Experian Credit Score vs. FICO Score

January 14, 2021 &• 7 min read by Barry Paperno Comments 17 Comments

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When you think “credit score,” you probably think “FICO.” The Fair Isaac Corporation introduced its FICO scoring system in 1989, and it has since become one of the best-known and most-used credit scoring models in the United States. But it isn’t the only model on the market.

Another popular option is called VantageScore, the product of a collaboration between the three major credit reporting agencies: Experian, Equifax, and TransUnion. It uses similar scoring methods to FICO but yields slightly different results.

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Each scoring model has multiple versions and multiple applications—you don’t have just one FICO score or one VantageScore. Depending on which bureau creates the score and what type of agency is asking for the score, your credit score will vary, sometimes siginifcantly. One credit score isn’t more “accurate” than another, they just have different applications. Learn more about the different types of credit scores below.

When you sign up for ExtraCredit, you can see 28 of your FICO scores from all three credit bureaus. Your free Credit Report Card, on the other hand, will show you your Experian VantageScore 3.0.

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What Is a VantageScore?

VantageScore was created by the three major credit reporting agencies—Experian, Equifax, and TransUnion. It uses similar scoring methods to FICO but yields slightly different results.

One of the primary goals of VantageScore is to provide a model that is used the same way by all three credit bureaus. That would limit some of the disparity between your three major credit scores. In contrast, FICO models provide a slightly different calculation for each credit bureau, which can create more differences in your scores.

FICO vs. VantageScore

So, what are the differences between an Experian credit score calculated using VantageScore and one calculated via the FICO model? More importantly, does the score used matter to you, the consumer? The answer is usually no. But you might want to look at different scores for different needs or goals.

Is Experian Accurate?

Credit scores from the credit bureaus are only as accurate as the information provided to the bureau. Check your credit report to ensure all the information is correct. If it is, your Experian credit scores are accurate. If your credit report is not accurate, you’ll want to look into your credit repair options.

Our free Credit Report Card offers the Experian VantageScore 3.0 so you can check it regularly. If you want to dig in deeper, you can sign up for ExtraCredit. For $24.99 per month, you can see 28 of your FICO scores from all three credit bureaus. ExtraCredit also offers rent and utility reporting, identity monitoring and theft insurance, and more.

ExtraCredit Five Features

Understanding the Scoring Models

FICO and VantageScore aren’t the only scoring models on the market. Lenders use a multitude of scoring methods to determine your creditworthiness and make decisions about whether or not to give you credit. Despite the numerous options, FICO scores and VantageScores are likely the only scores you’ll ever see yourself.

Here’s what FICO uses to determine your credit score:

  • Payment history. Whether or not you pay your bills in a timely manner is critical, as this factor makes up around 35% of your score.
  • Credit usage. How much of your open credit you have used—which is called credit utilization—accounts for 30% of your score. Keeping your utilization below 30% can help you keep your credits core healthy.
  • Length of credit. The average age of your credit—and how long you’ve had your oldest account—is a factor. Credit age accounts for around 15% of your score.
  • Types of credit. Your credit mix, which refers to having multiple types of accounts, makes up around 10% of your score.
  • Recent inquiries. How many entities have hit your credit history with a hard inquiry for the purpose of evaluating you for credit is a factor for your score. It accounts for about 10% of your credit score.

VantageScore uses the same factors, but weighs them a little differently. Your VantageScore 4.0 will be most influenced by your credit usage, followed by your credit mix. Payment history is only “moderately influential,” while credit age and recent inquiries are less influential.

Each company also gathers its data differently. FICO bases its scoring model on credit data from millions of consumers analyzed at the same time. It gathers credit reports from the three major credit bureaus and analyzes anonymous consumer data to generate a scoring model specific to each bureau. VantageScore, on the other hand, uses a combined set of consumer credit files, also obtained from the three major credit bureaus, to come up with a single formula.

Both FICO and VantageScore issue scores ranging from 300 to 850. In the past, VantageScore used a score range of 501 to 990, but the score range was adjusted with VantageScore 3.0. Having numerical ranges that are somewhat consistent helps make the credit score process less confusing for consumers and lenders.

