As many Americans are facing hard times financially, being “credit smart” this holiday season will be more important than ever. FICO’s Holiday Credit Guru, Shon Dellinger, has several tips consumers should keep in mind this holiday season, including:
- Paying with plastic: Be wary of hidden pitfalls that could damage your credit this holiday season. Before you open a new line of credit at your favorite retail store, remember that besides having sky high interest rates, opening new lines of credit can hurt your credit score, so make sure the card meets your overall needs and not just your desire for quick savings.
- Don’t shop till you drop into debt: Everyone wants to get their family and friends the best presents this holiday, but you don’t have to compromise your financial health to do it. Just last year, 28 percent of consumers surveyed told us they had recently had at least one of their credit limits lowered. Reducing your available credit can lead to higher “credit utilization” and lower FICO credit scores.
- New Year, new policies: In response to changes brought about by the CARD Act that went into effect earlier this year, many credit card issuers have added annual fees, lowered credit limits, and raised interest rates on their cards. Be aware that many lenders have tightened the amount of credit they are making available since last season and that not all cards have the generous rewards (miles, points, etc.) programs they once had.
- Get smart about your credit: Utilize the resources available to keep track of your credit reports and scores: go to www.myfico.com or the FICO Forums, where thousands of people have weighed in on every imaginable credit question. You can also download the free iPhone app, answer a short series of questions and get your estimated FICO score range.