get into the habit of making your monthly payments late.

Take a close look at your budget for November and December. How much money is coming in to cover the cost of holiday spending on your credit cards? If you have savings you can earmark for this purpose, by all means, include that too.

Once all the math is done, limit your holiday credit card spending to whatever cash you’ll have on hand to pay back what you’ve charged every month.

2) Apply for a secured credit card to use for holiday purchases.

If you don’t have a credit card, apply for one that you secure with a cash deposit. Just be sure to shop around for the best deal, including a card issuer that reports your activity to the credit bureaus. It’s this reporting that benefits your credit score, provided, of course, you follow good credit card practices.

3) Restrict yourself to cash spending.

If you don’t have a credit card, don’t want one, or don’t trust yourself with using it responsibly, limit yourself to cash for this year’s holiday purchases. Of course, the less you spend, the more creative you’ll have to get, but what you’ll probably find is that the less you spend on gifts, the more they mean to you and the recipients.

4) Instead of traveling for the holidays, put that money toward paying down credit card debt instead.

Do you always visit long-distance family or friends for the holidays? Think about mixing it up this year. Do the math and see just how much you’ll save by staying home instead. It may be thousands of dollars that you could put toward outstanding credit card debt. Yes, it’s a tough call, but one that has the potential to make a huge impact on your financial life going into the New Year. If that’s the route you decide to take, get creative with a virtual family holiday gathering via Skype, Facetime, Facebook, and Instagram.

Learn more about rebuilding your credit, during the holidays and all year long.

 

 

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