Your score may also differ across the credit bureaus because your creditors aren’t required to report to all three. They may report to only one or two of them, meaning each bureau likely has slightly different information about you.

Variations in Scoring Requirements

If you don’t have a long credit history, VantageScore is the score you want to monitor. To establish your credit score, FICO requires at least six months of credit history and at least one account reported to a credit bureau within the last six months. VantageScore only requires one month of history and one account reported within the past two years.

Because VantageScore uses a shorter credit history and a longer period for reported accounts, it’s able to issue credit ratings to millions of consumers who wouldn’t yet have a FICO Score. So, if you’re new to credit or haven’t been using it recently, VantageScore can help prove your trustworthiness before FICO has enough data to issue you a score.

The Significance of Late Payments

A history of late payments impacts both your FICO score and your VantageScore. Both models consider the following.

  • How recently the last late payment occurred
  • How many of your accounts have had late payments
  • How many payments you’ve missed on an account

FICO treats all late payments the same. VantageScore judges them differently. VantageScore applies a larger penalty for late mortgage payments than for other types of credit payments.

Because FICO has indicated that it factors late payments more heavily than VantageScore, late payments on any of your accounts might cause you to have lower FICO scores than your VantageScores.

Impact of Credit Inquiries

VantageScore and FICO both penalize consumers who have multiple hard inquiries in a short period of time. They both also conduct a process called deduplication.

Deduplication is the practice of allowing multiple pulls on your credit for the same loan type in a given time frame without penalizing your credit. Deduplication is important for situations such as seeking auto loans, where you may submit applications to multiple lenders as you seek the best deal. FICO and VantageScore don’t count each of these inquiries separately—they deduplicate them or consider them as one inquiry.

FICO uses a 45-day deduplication time period. That means credit inquiries of a certain type—such as auto loans or mortgages—that hit within that period are counted as one hard inquiry for the purpose of impact to your credit.

In contrast, VantageScore only has a 14-day range for deduplication. However, it deduplicates multiple hard inquiries for all types of credit, including credit cards. FICO only deduplicates inquiries related to mortgages, auto loans, and student loans.

Influence of Low-Balance Collections

VantageScore and FICO both penalize credit scores for accounts sent to collection agencies. However, FICO sometimes offers more leniency for collection accounts with low balances or limits.

FICO 8.0 also ignores all collections where the original balance was less than $100 and FICO 9.0 weighs medical collections less. It also doesn’t count collection accounts that have been paid off. VantageScore 4.0, on the other hand, ignores collection accounts that are paid off, regardless of the original balance.

What Are FAKO Scores?

FAKO is a derogatory term for scores that aren’t FICO Scores or VantageScores. Companies that provide FAKO scores don’t call them this. Instead, they refer to their scores as “educational scores” or just “credit scores.” FAKO scores can vary significantly from FICO scores and VantageScores.

These scores aren’t completely valueless, though. They can help you understand where your credit score stands or whether it’s going up or down. You probably don’t want to shell out money for such scores, though, and you do want to ensure the credit score provider is drawing on accurate information from the credit bureaus.

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Source: credit.com

5 Savvy Money Moves to Make This Year

January 5, 2021 &• 6 min read by Credit.com Comments 0 Comments

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The following is a guest post from The Savvy Couple.

As much as we don’t like to admit it, money is a very important tool that can be used to better our lives.

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So why don’t we take better care of managing it?

Luckily, there are some savvy money moves that you can make this year to improve your finances and feel more financial peace. This year can be a great one, and you can use your money to help make it happen.

We have narrowed down our top five money moves that you can make this year that will have a huge impact on your overall finance. The best part is they are not complicated and they won’t take a lot of time to implement. In fact, you can start to put them in place right after reading to the end of this article.

1. Create a Money Plan and Stick to it

It’s really important to create a plan, or budget, for your money. If you don’t, then you could find your money just escaping and not having a clue where it’s gone.

A lot of people think that a budget is strict, and something that you use for just your bills. But a good budget will be a plan for your money for the month and how it is going to be spent. Your budget should reflect the direction that you want your life to take.

It should enable you to spend more money on the things you love and cut wasteful spending on the things you don’t.

