Overindulging during the Festive season isn’t limited to what you eat and drink. The temptation to let off year-end steam by going on a spending spree can be intense – but the hangover from overextending yourself during the holidays can last as long as seven years, as far as your Credit Score is concerned.
Staying credit savvy during the busy holiday period can help keep your Credit Record positive – with long-lasting effects on your ability to open accounts and apply for loans and credit cards. Knowing your Credit Score is important at any time of year – but it’s especially important to keep tabs on the effects of holiday spending sprees on your score.
Check your Credit Report for free before you book your holiday or make your festive season purchases to make sure that your credit limits are accurately reflected and that you’re in a good position to take on the additional expenses. With the inevitable increase in card swipes and spending over the holidays, the chances of fraud increase as well – so it’s important to be vigilant.
It’s a good reason to complete a second Credit Report check, two or three months into the New Year, to make sure that it doesn’t reflect any transactions you may not have made or new accounts you didn’t open.
Once you’ve ensured that you haven’t fallen victim to identity theft, it’s important to manage your credit properly to ensure that your Credit Score remains healthy. Here are some practical tips to try as you head into 2019:
The monthly credit repayment buck starts and stops with you. The size of your credit card debt, relative to your available credit, plays an important role in calculating your Credit Score. If it looks like you've used up all your available credit, your Credit Score may suffer.
You’re always building your Credit Score – it’s a living thing that shifts as you open accounts, make payments and access loans. The way you pay off debt has a significant impact on the health of your Credit Score, so if you’re forgetful about paying bills, consider automating payments to help maintain a healthy score.
It may seem counter-intuitive, but consider requesting a credit limit increase from your card provider. Instead of transferring the balance of your card – which can have a negative impact on your Credit Score if not managed responsibly – a credit limit increase simply increases your available credit, making your existing credit card balance look comparatively lower.
Make use of banking alerts services which monitor your banking profile which sends you notifications, emails or SMS’s triggers when a charge exceeds a certain amount or when you have bills coming up. You can also use a product like TrueIdentity from TransUnion to check for any inaccuracies on your credit profile, or signs identity thieves might have opened a fraudulent account in your name. South African users can access a discounted one-year TrueIdentity subscription for R499, before 31 December 2018.
Many people think closing unused credit accounts improves their credit outlook - but that’s often not the case. Closing accounts changes your level of available credit, while opening new accounts can make it look as though you're overextended. Closing long-held accounts also reduces the average amount of time your accounts have been open, which could have a negative effect on your Credit Score.
You don’t need anything weighing you down as you head into the New Year. Be smart and keep your Credit Score healthy to enable you to head into 2019 on the right financial note