This post is sponsored by Lexington Law. All content and opinions are my own.
It’s the “spendiest” time of the year. The last thing you’re probably thinking about is the health of your credit, right? Last Christmas, Americans added over $1,000 of debt to their household balance sheets. If you are the average American consumer, you’re probably already planning how you’ll float 2019 holiday expenses using a hybrid of credit and cash in the bank.
While each personal financial situation is unique, if you’re planning to buy a home or finance a large purchase next year, it’s important to create a game plan for safeguarding your credit alongside planning for how you’ll pay for the holiday season. For those who feel the struggle of balancing fun with smart money choices, below are five methods to help you get the best credit score possible in 2019.
Don't go into debt throughout the holidays
With the most wonderful (expensive) time of the year just around the corner, now is the time to come up with a game plan of how you’ll get through the holidays without going into debt. Or getting deeper into debt.
Often, this means making hard choices like doing a no-gift Christmas or opting not to travel home. But this post isn’t about living your best holiday life, it’s about your best financial life and often those sacrifices are what make up the difference on a balance sheet. Being fiscally savvy now means one day you will be able to live both at the same time.
Make a debt payoff plan for 2019
In addition to making a “paying for the holidays” game plan, you’ll want a debt payoff plan for 2019 before the new year starts on January 1st. Here is my most popular tutorial on paying off debt quickly, and another if you’re more the “slow and steady” type.
The reason why this is important: if you pick your game plan now, you can get everything together, prepped, and in-place for a strong start in the new year. An example of this would be going ahead and filling out a debt repayment spreadsheet with the balances you owe organized by interest rate, or calculating how much you’ll allocate to payments each month once holiday spending is over.
Make on-time payments
Paying on time now seems like the easiest thing in the world thanks to online banking and auto pay, but it still happens (Yep, even to a financial expert like me.) Something on the tech side could fall out of sync, or if you manually pay, perhaps you’ll forget during the chaos of the holiday season to log-in and make that all-too-important payment.
But this is an easy step to take if you’re looking to have better and better credit in the New Year. If you’re not already on autopay, (read up on my system of how I autopay all of my bills here), then at least set yourself up with calendar reminders from now until the end of the year.
Avoid any large purchases (if you can)
If you want to make what I like to call a GLP – gigantic life purchase – in 2019 (think house, car, business etc.), then you’ll want to keep large purchases to a minimum from now until then. For example, don’t finance a washer-dryer set when you’re looking to finance a car in the next few months. Don’t buy a brand new car when you’re about to start shopping for a home loan.
With that said, of course, there are emergencies that can’t be helped. But if you can keep GLPs to a minimum during this time, please do.
Pick up a holiday side gig for extra cash
Need more money for the holidays? Go earn more money. Retail stores especially are always looking for extra help. You can also get creative and start a side hustle of your own, like wrapping presents, hiring yourself out to help decorate, or baking treats for friends.
The holidays are also a time when people are traveling and going to parties: babysitters, dog sitters, and house sitters are all in high demand. Even if you commit to a side hustle for just a few weeks of the holiday season, the extra cash can be a huge benefit to your finances in 2019. I’ve got plenty of advice on picking up more cash “on the side”: see here, here, and here.
Build Your Emergency Fund
Here’s why having extra funds is more important than ever: in 2019, a new FICO score with debut and this time, the new “UltraFICO” score will factor in how much people keep in their checking and savings accounts. It’s a new score designed to help those with lower scores increase their scores enough to qualify for lending.
It can also be a good thing for consumers because it is now the one factor in a credit score you can directly control.
For example, if you want to buy a home next year but are worried your credit might be too low, start saving. Start saving in addition to any home down payment fund you might have, as the more money you keep on hand, the higher your score can be when “UltraFico” gets rolled out in early 2019.
For those who may have bad credit with several bad marks, Lexington Law can help with filing disputes or challenging specific items on your credit report. They’ve helped over 100,000 clients remove inaccurate and unverifiable items from credit reports such as late payments, collections, charge-offs, and more. Learn more about Lexington Law here.
There is a lot of information to digest above, and with the holidays coming I won’t judge if you have a short attention span. For those who want a list of what to do by priority, I recommend the following:
- Maintain your current credit by making on time payments and avoiding large purchases throughout November and December (If you can only do one thing, don’t make your credit worse before the end of the year.)
- Make a debt payoff plan (if needed) and get it ready to go by January 1st.
- Pick up a side hustle/accelerate your savings. (if possible)