It doesn’t have to be super strict either—we advise “paying yourself first.” Meaning put your money where it’s most important first (investing, savings, fun money), and then using the rest of the money to pay your bills.

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Think about what your goals are for your life and base your budget around that. You have a set amount of income, and you can decide where you want that money to go.

2. Cut Your Monthly Expenses

One step toward creating the money plan that you want can be cutting your monthly expenses. This doesn’t mean that you need to be drastic with the expenses that you are cutting out.

When it comes to creating your money plan, it’s important to look at what you are currently spending money on.

If you have never tracked your expenses before, you will likely be surprised to see where your money is going. We like to think that we have a good idea of what we are spending, but if you are not tracking your spending then you are most likely vastly underestimating your spending.

Go back through your spending and highlight any problem areas. The important thing here is to not beat yourself up for anything that you’ve spent.

When you have created the plan for your money, you may find that you have been spending on things that don’t fit in with that plan. These could be the ones that you choose to cut down on.

Cut down on your expenses slowly. Otherwise, you could find that it’s too much of a change and you want to go back to how you were spending before. Try picking one thing to cut down on, and do a bit of trial and error.

3. Stay Away from Debt

We’ve been talking about creating a money plan for your life, but there are some things that can throw your plan off track—debt being one of them.

Sometimes, debt is unavoidable. There are situations that we find ourselves in such as medical emergencies, car repairs, or any kind of emergency really!

The best thing to do is to prepare for these kinds of situations. We can’t fully plan, of course, but we can set aside some money to prepare. These are usually referred to as emergency funds. We recommend saving a $1,000 emergency fund as soon as possible, then slowing building that up to 3–6 months of living expenses after your debt is paid off.

Debt is so normalized in society, but debt doesn’t have to be! Making savvy money moves and trying to prepare for future emergencies will help tremendously in the long run.

4. Understand How Your Credit Score Works

Let’s be honest—a lot of us don’t pay much attention to our credit score. It’s one of those boring things that we don’t think about until we need it.

The last thing that you want to happen is to find that you need to take out credit but you can’t because of your credit score. Therefore, it’s a savvy money move to understand how your credit score works.

Credit scores are generally used by lenders when you want to take out a line of credit with them—for example, when you are getting a mortgage or car loan. If you have a high credit score then you will have access to better rates and terms for your loans.

Your credit score is largely determined by whether you pay your bills on time, as any missed payments will go against you. Your score is also determined by how much credit you have used compared to the amount that you have been lent.

It’s essential that you check your credit report as there can be errors on there which you can rectify—the sooner the better. The longer you wait to repair your credit, the harder it can become.

You can get your Experian VantageScore 3.0 for free from Credit.com when you sign up for the free Credit Report Card. And if you want more details on your credit score, sign up for ExtraCredit. You’ll get 28 FICO® scores and your credit reports from all three major credit bureaus.

5. Start an Online Side Hustle

We are huge fans of starting side hustles because at the end of the day you can only cut your expenses so much. But your income has unlimited potential.

Side hustles are great because you can create an income stream for your goals, or even use it to leave your day job.

The benefit of starting an online side hustle is that there are so many possibilities, you pretty much only need to have access to the internet.

It’s worth brainstorming some side hustle ideas that you have an interest in doing. It’s also worth thinking about ideas that will be free or have a very low cost to start up. The last thing that you want to do is spend a lot of money on something that’s not going to take off.

You can determine how much time and effort you want to put into your side hustle—it doesn’t have to be a brand-new business, but can be getting an extra job or something small.

Some of our favorite side hustle ideas include:

  • Starting a blog
  • Proofreading
  • Facebook advertising for businesses
  • Teaching English online
  • Freelance writing

Savvy Money Moves throughout the Year

If you want to make some good money moves this year, this is a good place to start. These are some simple things that anyone can do to improve their finances greatly.

What are your best savvy money moves? Let us know in the comments!


Kelan and Brittany Kline are the creators and co-founders of The Savvy Couple. They write about personal finance, budgeting, making money online, entrepreneurship, and more.

