It’s that time of year again and I have to issue this warning…

You may have already heard the holiday music. Well Beware, I call it retail store seduction. Better know as retail store credit cards! During the holiday season many stores are going to seduce you into applying for a retail store credit card. They make it sound so attractive, “Simply sign here and You’ll save 15 percent or don’t pay a cent for 90 days, or longer

They may even offer you a free gift, well don’t do it!

Here’s the problem, retail store credit cards can hurt your credit score.

Guess what, that credit card comes with a credit inquiry. You just added a credit inquiry to your credit report.

And as I’ve said before, credit inquiries count for 10 percent of your credit score, so your score just dropped a few points.

Not only that, the bigger ticket items that offer deals like, no payment for say a year, can hurt your credit score even more.

Here’s why, it’s called credit utilization and it counts for up to 20% of your credit score.

If that furniture costs $2000 and you don’t pay for a year, guess what, that’s a $2,000 dollar balance on a card that has a $2000 dollar credit limit. That’s deemed, 100% credit utilization. In other words, for a whole year, to the credit bureau, it looks as though you can’t afford to pay it down and instead are carrying the full balance.

The credit bureau doesn’t know this is a special offer that actually doesn’t require any payments for a whole year.

To the scoring system, it appears as though you have charged all of the available credit on that card.

Mark Fidgett is a Vancouver mortgage broker and the driver behind www.NotaPennyDown.com

604-273-2002

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www.notapennydown.com

P.S. Who’s the next person you know who wants to save thousands off their mortgage? Be sure to give me a call so we can help them! 604-273-2002

Check out the video “Credit Warning with Vancouver mortgage broker Mark Fidgett”