It’s no secret that the holidays mean more spending. But that can become a problem when spending leads to significantly higher credit card balances, missed payments, and a lower credit score.
Even more notable, 33% of Americans increased their total credit card debt by 10% or more between October 2018 and January 2019 of this population, almost twice as many consumers see their FICO® Score decrease vs. increase between October and January.
Not only can increased credit card debt feel stressful, but credit card debt can have an impact on FICO® Scores.
The amount of debt on revolving accounts is an important driver of your FICO® Score. Racking up large revolving balances may mean that you are overextended, and more likely to miss payments. Similarly, people with lower debt and credit utilization levels tend to be less likely to miss payments, and as such, are rewarded by the score for their more careful use of credit.
While you may feel the need to spend more for the sake of holiday cheer, it’s critical to keep your credit score healthy this holiday season.
Holiday Credit Tips:
- Resist opening store credit cards or consider leaving your credit card at home.
- Opt to shop with cash to keep from overspending.
- To avoid the post-holiday blues for your credit score, monitor your holiday spending and make sure to pay your bills on time.
If you successfully rein in your spending during the holidays, you may not need to make any resolutions around getting your FICO® score back in shape in the New Year!