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1099-C: What You Need to Know about the Cancellation of Debt Tax Form

January 6, 2021 &• 5 min read by Brooke Niemeyer Comments 4 Comments

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Disclaimer

From early January to mid-February, you might receive a number of tax documents in the mail. They can range from expected W-2s from your employer to forms about mortgage interest you paid. One form that many people don’t expect is the 1099-C. Discover why you would receive such a form and what the IRS expects you to do with it. Make sure to consult with your tax professional for your specific situation.

What Is a 1099-C Form?

A 1099-C is a tax form required by the IRS in certain situations where your debts have been forgiven or canceled. The IRS requires a 1099-C form for certain acts of debt forgiveness because it sees that forgiven debt as a form of income.

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For example, if you borrowed $12,000 for a personal loan and only paid back $6,000, you still received the original $12,000. Not paying back the other half of the loan means you got the benefit of that money without paying for it. The IRS considers that to be income in many cases.

Why Did You Get a 1099-C Form?

Not every debt cancellation involves a 1099-C form. But if you received this form in the mail, it’s because of a debt cancellation that occurred at some point during the tax year.

Box 6 on the 1099-C form should have a code to help you determine why you received the form. You can also learn more about 1099-C cancellation of debt processes and the reasons you might receive such a form if you’re not sure whether yours is accurate.

The IRS provides instructions and information about 1099-C forms and cancellation of debt in general. That includes a list of potential codes that might be found in Box 6:

  • A—Bankruptcy (Title 11)
  • B—Other judicial debt relief
  • C—Statute of limitations or expiration of deficiency period
  • D—Foreclosure election
  • E—Debt relief from probate or similar proceeding
  • F—By agreement
  • G—Decision or policy to discontinue collection
  • H—Other actual discharge before identifiable event

What Should You Do with a 1099-C Form?

You should never ignore any tax form you receive, as each might have positive or negative implications on your tax return. But you should also not panic if you receive a 1099-C form indicating a large amount of income. It doesn’t necessarily mean that you will owe a lot more in taxes.

First, find out whether the type of debt cancellation on the 1099-C form is excluded from taxable income. The IRS provides a list of exclusions, which include debts that were forgiven because you were insolvent or involved in certain types of bankruptcies. It’s a good idea to double check with your bankruptcy lawyer about whether you need to claim 1099-C income relevant to your bankruptcy discharge.

Once you know whether you need to claim the income or not, you must incorporate the 1099-C into your federal tax filing. If the canceled debt doesn’t fall under an exclusion, you report it as “other income” on your tax return.

That income will be included with your other income in determining how much tax you must pay for the year. In short, you’ll have to pay taxes on the extra income. That might mean your refund is reduced or that you owe more taxes than you would otherwise.

In cases where the 1099-C canceled debt falls under an IRS exclusion—which means you don’t have to pay taxes on all or some of the income—you still may need to file a form. The creditor that sent you the 1099-C also sent a copy to the IRS. If you don’t acknowledge the form and income on your own tax filing, it could raise a red flag. Red flags could result in an audit or having to prove to the IRS later that you didn’t owe taxes on that money.

Luckily, the IRS provides a form for this purpose. It’s Form 982, the Reduction of Tax Attributes Due to Discharge of Indebtedness.

What to Do if You Received a 1099-C Form After Filing Your Taxes

If you don’t know a 1099-C form is coming—and many people don’t realize they might receive one—you could file your taxes before it arrives. You should file an amended return if this happens. That’s true even if the 1099-C doesn’t change your tax obligation, as you might want to get the Form 982 on record for documentation purposes. 

What’s the 1099-C Statute of Limitations?

There aren’t really statutes of limitations on cancellation of debt, though the IRS does have rules about when these forms should be filed. The creditor must file a 1099-C the year following the calendar year when a qualifying event occurs. That just means the creditor must file the next year if they discharge or forgive a debt.

If the creditor files a 1099-C with the IRS, then typically it must provide you with a copy by January 31 so you have it for tax filing purposes that year. This is similar to the rule for W-2s from employers.

However, there is no rule for how long a creditor can carry debt on its books before it decides it’s uncollectible. So, if your debt isn’t canceled via repossession, bankruptcy, or other processes, cancellation could happen at any time. The creditor doesn’t have to tell you about it other than sending the 1099-C.

Is a 1099-C Form Good or Bad for Your Credit?

