Tips to Avoid Holiday Debt & Poor Credit Scores
If your holiday shopping isn’t done, you may be about to spend more money than you should on gifts for family and friends. If you are also trying to buy a home, this is the last thing you should do!
Anyone can become victim to the big sales pitches in their inbox, the endless commercials, and just the pressure to get “the perfect gift” for everyone on their list. It makes it all too easy to get out a credit card and just start buying presents. But if you want to buy a home in the new year, you should know that what you add on to your credit card debt now could stop you from buying a home later.
Your debt-to-income ratio is important in the homebuying process, so if you want to qualify for a mortgage, the last thing you should be doing is racking up debt with gift purchases. Also, your credit utilization ratio accounts for almost 30 percent of your credit score. This ratio is the amount of credit you’ve used compared to the total amount of credit you have available on your credit cards. The lower your ratio, the higher your credit score will be.
Here are a few holiday shopping tips to keep this ratio low – and your score high:
It’s possible to enjoy holiday gift giving while sticking to your home buying budget. Just plan carefully, spend wisely, and keep your eye on the prize - being able to move into a new home.