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I don’t know about you, but I’m still trying to shift gears into “fall mode.” A couple months in and it’s still hard to let go of all that summer offered, especially coming out of what was a dismal 2020. When our Community team requested an article on the holidays and credit, my first reaction was, “Wow, slow down, it’s a bit too early for that.”
But then just the mere mention of the holidays caused me to start feeling the excitement and a bit of anxiety. Whether you are contemplating upcoming holiday travel, shopping, visitors or parties, a little planning and preparation can go a long way to maximizing enjoyment and minimizing stress. And looking at your credit may be a part of laying the foundation for a fantastic holiday season. I’ve long been a proponent of saving or shopping for the holidays in small chunks throughout the year. In a similar way, carefully managing your credit throughout the year makes sense.
To that end, visiting www.annualcreditreport.com and checking your credit should be part of your year-round financial routine. However, here are five reasons a credit health check right now, as we cruise toward the 2021 holiday season, may make sense:
You’re going for the big bow.
Checking your credit well in advance of any major purchase is a smart move. It can ensure you have time to put things in order in a way that provides access to the best loan at the best interest rate. Things have been tight in the auto market this year, but perhaps this holiday season you’re looking at putting the big bow on top of a present in the driveway? If that’s the case, it’s time to check your credit report and score before you start shopping in earnest.
You played defense during 2020.
The pandemic had a lot of folks scrambling to make ends meet. If part of doing that had you taking advantage of CARES Act or other credit relief provisions that may have applied to your situation, ensure that your credit report accurately reflects that relief and that missed payments were not inadvertently reported.
You are feeling the real estate market hype.
The real estate market – depending on where you sit, this could be good or bad – has been on fire. If you’ve been on the sidelines but are thinking about jumping in this fall, don’t wait until the last minute to ensure your credit is in order. The difference between an exceptional score – 800 or above using the standard FICO® range – and a good score – 700 +/- – can equate to tens of thousands of dollars in interest over the life of your mortgage. Before you start house shopping, do some credit house cleaning to ensure your record reflects the real (and best) you.
You want to ensure fraud hasn’t landed on your doorstep.
Inaccurate information or hard inquiries – requests for credit you did not make – may provide a heads-up that you’re the target of unscrupulous activity. Throughout the pandemic, we have seen an uptick of fraudulent activity of all types. Check your report to ensure you haven’t been a victim.
You’re ripe for a top-to-bottom assessment.
As we emerge from the pandemic, it’s a great time to assess where you stand financially. On the credit front, that means reviewing your report, your credit score, and assessing your debt and plan to eliminate it. Figuring out where you stand and where you want to go before the hectic holiday season will ensure you assess your situation and map out your plan prior to holiday excitement taking hold.
While it’s unlikely that all these situations apply to you, any one of them could provide a compelling reason to take a close look at where you stand with your credit. Continue to do the right things, make prudent purchase and payment decisions and everything should fall into place. Let me – rolling with the theme of this article – be the first to wish you Happy Holidays!
About the Author: JJ Montanaro is a Certified Financial Planner® professional and part of the Military Affairs team at USAA. He’s a graduate of the U.S. Military Academy and has over 20 years of financial planning experience.
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