Q. Our goal is to purchase a home in the next year or two. Will charging all our holiday purchases increase or decrease our credit score?

A. The answer actually varies depending on your current credit report and credit scores. It depends on how much of your available credit you are currently using, how long of a credit history you have and whether or not you will pay your bills on time after you incur the debt.

Determining how you are going to pay for your holiday purchases it an important part of any holiday survival plan. If you are going to use credit you need to consider how it will affect your credit scores. The last thing you want is to face a holiday debt hangover on Jan. 1.

Charging the full credit limit of your credit card will lower your credit score. If you charge up to your credit limit you will want to pay this down as quickly as possible. In addition, you do not want to exceed your credit limit. Not only will this negatively impact your credit score, but you will incur additional fees.

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Opening numerous credit cards in a short period of time (in order to qualify for store discounts) can also lower your credit score. Too many accounts opened at once can be a signal that you are getting overextended and may be approaching debt problems. Closing too many accounts limits the amount of credit available to you. Your credit score is also based on the length of your credit accounts, so closing the accounts can end up affecting your score negatively.

To keep things simple if you are going to use credit, use one or two credit cards. This allows you to track your purchases. Do not charge up to your credit limit or exceed your credit limit. Pay off your credit card as soon as possible. If you are going to use different credit cards to qualify for different promotions, charge the item and then immediately pay the balance off.

Enjoy the holidays and start 2018 without holiday debt hangover.

Bonnie Spain is the executive director of Consumer Credit Counseling Service of the Black Hills, a United Way member agency. To contact her, email credit@cccsbh.com

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