It’s never too early to start planning your holiday spending budget. In 2014 average shoppers around the country were on pace to spend a whopping $861 on holiday gifts alone. With an expense that large, shouldn’t you get something back in return? (aside from the joyous feeling of gift giving of course!)
Truth of the matter is, if done correctly the holidays are a fantastic time to help build your credit and increase your score. Sure you can apply for layaway at Wal-Mart, bust out your Discover Card, or even put some of your spending on your hefty store cards (it’s about the only time you use them anyway,) but these methods can sometimes hurt your score, especially if you start to rack up your balance. So what are the best methods to build your credit during the holiday season? We recommend secured cards and a Fingerhut account.
Building Credit With Secured Credit Cards
Secured Credit Cards have all of the benefits of a regular credit card without most of the risks. A Secured Credit Card works just like a regular credit card. You use the card to make purchases and pay them off each month. They’re accepted everywhere credit cards are, the only difference between the two is secured cards are backed by the consumer. That means you decide how much of a credit limit you want by putting your own money into it. Once you close the card out in the future, your money will be returned to you.
Secured cards were created solely for building credit. Most cards don’t require you to have a good credit score (or a credit score at all for that matter.) Just like any credit account, you will have to pay on time each month, and if maxed out, it will bring down your score. Make it your priority to try and stay under 30% of your credit limit and pay off your balance at the end of the month.
Secured credit cards hold benefits over regular credit cards. When getting approved for a regular credit card or a loan, your credit score will always drop. This is because the creditor is unsure of how you will use your new line of credit. A few months of on-time payments will see your score bounce back to normal or even increase. Since the consumer is the backer of secured cards, there won’t be an initial decline in score, meaning your score won’t suffer for months while you struggle to bring it back to normal. Regular credit cards will also create a hard inquiry on your credit report, bringing your score down a few points regardless of being approved. Most secured cards will not create a hard inquiry and scores won’t be dropped. Better Qualified has a page of recommended secured cards for you to choose from
After making holiday purchases on your secured cards, always be sure to:
- Pay your balance off or down to 30% or lower
- Always pay on time
- Never max out your card
Spend and Build
If you’re looking to incorporate building your credit score into your holiday spending this year, then now is the time to start. Another recommendation to help build your credit this holiday season is the Fingerhut Credit Account.
Fingerhut has been around for 60 plus years as a catalog retailer. Fingerhut now sells its thousands of products online to its members. With Fingerhut you’ll be able to find all of those name brands available at Wal-Mart, Amazon, and Target. Using a Fingerhut Credit Account to do your holiday shopping will be the most beneficial to your credit in the long run.
Fingerhut makes it easy to do your holiday shopping on their site, all while building your credit up.