The 1099-C form shouldn’t have any impact on your credit. However, the activity that led to the 1099-C probably does impact your credit. Typically, by the time a creditor forgives a debt, you’ve engaged in at least one of the following activities:

  • Failed to make payments for an extended period of time
  • Negotiated a settlement on the debt
  • Entered into a program with the creditor because you can’t pay the debt, such as a home short sale or voluntary repossession
  • Been sent to collections
  • Had a foreclosure or repossession
  • Gone through a bankruptcy

All of those are negative items that can impact your credit report and score for years. So, while getting a 1099-C itself doesn’t change your credit at all, you’ve probably already experienced a negative hit to your score.

Get Tax Help if You Receive a 1099-C

As with other tax topics, the 1099-C can be complicated. It’s a good idea to work with a professional when dealing with complicated tax matters or trying to reduce your tax burden legally.

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What Is an Accredited Retirement Plan Consultant (ARPC)?

What Is a Accredited Retirement Plan Consultant (ARPC)? – SmartAsset

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Salespeople and marketers working in the financial services profession, as well as college students, can earn the Accredited Retirement Plan Consultant (ARPC) certificate to show they have proficiency and professionalism sufficient to help employers create effective retirement plans for workers. That includes plan features and designs as well as how to educate, advice and communicate with eligible employees about the plan, not to mention marketing the plans. They can also address required reporting and compliance demands. Meanwhile, a financial advisor can offer individuals, whether they are employees or not, valuable advice on creating, adjusting and monitoring their own personal financial plan.

ARPC Issuing Body

The Society of Professional Asset Managers and Recordkeepers (SPARK) is the sponsor of the ARPC certificate. The nonprofit was formed in 1998 and acts as an advocacy group on federal retirement policy. The membership of SPARK includes many of the financial industry’s top companies, including BlackRock, Fidelity, Charles Schwab and Merrill Lynch. In addition to the APRC certificate program, SPARK provides research, training and other resources on cybersecurity, fraud, compliance and industry best practices.

The ARPC has been offered since 2004. About 150 financial professionals currently hold the certificate. So it’s not an especially common certification.

ARPC Certification Requirements

The ARPC designation is primarily intended for people already working in sales and marketing in the retirement plan field. With the exception of students, applicants must have a year of full-time experience.

SPARK further defines a year of experience as at least 2,000 hours of working in financial services. That has to include at least 400 hours spent selling, marketing or providing services to retirement plans and plan participants.

Applicants must provide a recommendation letter from a current work supervisor. The recommendation letter has to verify the type and amount of the application’s work experience.

Students currently enrolled in a college or university can apply without the required job experience requirement. Instead, they need a recommendation from a faculty member or department head to qualify.

Student applicants won’t receive their ARPC until they complete a year of professional work experience, however. The relevant work experience can include an internship.

The ARPC Exam

ARPC applicants also have to pass a certification exam. This is a 100-question multiple-choice test that must be completed within two hours with a passing score of 73% correct. The exam questions are designed to test the applicant’s knowledge of how to determine an organization’s retirement plan needs, evaluate the effectiveness of organization’s current retirement plan, formulate a suitable retirement plan solution, present it to the employer and assist in implementation and follow-up.

No coursework is required to sit for the exam. However, applicants can take an online ARPC course that presents material based on the exam outline.

Costs to Get an ARPC

ARPC applicants have to pay a $350 application fee and taking the exam costs another $150. The optional self-paced online ARPC training course costs $850. Applicants who pay for the SPARK ARPC course can have the $350 application fee waived.

ARPC certificate holders pay $150 annually to renew the designation. Each year they also have to complete 10 hours of continuing education courses. SPARK offers five-hour continuing education courses that meet the requirements for $150 each.

ARPC Jobs and Privileges

ARPC holders work in marketing and sales in the retirement field. Earning the APRC designation allows the holder of the certificate to use the ARPC certification logo on business cards and stationery. Beyond that, there are not particular powers or privileges associated with holding this designation.

Comparable Certifications

There are several other professional designations that can be earned by financial services workers in the retirement field.

Accredited Retirement Plan Specialist (ARPS) is a SPARK designation for administrative and recordkeeping professionals working in retirement plan operations. Similar to the ARPC certificate, ARPS holders have demonstrated a year of experience and the ability to pass an exam.

