How To Avoid Harming Your Credit Record Over The Holiday

By adhering to the following 4 steps not only will your credit score not deteriorate over the holiday you may well improve it.

1. Do not accept any offers of instant credit.

We are all aware of the special deals offered by the department stores; "take out our store card today and receive a discount on today's purchases". Most of the larger department stores have their own credit card and they would all love us to take one out; however it is not advisable to do so as this type of credit is deemed to be low quality credit and any lender that uses a credit scoring system frowns upon this type of credit. Applying for this type of credit could cause your credit core more harm than good and possibly prevent you from taking out any important emergency loans until June or July of 2011. This could cause you significant problems if your car goes wrong and you need to take out a loan to replace it or you have some other sort of disaster that puts an extra demand on your finances.

2. Do not overspend.

Slightly less than a third of your credit score is determined by how well you manage your debts, if you allow your credit card balance to go above 30% of your credit limit you receive a red flag on the credit scoring systems reduces your credit score almost immediately. The reasoning behind this is because if you start to max out on your credit cards, the system decides that you are probably struggling financially. Therefore if you do buy goods on your credit cards and pay of the whole balance each and every month then the system decides that you are operating within your means and that will help improve your credit score.

3. Always make your payments on time.

Slightly more than a third of your credit score is determined by your payment profile. This makes it of the utmost importance to make sure all your credit and bill payments are paid punctually every month. Just one payment being made 30 days late can shave up to 50 points of your credit score. If possible you should set up auto payment on any regular payments you have to make to ensure you avoid paying them late. For any of your bills that you cannot set up on an auto repayment plan you need to make sure that you diarise the payment dates or write on your calendar when they are due so you do not forget. This is of paticular importance over the festive season, because there is so much happening socially it becomes easier to get in the party spirit and let your financial guard down. Missing payments can not only cause you credit score issues but it is also likely to cost you financially with late payment charges and a possible increase in the interest rate you are being charged.

4. Stay on top of your credit balances.

You need to ensure you are aware of what you owe at all times, and do what you can to reduce the debt. According to research as people increase the balance on their credit cards they are more likely care less about their levels of debt, and more likely to add new debt. You should write a list of who you owe money to, exactly how much you owe them and how much is required each month to make the minimum required payment.

If you keep the above mentioned steps in mind all of the time and not just over the holiday, your credit score should improve and not deteriorate over time.

by: Steve Smith

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