When shopping for a military-inspired coat or leather boots to step fashionably into fall, good credit may not be on your must-have list of the season's hottest trends. As you transition your wardrobe with upcoming weekend shopping sprees, your credit health could get as big a dent as your wallet. Keep these simple Dos and Don’ts in mind as you shop because a great credit score is every season's hottest financial accessory.
DO Shop And Use Credit
This is probably the easiest rule to abide by. To earn great credit, you have to use credit. Even if you prefer to pay debit or cash, throw your credit card into the mix too so you can utilize credit and pay on time to maintain consistent payment history.
DO NOT Buy Everything On Credit To Rack Up Rewards Points
Just because you can spend on credit doesn't mean you should spend everything on credit. That’s the quickest road to debt. Spending on credit in order to rack up cash back or rewards points leaves you with an outstanding monthly balance, which will accrue steep interest charges and negate any rewards earned; plus, carrying significant debt spoils your credit score.
DO Buy Big Ticket Items On Credit... If You Have A Payment Plan For It
Though we always recommend paying your balance in full each month, a huge benefit of credit cards is the ability to carry a balance month-to-month. This comes in handy for big purchases like a refrigerator or Gucci purse you can't pay off all at once. If you plan to put a big purchase on your card to pay over time, have a plan of how much you can afford to pay each month and how long it will take. Plan to pay it off quickly to minimize interest charges. Look into a credit card with 0% intro purchase APR to pay interest-free for a period of time.
DO NOT Get A Retail Card
As tempting as they are, retail cards are terrible for your wallet and credit score. Retail cards give you incentives to spend more, which weighs down your credit score with debt and will cost you in notoriously high interest rates that quickly add up. Trust us, store discounts and sale days aren't worth the hassle.
DO Watch Your Limits
If you are juggling multiple credit cards as you shop, keep in mind your credit limit on each card. Credit utilization rate—the amount of credit you are using out of your cards' total available credit—has significant impact on your credit score. Track how much you charge to your credit cards and keep your credit utilization rate under 30% of your available credit. Also, make sure you are never close to maxing out any credit card.
DO Watch Your Credit Score
Check your credit score right now for free at Credit Karma. Are you on your way to great credit? The best part about monitoring your credit health is that a great credit score has shopping power. With great credit, you can negotiate with your issuer to raise your credit limit, lower your rates, and even cancel a late fee or penalty when you slip up once in awhile. Plus, you can qualify for great credit cards that could benefit your shopping habit, like a rewards card to earn a little cash back or a low interest card to minimize your interest costs. When you have responsible credit habits, it gives back in awesome financial perks.