Certified Retirement Counselor (CRC) is offered by the International Foundation for Retirement Education. Applicants can earn the certificate by registering and passing a four-hour 200-question exam that costs $520.

Bottom Line

Sales and marketing professionals working in the retirement plan industry can demonstrate their proficiency at designing employer-sponsored retirement plans by earning the ARPC designation. Earning the certificate requires having a year of relevant experience, obtaining a letter of recommendation and passing an exam. The designation, which is not particularly common among financial professionals, can also be earned by college students.

Tips on Retirement

  • Consider working with a financial advisor to develop, implement and fine-tune a personal financial or estate plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
  • Are you saving enough for retirement? SmartAsset’s award-winning retirement calculator can help you determine exactly how much you need to save to retire.

Photo credit: ©iStock.com/South_agency, ©iStock.com/Andrii Dodonov, ©iStock.com/kupicoo

Mark Henricks Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.

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Don’t Let Debt Ruin the Holidays: Proactive Steps

December 2, 2020 &• 6 min read by AJ Smith Comments 0 Comments

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Disclaimer

According to numbers for the 2018 holiday shopping season, American shoppers incurred an average debt of just over $1,000. And not everyone could pay that debt off quickly, leading to expensive, long-term credit card debt for some.

But holiday shopping debt isn’t the only financial burden people face. Many enter the season with other debt. If that’s you, don’t let debt ruin the holidays. Instead, consider some of these tips to manage debt before the holidays so you can enjoy the festivities with reduced stress.

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1. Find Out Exactly Where You Stand Financially

Before you create a plan to tackle your debt, ensure you’re accounting for all of it. According to a 2019 study, around one in five adult Americans weren’t sure if they had credit card debt when asked.

Even if you think you have a handle on your debt, it’s a good idea to give your reports a once-over. This lets you ensure you didn’t miss something important and that no one has used your identity to run up debt in your name. That could come as a nasty surprise if you try to use or obtain credit for holiday shopping.

You can get a free copy of your credit reports from AnnualCreditReport.com. Normally, you can get one per year from each of the three major credit bureaus. But because of assistance measures put in place for COVID-19, you can get a free copy from each bureau every week through April 2021. You can also get a free Credit Report Card from Credit.com, which includes your Experian VantageScore 3.0 and regular updates on what is affecting your scores.

2. Create a Monthly Budget

Once you know everything you owe, sit down and take a look at your monthly budget. List all of your regular expenses and decide where you can cut to help put more money toward your debt.

Use tools such as credit card debt calculators to determine how much you should pay every month on debt to reduce it in a certain amount of time. This helps you understand how much money you should be putting toward debt to pay it off before the holidays arrive.

3. Choose a Method for Paying Down Debt

Every situation is different, so the way you pay down debt depends on what might work best for your situation. Here are a few tips to consider.

Go with a Basic Snowball Method

The Snowball Method means you line up all your debts by total balance. You make a minimum payment on each while throwing anything extra at the debt with the smallest balance. You do so because you’ll be able to pay off that one the fastest.

Once you pay off the first debt, you take everything you were putting on it each month and add it to what you’re paying on the next-smallest balance. As you pay off each debt, you have more money to put toward the next one. By the time you reach the biggest debt, you can pay it off fairly quickly.

Make Use of Balance Transfer Cards

If it’s not realistic to pay down all of your debt before the holidays, you might want to concentrate on getting your finances in order and ensuring your debt costs as little as possible. One way to do that is to make use of a balance transfer card.

These cards let you transfer existing high-interest credit card debt to a card that has 0% APR for a period of time. If you can pay the debt off within that time—which can range from a year to two years on average—you can save a lot in interest.

Consider Taking Out a Personal Loan to Consolidate Debt

If you’re dealing with high-interest debt or payments that simply add up to more than you can handle every month, you might consider a personal loan to consolidate debt. A debt consolidation loan doesn’t get rid of your debt, but it might make it more manageable. You might end up with a single monthly payment that reduces how much you must worry about during the holidays.

