3 Easy Ways to Improve Your Credit Score During the Holidays

Whether you’re gathering with your friends and family, putting up decorations, or just enjoying a well-deserved break, you’re probably not thinking about your credit score much during the holidays. Though it may not be your idea of holiday fun, being mindful about your credit score during the holidays can help bring you closer to your financial New Year’s goals.

Here are a few ways to give your credit score a much-needed boost during this holiday season.

1. Plan to make more purchases with cash

Spending with cash instead of credit cards is a smart move to prevent the potential debt cycle that can accrue during the holidays. Paying with cash instead of plastic will help keep your credit utilization ratio low. This ratio compares total credit available to you with the amount of credit you have used. A low ratio means you do not use very much of your credit. Remember that your credit utilization ratio accounts for 30 percent of your credit score.

2. Apply for credit with a low APR

If you’re planning on pulling out plastic for this holiday shopping season, you may want to pay a visit to your credit union before you start swiping.

According to data from the National Credit Union Administration, the average interest rate of a regular credit card from a credit union is lower than a credit card from a bank.

The most important thing is to commit to paying off your holiday purchases so that you’re not still paying for it when the holidays roll around again.

3. Consolidate high-interest credit cards

Trying to reach the recommended 30 percent credit utilization ratio can feel like an overwhelming task when the majority of your monthly payment goes to cover high interest. Explore your options to consolidate balances of other cards with a personal line of credit or other type of financing.

Credit unions usually beat national banks with lower rates for personal lines of credit. And during the holiday season, credit unions tend to have special offers.

You could also do a balance transfer from your high-interest credit cards to a low-interest credit card to consolidate debt. Tackling credit card debt at a much lower interest rate can save you a great deal of money if you’re diligent.

Being mindful about the way you make your purchases this holiday season can help give your credit score a nice little boost.

Source: Wise Bread

 

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