Post-Holiday Credit Score Rehab

Right around now, nearly half of Americans are sitting with some holiday-related credit card debt. There are plenty of evergreen tips for maintaining or working towards a healthy credit score like:

  • Checking your score with a free credit service
  • Keeping utilization under 30%
  • Making payments on time
  • Reporting any credit errors

If you need a little bit more help during times like these, look no further. Here are some additional post-holiday strategy tips for rehabbing your credit score.

Make Your Payments (However and Whenever You Can)

Pay at least the minimum balance on all your cards, then use any leftover cash to pay towards the card with the highest balance. Making a small payment on time is better than making a larger one late. If your payment is due a few days before payday, it can be useful to make a small payment when its due, then pay more after your paycheck clears.

There’s nothing wrong with making payments multiple times per month. This will help your utilization rate stay below 30% and can also benefit your score depending on what time of the month your credit card company reports your balance to the credit bureau.

Keep Your Cards Open

Don’t close any cards you opened to make use of special holiday deals even if you know you won’t need them again. This will decrease your aggregate credit limit and thus spike your credit utilization rate upon closing. A full breakdown of the impact of your credit utilization rate on your credit score is available here.

The “B” Word

Budget accordingly. You can do this. Nowadays, there are tons of free apps that make it even easier to track your spending and see where most if it goes: Mint, YNAB, Albert, Claritymoney, and Goodbudget are just a few of the many free smartphone apps that you can use to stay on top of your spending while you work your way back to your pre-holiday financial standing.

Make Use of Your Mortgage

If you’re a homeowner with a history of good credit, you can use this to your advantage. We have been experiencing a historic period of favorable mortgage rates. If you haven’t made use of this with a new purchase or refinance yet, you may still be able to save big.

A cash-out refinance gives borrowers the option to refinance their mortgage rate while also pulling money out to be used at their discretion i.e., paying off holiday credit card debt. More about the cash-out refinance here.

Rebuilding your credit score is a marathon, not a sprint. It will take time for your good habits to start showing off. Keep chugging along by making payments, sticking to a budget, and keeping your spending under control. You can do this!