Credit do's and don'ts: Holiday edition

‘Tis the season to shop til you drop! With blow out deals and gifts galore, you might be tempted to put it all on the credit card this holiday season.

But before you swipe and land yourself on the naughty list, consider how your shopping habits could affect your credit score.

Keep your credit in check with these tips:

1. Don't max out your credit. Credit utilization—or the amount of money you spend compared to your available credit—makes up 30 percent of your credit score. For example, if your credit card has a limit of $1,000 each month and you only spend $200 each month, your credit utilization is 20 percent. Credit experts recommend only using up to 50% of your available credit. This shows lenders that you know how to responsibly handle your credit. Maxing out your card might sound like no big deal, but doing so could actually signal to lenders that you're not responsible or that you're in financial trouble.
2. Be wary of opening up store credit cards. They might sound like an easy way to save some money—especially if you were planning on buying store products anyway. But new credit makes up 15% of your credit score, so opening that new account could actually harm your credit. Avoid opening too many credit accounts at the same time. It's recommended to have two revolving loans (such as credit cards) and one installment loan (such as a mortgage or car loan) to establish good credit.
3. Don't spend more than you can afford. Just because you can use credit doesn't mean you should. If you don't have a lot of money to spend this holiday season, consider giving a more thoughtful, but less costly gift. Lend a hand with a project or give the gift of quality time together.
4. If you do use credit, use it responsibly. Making timely payments is a great way to build your credit score. In fact, your bill paying history is the most important factor on your credit score, as it shows that you manage your money well and are likely a responsible borrower. So, if you do decide to whip out the credit card this holiday season, be sure to pay all your bills on time.

Want to know more about your current credit?

Go to www.annualcreditreport.com to get a free copy of your credit report once a year. While it won't tell your scores, it will tell you what has been reported on you from each credit bureau.

You'll see an accurate snapshot of your credit history and will also let you check that everything is being accurately reported. This way, you can dispute anything on your file that is not yours.

You'll also be able to detect fraud that could otherwise go unnoticed. You can opt to pay for your score if you're curious. Knowing your score can be beneficial, because your score determines your ability to qualify for loans, such as a car loan or mortgage. The better your score, the better rate you'll be able to enjoy, and the more money you'll save in the long term.

TIP: If you detect fraud on your credit report, you should:

1. Notify social security that your social security has been compromised
2. Notify the police of your stolen identity and file a police report
3. Write a letter to the creditors disputing the fraud and ask them to remove fraudulent information
4. Call the credit bureaus and ask them to place a fraud alert on your files

Bureau Fraud Numbers:

Equifax: 800-525-6285

TransUnion: 800-916-8800

Experian: 888-3973742

The information contained herein (including but not limited to any description of TowneBank Mortgage, its affiliates and its lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. This is not a commitment to lend.