#animation-wrapper max-width: 450px; margin: 0 auto; width: auto; height: 600px; font-family: ProximaNova-Regular, Arial, sans-serif #animation-wrapper .box background-color: #f5f5f5; color: #000; text-align: center; font-family: ProximaNova-Regular, Arial, sans-serif; height: 130px; padding-top: 10px .content .box p margin: 0 0 .box .btn-primary color: #fff; background-color: #ff7f00; margin: 10px 0 .chat ul margin: 0; padding: 0; list-style: none .message-left .message-time display: block; font-size: 12px; text-align: left; padding-left: 30px; padding-top: 4px; color: #ccc; font-family: Courier .message-right .message-time display: block; font-size: 12px; text-align: right; padding-right: 20px; padding-top: 4px; color: #ccc; font-family: Courier .message-left text-align: left; margin-bottom: 8px !important; .message-left .message-text max-width: 80%; display: inline-block; background: #79af3e; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; font-weight: 100; line-height: 1.5em .message-right text-align: right; margin-bottom: 8px !important; .message-right .message-text line-height: 1.5em; display: inline-block; background: #2e5e89; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; line-height: 1.5em; font-weight: 100; text-align: left .chat background: #fff; margin: 0; border-radius: 0 .chat-container height: 450px; padding: 5px 15px; overflow: hidden .spinme-right display: inline-block; padding: 15px 20px; font-size: 14px; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 .spinme-left display: inline-block; padding: 15px 20px; font-size: 14px; color: #ccc; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 .spinner margin: 0; width: 30px; text-align: center .spinner>div width: 10px; height: 10px; border-radius: 100%; display: inline-block; -webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both; animation: sk-bouncedelay 1.4s infinite ease-in-out both; background: #000 .spinner .bounce1 -webkit-animation-delay: -.32s; animation-delay: -.32s .spinner .bounce2 -webkit-animation-delay: -.16s; animation-delay: -.16s @-webkit-keyframes sk-bouncedelay 0%, 100%, 80% -webkit-transform: scale(0) 40% -webkit-transform: scale(1) @keyframes sk-bouncedelay 0%, 100%, 80% -webkit-transform: scale(0); transform: scale(0) 40% -webkit-transform: scale(1); transform: scale(1) .ad-container padding: 15px 30px; background-color: #fff; max-width: 690px; box-shadow: 1px 1px 4px #888; margin: 20px auto .ad padding: 10px 6px; max-width: 630px .ad-title font-size: 20px; color: #07b; line-height: 22px; margin-bottom: 6px; letter-spacing: -.32px .ad-link line-height: 18px; padding-left: 26px; position: relative .ad-link::before content: ‘Ad’; color: #006621; font-size: 10px; width: 21px; line-height: 12px; padding: 2px 0; text-align: center; border: 1px solid #006621; border-radius: 4px; box-sizing: border-box; display: inline-block; position: absolute; left: 0 .ad-link a color: #006621; text-decoration: none; font-size: 14px; line-height: 14px .ad-copy color: #000; font-size: 14px; line-height: 18px; letter-spacing: -.34px; margin-top: 6px; display: inline-block .ad .breaker font-size: 0 .box .box-desc font-family: ProximaNova-Bold, Arial, sans-serif; font-size: 17px; font-weight: 600 .btn display: inline-block; margin-bottom: 0; font-weight: 400; text-align: center; vertical-align: middle; touch-action: manipulation; cursor: pointer; background-image: none; border: 1px solid transparent; white-space: nowrap; padding: 6px 12px; font-size: 14px; line-height: 1.428571429; border-radius: 4px; -webkit-user-select: none; -moz-user-select: none; -ms-user-select: none; user-select: none; font-family: ProximaNova-Semibold, Arial, sans-serif; text-decoration: none .btn-group-lg>.btn, .btn-lg padding: 10px 16px; font-size: 18px; line-height: 1.3333333; border-radius: 6px #ad-4 font-family: Arial, sans-serif; background-color: #fff #ad-4 .ad-title color: #2130ab #animation-wrapper .cta-amone background: #79af3e; color: #fff; width: 155px; height: 41px; font-family: ProximaNova-Semibold, Arial, sans-serif; font-size: 14px; margin: 10px auto 7px auto #animation-wrapper .amone-logo display: block; margin: 0 auto @media (max-width:500px) .ad padding: 20px 18px; max-width: 630px

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4. Set a Holiday Budget and Stick to It

Once you have a plan for dealing with your existing debt, ensure you don’t re-create it with your holiday spending this year. Spend smart during the holidays. Make a list of what you want to do, the meals and treats you want to make, and the gifts you want to buy.

