Spending and splurging will be top of mind as the temptation of gifts, dining and entertainment kick off the holiday season ahead of us. It’s a good time for a gentle reminder to take inventory of your financial credit health before the madness begins.

Will you be on pins and needles when a retailer swipes your credit card for that splurge gift? Or will you be calling your lenders to increase your credit limits to afford the "big" buy? Many clients that I encounter are accustomed to frequent credit offers, only to be surprised when their application or credit increase is denied. Damaging credit report information or overextended borrowing are usually the culprits and often, it may be something you’ve forgotten about, like a small unpaid medical bill that went into collections.

Repairing your credit won’t happen overnight – you need to establish a history of sound financial behavior first. But the sooner you start, the sooner you can put less-than-perfect credit in the rear-view mirror on the road to financial wellness. Warning signals for debt problems may include:

  • Making only minimum credit card payments or missing payment deadlines.
  • Reaching credit limits on one or more cards.
  • Frequent credit card cash advances.
  • Monthly charges exceeding card payments.
  • Tapping savings or a 401(k) to pay day-to-day bills.

If these scenarios sound familiar, you should take steps to repair your credit rating and to get your financial well-being back on track.  Here are a few tips:

Check your Credit. Take advantage of free access to your credit reports from all three credit report agencies at www.annualcreditreport.com.  Review reports for errors that may be damaging your score unnecessarily and sign up for free alerts to help you keep tabs.

Requests for credit limit increases peak around the holidays. PNC generally receives more requests for increases, but plenty of customers request credit line decreases. These usually are from parents who add teenagers to their credit card accounts, but want to limit their spending.

Your credit limit and credit score are closely tied. Your score helps lenders set your limit – and your limit, along with your spending, are factors in your score.

With the two so intertwined, it’s important to stay well below your credit limit if you want to avoid hurting your credit score.

Budgeting. Add up your monthly expenses. If more goes out than comes in, you either need to reduce expenses or increase income.

Pay on time. Late payments on credit cards and other bills can be expensive ($30 late fees aren’t uncommon) and can trigger higher interest rates, sometimes at 30 percent, which can damage your credit score and cost you more. Paying on time will begin to put late or missed payments in your past and help rebuild a more positive payment history.

Accelerate your payments. It can take years to erase a debt by paying only the minimum amount due. An extra $50 a month can make a significant dent in the payoff time and interest paid. Try bringing your lunch to work, avoiding impulse buys and saving gas by planning errands more carefully – you’ll be surprised how it adds up.

Talk to your creditors. Call your creditors before you miss a payment and they resort to credit collection. They’d much rather work with you directly and may be willing to work out a suitable repayment plan or even lower your interest rate to match other offers.

Be smart about balance transfers. Consolidating debt from several cards into a new account or with a home equity loan may lower your interest rate, but read the fine print carefully for limited introductory rate periods, higher rates for new purchases, early payment penalties and other fees.

John Balazentis is PNC Bank market executive of WorkPlace Banking for Indiana.

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