6 tips for healthy credit during the holidays

Posted by

The holidays are usually a time to spend. If you’re in the market to buy a home in the near term, you may want to consider how holiday spending could impact approval of and pricing on a mortgage application.

Young man in colorful scarf and coat carrying purchases and wrapped gifts while standing in the falling snow outside an iron gate with a festive green wreath.Here are a few tips to keep in mind during the holiday shopping season:*

1) Check your credit report: If you plan to apply for a mortgage, check your credit report first. Finding and correcting errors on a credit report before applying for a mortgage may prevent complications or delays in the process.

2) Try not to increase charge card balances: Remember that revolving balances may lower your credit score. Also, a jump in outstanding debt may increase your debt-to-income ratio, which can affect the type and amount of loan for which you may qualify.

3) Think twice about opening new credit accounts: It is tempting to accept those promotions that offer an extra 15% off purchases with a store charge card. Just be aware; each time you apply for a charge card or other type of credit, your credit report is pulled. These inquiries on your credit report may negatively affect your credit score.

4) The age of your accounts matters: Remember older credit card accounts may help your score, while newer accounts may be a drag on your score. Having a credit account for a long time may indicate that you manage credit responsibly over time. New accounts can lower the overall average age of your accounts.

5) Don’t rush to close accounts: You may think an end-of-year clean-up of your credit is a good idea. Not necessarily. Since older credit accounts may help your score, closing old accounts — even if they are not used — can lower the overall average age of your accounts and hurt your credit score. Also, your score may be based in part on your credit usage relative to your available credit. Closing accounts reduces your available credit.

6) Think twice about big-ticket items: I know a new car for the holidays sounds attractive, especially with low financing rates. Just remember the monthly payment on a vehicle loan may reduce the amount of money you have available to make mortgage payments. This may affect the type and amount of loan for which you may qualify.

As with eating during the holidays, using credit in moderation may help you stay in shape for the New Year. Enjoy the holidays, and best wishes for the coming year.

* Consult a consumer credit counseling service or professional for guidance on how best to improve your overall credit score. Fees may apply.

Reminder: All comments are moderated prior to publication and must follow our Community Guidelines.

Submit an Idea

[contact-form-7 id="32" title="Share An Idea"]

You are leaving the Bank of the West Change Matters site. Please be aware: The website you are about to enter is not operated by Bank of the West. Bank of the West does not endorse the content of this website and makes no warranty as to the accuracy of content or functionality of this website. The privacy and security policies of the site may differ from those practiced by Bank of the West. To proceed to this website, click OK, or hit Cancel to remain on the Bank of the West Change Matters site.