It’s that time of year again. Carols are heard over the radio and store speakers, lights decorate every lamp post and tree, and peppermint and chocolate rule most cafés. The winter holidays are finally here, and after a very, very long year, they are more than welcome.
Many of us celebrate gift giving holidays during this time of year, which typically involve a meal with loved ones. This, of course, means spreading warmth and generosity, but it unfortunately means something else: spending. From gifts, to decorations to the assortment of candies and meals, your spending will likely increase substantially during the holidays. It’s important to manage your credit score over the holidays.
You may find yourself wondering: how do you ensure your credit score remains good into the new year?
Don’t overspend on gifts
This is a bit of a cliché, but remember, you should never put yourself into debt just to impress your loved ones. Whatever holiday you celebrate, it’s never about the gifts. Most of your loved ones would likely be uncomfortable with lavish gifts if they know it’s beyond your means. As for small children, what they will remember is not if they got the trendiest toy, but instead, the memories you made.
Keep track of your spending and credit
While you are entering this turbulent spending time, it’s a good idea to keep track of your spending. Especially if you are using credit to spend. Check your credit card balance daily to keep track of your spending! There are also plenty of apps these days where you can record your spending and see an item by item break down. If online accounts and apps aren’t your thing, you can always go analogue and keep track with a pen and paper or save your physical receipts. Just remember to go over them at some point!
However you do it, tracking your spending ensures two things. 1) you are not surprised when your credit card bill comes, and 2) it forces you to be more intentional about your spending. It becomes harder to justify that third $5 peppermint mocha when you have to record it. Track your spending, especially when using credit, which will help you protect your credit score.
Pay your bills on time
This may sound like a no-brainer, but the holidays are hectic. You find yourself setting up for the holiday, ensuring you have everything you need for Christmas dinner, that you have the right gifts for everyone on your list, all while staying on top of your regular day-to-day.
It’s not surprising if a bill or two slips your mind after they’re past due, but this could really affect your credit score. One way to prevent this common misfortune is to keep track of not just your spending, but your payments. Once you have that down, you can set up automatic payments through most banks online. This way, it’s done and you can spare the mental energy for the important things! Just be certain that all of your information is filled out correctly to avoid over or underpaying for certain bills.
There is a lot to keep track of… but look for inaccuracies
We’ve all heard the story. Joe Regularman is very careful with his credit, he pays all of his bills on time, seldom shops for credit, and has the exact usage, payments, and types of credit figured out to ensure he has the best score. But the Regularmans go to apply for a mortgage or a car loan only to find they are rejected due to poor credit. Joe Regularman didn’t check his statements or credit score for inaccuracies.
Sadly, this does happen to many Canadians. Whether it’s an honest mistake or fraud, it can happen to you! Check your credit using a free credit monitoring app like Borrowell or Credit Karma. If you see anything is suspicious, be sure to contest it through the appropriate channels. It may be a hassle, but it’s much less of an annoyance than a tanked credit score that you aren’t even responsible for.
Hold off on new credit for now
New credit, especially by way of store-rewards credit cards, may be tempting this time of year. Even worse, many stores will be actively promoting their rewards credit cards at the check out. Therefore, it’s easy to convince yourself that you could use it, and applying won’t hurt your credit, at least not that much.
Remember, every time you apply for credit, it negatively impacts your credit score. This may not be an issue for you, but it is worth the second thought. Especially in the case of store-credit cards as they often have very high interest rates. Therefore, carrying a balance could hurt your credit score rather than help it!
Manage your credit score during the holidays!
So, whether you are spending the holidays with family in person or you’re celebrating over Zoom, be sure to follow our tips to maintain a good credit score over the holidays. This way, you can focus on what really matters this holiday season!
If you’re considering applying for a mortgage and need help understanding how to manage your credit score this holiday season give me a call! You can reach me at (705) 333-4338 or get in touch with me here!