Building Credit During the Holiday Season: A Guide to Smart Spending

The holiday season is a time for joy, celebration, and, often, increased spending. If you are preparing to purchase a home it is important to balance the cost of festivities with financial responsibility and avoid compromising your credit score. Here's a guide to building credit during the holiday season, ensuring you enjoy the festivities without jeopardizing your financial well-being.

1. Review Your Credit Report

   Before you can start making improvements, you need to know where you stand. Get a copy of your credit report from AnnualCreditReport.com and carefully review it for any errors or inaccuracies. If you find any mistakes, dispute them with the credit bureaus immediately.

2. Make All of Your Payments On Time

   Payment history is the single most important factor in your credit score, so make sure you're making all of your payments on time, every time. This includes credit cards, loans, rent, and even utilities.

3. Keep Your Credit Utilization Low

   Credit utilization is the percentage of your available credit that you're using. Aim to keep your credit utilization below 30%, and ideally below 10%. This means if you have a credit card with a $1,000 limit, try to keep your balance below $300.

4. Avoid Opening New Credit Accounts

   Every time you apply for a new credit card or loan, a hard inquiry is placed on your credit report. This can temporarily drop your score by a few points. If you're trying to build your credit, it's best to avoid opening new accounts unless absolutely necessary.

5. Pay Down Existing Debt

   The more debt you have, the lower your credit score will be. If you can, start paying down your existing debt, especially high-interest credit card debt. This will free up more credit and lower your credit utilization ratio.

Here are some additional tips for managing your credit during the holiday season:

1. Create a budget: Before you start shopping, create a budget and stick to it. This will help you avoid overspending and putting too much on your credit cards.

2. Save when possible: Shop sales and use coupons/promo codes to save on items you were planning on buying anyway. Don’t forget to see if your credit card has any partnerships and when possible, use Rakuten

3. Use cash or debit cards: If you can, try to use cash or debit cards for holiday shopping instead of credit cards. This will help you avoid interest charges and keep your credit utilization low.

4. Set up automatic payments: Set up automatic payments for your credit cards so you don't accidentally miss a payment.

5. Review your spending regularly: After each holiday shopping trip, review your spending and make sure you're still on track with your budget.

By following these tips, you can build your credit over the holidays and be well on your way to achieving your dream of homeownership.

If you have concerns about your credit score or managing your finances, consider seeking professional guidance from a financial advisor or credit counselor. They can provide personalized advice and strategies to improve your financial situation.

Remember, building credit is a long-term endeavor, and the holiday season should not be a time for impulsive spending. By practicing financial discipline, utilizing credit cards responsibly, and seeking guidance when needed, you can maintain a healthy credit score while enjoying the festivities of the holiday season.