Did you splurge this month? It may end up dinging your credit

SALT LAKE CITY – All the shopping you did this month may have a bigger impact on your finances than just having to budget for all the money you spent. It could also hurt your credit score.

Rod Griffin of Experian said credit scores often take a hit during the holidays for one important reason – utilization.

“The thing that happens during the holidays is we tend to spend more, obviously, our credit card balance may go up,” he said. “What a lot of people don’t know, is that that balance to limit ratio, what we call utilization, is the second most important factor in credit scores.”

Maxing out your cards can hurt you almost as much as missing payments.

Griffin also warned that consumers should be wary of those in-store offers that we often get at the counter like, say, a promise that you can save a percentage by signing up for a store’s branded credit card on the spot.

“When you apply in most cases, you have an inquiry added in. It may cause your credit score to dip a bit,” Griffin said.

As Get Gephardt has reported, those cards often also have high interest rates which can quickly erase any savings if a consumer carries a balance.

The impact large spending has on credit scores does not have to be a bad thing.

Griffin said that if you’ve racked up credit card bills during the holidays, paying them down or paying them off is going to help your credit score almost instantly, and it can demonstrate to the credit bureaus that you are responsible with debt.

And if your New Year’s resolution is to get on top of your credit, you can check it for free once per week at annualcreditreport.com.

It’s worth doing regularly. Studies have shown our credit reports are plagued with errors.

Getting those removed can also improve your credit.