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How to Protect Your Credit Score from Holiday Shopping Pitfalls

ARA -- Holiday sales, coupons, discounts and deals -- wise use of special offers can help you save money on holiday shopping. But you might want to think twice before taking advantage of at least one type of incentive commonly offered by stores during the holidays.

Department stores, clothing retailers and other shops often offer a day's worth of discounts, free rewards points or some other gift to entice you to sign up for a credit card while you shop in their establishments. But before you sign up, you should be aware of how that new credit line could affect your credit score. Its impact could linger long after the holidays are over.

During the holidays, it may seem particularly tempting to fund holiday shopping by opening new credit accounts or maxing out current accounts. However, it's wise for consumers to educate themselves about how holiday shopping behaviors can affect their credit scores.

Here are a few tips for protecting your credit score through the holiday season:

Know your score

Smart holiday shoppers start out with a list and a budget. Credit-savvy shoppers check their credit score before starting their shopping list. Knowing your credit score and taking action to preserve a good score can help you secure better deals on larger-ticket holiday purchases. Plus, knowing your score can help you make informed decisions about how you will use credit throughout the holiday season.

Finding your score is easy since you can take advantage of products like Signing up with also allows you to access your score throughout the year, receive alerts when your score changes, learn more about how your score works, and even plan ahead to see how major financial decisions may affect your score.

Decide carefully

Decisions about how you will use credit this holiday shopping season can affect your credit score well into next year. The number of open cards you have, as well as the amount of available credit on those cards, directly affects your credit score. And your credit score directly affects your ability to get more credit and to secure favorable rates from lenders. So holiday moves that lower your credit score now could affect your ability to get a good rate on a new car loan next spring.

Holiday moves that could lower your credit score include:

-- Missing a payment or making a payment late on a credit card, loan or any other type of debt.
-- Maxing out your credit cards so that you are using 80 percent or more of your total available credit.
-- Opening or applying for multiple new credit accounts in a short period of time.
-- Carrying too much revolving debt.
-- Transferring a balance from one card to another. If you have to open a card to transfer the balance, or if you are transferring from a card with a higher limit to one with a lower limit, a balance transfer could affect your credit score.

To protect your credit score through the holidays, consider these steps:

-- Continue to pay all your bills on time.
-- Create a holiday budget and stick to it. Don't borrow money from other budget areas to pay for holiday shopping if it means you won't be able to make full payments on other bills.
-- It's smart to use a credit card for big-ticket purchases or online shopping because of the extra layer of protection credit cards can offer versus using cash, but be sure to pay off those holiday items as quickly as possible.

Courtesy of ARAContent

To learn more about how you can protect your credit score through the holidays and all year long, visit

© 2010 ARAContent

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