Credit Card Use and Repayment Time to Increase in 2012
Approximately half plan to use credit cards exclusively for all their holiday purchases, while nearly a third will reserve credit cards only for more expensive gifts. However, 80 percent of consumers will use a fraction of their credit limit – less than 25 percent – which tends to bode well for a consumer's FICO Score. "Keeping revolving credit low can have a positive impact on an individual's credit score, since this accounts for almost 30 percent of a typical score," said Anthony Sprauve, spokesperson for myFICO.
Nearly a quarter of respondents will need more than three months to pay off their 2012 holiday expenses, compared to 18 percent in a similar survey conducted in 2010.
"While consumers are using credit cards more this year, it's important not to get carried away," said Sprauve. "Payment history is the most influential factor when determining an individual's FICO Score; therefore it's critical to pay at least the minimum amount on all credit cards every billing cycle."
Concern about Fraud and Credit Score Impact
According to the myFICO holiday spending survey, about 14 percent of respondents indicated they are concerned about the effect of holiday spending on their FICO Score. Additionally, 62 percent are concerned about fraud or identity theft during the holidays; surprisingly, 20 percent of these individuals take no steps to protect themselves.
"Tools such as Score Watch offered by myFICO can be used by an individual to detect important changes to that individual's credit report, allowing them to become aware of fraudulent charges or inaccuracies, so they can take immediate corrective action to minimize negative impacts to their FICO Score," said Sprauve. "Regularly monitoring your bank statement and credit report for errors can be instrumental for identifying fraudulent charges and maintaining an accurate credit report."
myFICO is the consumer division of FICO, the company that invented the FICO® Score, a credit risk score which serves as a de facto credit score used by the vast majority of lenders in the United States. myFICO offers informative free credit educational information that helps people understand actions they can take to achieve and protect their overall financial health. www.myfico.com
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