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Applying for Credit Cards During the Holidays







Be careful when asking for credit!


Many companies ask similar questions: 

"Do you have a card with us?", "Want to apply for our card and get 10% off your purchase today?"


People do not realize what this could imply on their credit.

They do not know that it affects their credit scores!


     Instead, they go on saying YES! The majority of the time they will get a response from the salesperson that a letter will be sent to their mailing address. Yet again not many know that it means they have been denied for the credit card. The letter will only tell the reasons to why they were unable to get the credit card the same day as offered. 

    According to Fair, Isaac, and Company, (FICO), "For most people, one additional credit inquiry will take less than five points off their FICO Scores," (myFICO). Apparently, it hurts more to people with little to no credit. 

   The correct way is to first verify your credit scores. As well analyze your income and expenses. It allows you to understand your current financial situation beforehand. Reviewing carefully can help you identify areas that require attention.



Here's a step-by-step approach to help you through this process:

1. Verify your credit report: Obtain a copy of your credit report from one of the credit bureaus (Equifax, Experian, or TransUnion). Review it carefully to ensure its accuracy and identify any errors or discrepancies. Addressing these issues promptly can help improve your creditworthiness.

2. Analyze your income: Assess your sources of income thoroughly. This includes your salary, bonuses, commissions, rental income, dividends, or any other sources. Determine your total monthly or annual income after tax deductions.

3. Evaluate your expenses: Track your monthly expenses over a few months to get a clear picture of your spending habits. Categorize your expenses into essential (e.g., housing, utilities, groceries) and non-essential (entertainment, dining out, subscriptions). This analysis will help you identify areas where you can make adjustments to save more money.

4. Create a budget: Based on your income and expenses, establish a budget that aligns with your financial goals. Allocate your income towards different categories such as savings, debt repayment, and discretionary spending. Ensure that your expenses do not exceed your income and make adjustments if needed.

5. Reduce unnecessary expenses: Take a closer look at your non-essential expenses and identify areas where you can cut back. This could include dining out less frequently, canceling unused subscriptions, or finding more cost-effective alternatives for certain services.

6. Prioritize debt repayment: If you have outstanding debts, create a plan to efficiently repay them. Consider organizing your debts by interest rate and tackling high-interest debts first. Additionally, explore strategies like debt consolidation or negotiating with creditors to lower interest rates or monthly payments.

7. Build an emergency fund: Start setting money aside regularly in an emergency fund. Aim to save at least three to six months' worth of essential living expenses. This fund acts as a safety net during unexpected financial hardships and helps avoid reliance on credit cards or loans.

8. Seek professional guidance: If you find the process overwhelming or require expert advice, consider consulting a financial advisor. They can offer personalized recommendations tailored to your specific situation to help you make informed decisions.

Remember, improving your financial health requires patience, discipline, and consistent effort over time. By verifying your credit report, analyzing your income and expenses, and implementing necessary changes, you can pave the way for a more secure financial future.





References:
(How Do Credit Inquiries Affect Your FICO Score? | MyFICO | MyFICO, n.d.) https://www.myfico.com/credit-education/credit-reports/credit-checks-and-inquiries




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