3 Ways to Help Make Sure Your Credit Score Doesn't Take a Dive During the Holidays

Many people don't stop to think about their credit score until they're ready to take out a loan. But if that's a plan of yours for 2024 -- say, you know you want to apply for a mortgage loan -- then it's important to do what you can to keep your credit score in top shape.

That can be challenging during the holidays, though. But if you take these steps, you may find that your credit score holds steady despite spending more than usual.

1. Ask for a credit limit increase if you know you'll be spending more

You might charge more expenses on your credit cards during the holiday season than usual. And you may have every intention of paying off your balances within a few months of racking them up.

But even if your credit card spending relative to your total credit limit rises for just a few months, it could be enough to damage your credit score. So to prevent that from happening, there's one simple move you can make -- ask your credit card issuers to raise your credit limit.

Of course, you'll need to be careful, because a higher credit limit might tempt you to spend more. But if you stick to your original spending budget while having a higher limit in place, it could help keep your credit utilization ratio in good shape. 

Credit utilization makes up 30% of your FICO® Score (the most commonly used credit scoring method). So it's in your best interest to keep your total credit card balance to a minimum.

2. Avoid applying for too many new credit cards in short order

Each time you apply for a new credit card, a hard credit check is done on your credit report. Usually, that will only cause your credit score to drop by a few points. So a single new credit card application may not cause much harm.

But as you go about your shopping, you may be tempted by different offers, including the option to open new store credit cards. If you say yes to too many in short order, it could result in multiple hard inquiries on your credit -- and a more significant drop in your credit score.

3. Check your credit report to make sure everything looks correct

Your credit report is a snapshot of your borrowing history. And it's important to make sure that the information on it is accurate. A mistake like a delinquent debt you never racked up could cause your credit score to drop.

Prior to the COVID-19 pandemic, you could view your credit report from each of the three reporting bureaus (Experian, Equifax, and TransUnion) for free once a year. But now you're entitled to a free copy every week. If you spot a mistake in late November and report it at once, you'll still have multiple opportunities to access your report for free before the end of the year to follow up.

If your credit score drops during the holidays, it could make it much harder to get an affordable loan in the new year. Take these steps to prevent that from happening. You'll be much happier for it.