Assign everything on your list a dollar amount, and then take another look. Can you realistically afford all of this? You might need to make some priority decisions and reduce your list to fit a holiday budget you can afford without racking up too much debt this season.

5. Use Credit to Your Advantage

If you don’t let debt ruin the holidays, you might be able to use credit as a financial tool to your advantage as you shop or participate in festivities. The right rewards credit cards help you earn points or miles as you spend—and you can earn even more points for spending in certain categories.

For example, you might have a cash-back credit card that gives you more cash back in the final quarter of the year on travel or grocery shopping. You could use that card to fund expenses as you go visit relatives or prepare a feast when they come to your home.

If you spend on your card only what you were going to spend with cash anyway, you can pay your balances off immediately. That means you get those rewards without any interest cost for doing so. If you don’t have a rewards credit card, you can find options to consider in the Credit.com credit card marketplace. Here are a couple to start with.

Blue Cash Preferred Card from American Express

Blue Cash Preferred® Card from American Express

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on American Express’s secure website

Card Details
Intro Apr:
0% for 12 months on purchases

Ongoing Apr:
13.99%-23.99% Variable

Balance Transfer:

Annual Fee:

Credit Needed:
Excellent-Good

Snapshot of Card Features
  • Earn a $250 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%).
  • 6% Cash Back on select U.S. streaming subscriptions.
  • 3% Cash Back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more).
  • 1% Cash Back on other purchases.
  • Low intro APR: 0% for 12 months on purchases from the date of account opening, then a variable rate, 13.99% to 23.99%.
  • Plan It® gives the option to select purchases of $100 or more to split up into monthly payments with a fixed fee.
  • Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit.
  • $95 Annual Fee.
  • Terms Apply.

Card Details +

This card gives you 6% cash back at U.S. supermarkets, up to $6,000 per year in purchases. You can also get 3% cash back at U.S. gas stations and transit, making it a potentially good card to use when you’re traveling. The Blue Cash Preferred® card allows you to earn a $250 statement credit after you spend $1,000 in purchases on your new card within the first 3 months.

Amalgamated Bank of Chicago Platinum Rewards Mastercard

Amalgamated Bank of Chicago Platinum Rewards Mastercard® Credit Card

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on Amalgamated Bank of Chicago’s secure website

Card Details
Intro Apr:
0% on Purchases for 12 months

Ongoing Apr:
12.90% – 22.90% Variable APR on purchases

Balance Transfer:
12.90% – 22.90% Variable APR on balance transfers

Annual Fee:

Credit Needed:

Snapshot of Card Features
  • 0% Intro APR on Purchases for 12 months; after that the variable APR will be 12.90% – 22.90% (V), based on your creditworthiness
  • Earn $150 Statement Credit after you spend $1,200 on purchases within the first 90 days from account opening
  • Earn 5x rewards on up to $1,500 in combined purchases each quarter in popular categories such as dining, groceries, travel, and automotive
  • No upper limit on the points you can accumulate, and since points never expire, you can save up for a big award!
  • Earn Points on Every Purchase! It’s simple: $1 = 1 Point
  • No Annual Fee or Foreign Transaction Fee
  • Select Your Rewards Your Way
  • No Foreign Transaction Fee

Card Details +

The Amalgamated Bank of Chicago Platinum Rewards Mastercard® allows you to earn 5X rewards up to $1,500 in combined purchases each quarter in popular categories. Categories include dining, groceries, fuel, travel, and other popular spending areas. If you’ll be spending in a certain category during the holidays, you could earn extra rewards points to redeem on travel or other purchases.

Reward Yourself

It’s never too early or too late to start planning financially for big seasons such as the holidays. If you’re ready to take a step toward that plan today, consider signing up for ExtraCredit. Reward It from ExtraCredit connects you with personalized offers and offers cashback rewards when you sign up and are approved for them.



Sign up now.

Source: credit.com