5 Sneaky Things That May Affect Your Credit During the Holiday Season
You’ve been taking some great steps to rebuild your credit and establish a solid financial future, and starting the process with an OpenBK Auto Loan was a fantastic step in the right direction. You’re starting a new history of creditworthiness by making your payments on time and being a responsible consumer, and we want to help keep you on track!
The holidays can be one of the most stressful times of the year, especially on your pocketbook. We all want to decorate the home, spoil our loved ones with presents, and be able to enjoy all the holiday parties and get-togethers we’re invited to…and it can be done…but it has to be done carefully. There are some spending habits that may, at first, seem totally harmless…but they’re actually hurting your credit score! We’ve put together five holiday tips for smart spending that will keep you on the right path and able to continue enjoying the freedom that rebuilding your credit can bring!
Don’t request an increase on your credit line.
You’re bouncing back from a negative credit history, or even a bankruptcy, but you know that part of rebuilding your credit is actually using your card! And you should use it, as long as you only spend what you know you’ll be able to pay that month. It may be tempting to ask for an increase when you have so many presents to purchase this season, but it’s not really a good idea. When you call your credit card company to request a higher limit, it usually initiates a hard-inquiry into your credit history, which will negatively affect your credit score.
Avoid using cash/debit only.
We know, it seems counter-intuitive, but if you decide you’re completely done with the credit card thing and switch to all cash, it can actually have a negative consequence! It’s tempting to get all your shopping done and not have a bill to pay next month, but banks like to see a paper trail of your good payment history. Your credit card company usually cancels your card if it has a long period of inactivity, which also has a negative impact on your credit score.
Don’t close your old credit card accounts.
If you have an established card that you use every once in awhile, but not enough that you want to keep it in your wallet – think again before you get rid of it! When you’re choosing what card to take with you to the mall, you may notice that old card sitting at the bottom of the drawer and think it’s a great idea to just cancel it out, but once again, the bank wants to see your payment history, and the further back it goes, the better! (That’s one more thing that can help get you approved faster, too.)
If you buy a cell phone for someone, let them sign up for their own plan.
If you have a family member that you want to surprise with the latest and greatest phone, it may be tempting to make sure they can start using it right away by signing up for a plan for them, but they’ll be happy enough with the phone – trust us! When you sign up for a new phone plan, you’re signing a contract that usually involves a hard-inquiry, again, chalking up another mark against your credit score.
Don’t use the finance plan the retailer offers.
If you’re planning on making a big purchase for the holiday season – maybe a big screen TV or a couch – the retailer may have a ‘hard to resist’ finance plan that sounds great, like 0% interest and no payments for an amount of time, but these are, at the heart of it, a loan. It’s another line of credit that will show up on your credit score and set you back – don’t fall for it!
These are the five biggest financial pitfalls that can set you back when you’re trying to re-establish your good credit. You’ve already started rebuilding your credit by trusting Open BK Auto Loans to help you get approved for a new car (and a new start!), so we hope you keep these tips in mind when you’re shopping this holiday season, and continue moving forward to a great financial future!
December 12, 2014 FAQs