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Building Credit After the Holidays

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After the Holidays: Facing Financial Reality

The holidays are a time for joy and celebration, but for many, they come with a financial hangover. If you’re staring at a larger-than-expected credit card bill or feeling the weight of overspending, you’re not alone. I’ve been there, and I know how overwhelming it can feel to face the aftermath of a few weeks of indulgence.

The good news? Holiday spending doesn’t have to derail your finances for long. With the right strategies, you can take control, rebuild your credit, and set yourself up for a more secure financial future. The key is to use this as an opportunity to assess your spending, learn from it, and move forward with a plan to regain financial control.

Understanding Where Your Finances Stand

The first step toward rebuilding your credit after the holidays is to gain a clear understanding of your financial situation. This means reviewing all your credit card and bank statements for any holiday-related purchases. Sometimes, it can feel overwhelming to face the reality of what you’ve spent, but taking a deep breath and doing this assessment will give you the clarity you need to move forward.

Begin by writing down your total balances, minimum payments, and interest rates for each account. Check if you have any outstanding balances that carry high-interest rates. If your credit card utilization has spiked during the holidays, this could be affecting your credit score. When your credit card balances are near or at your credit limit, it negatively impacts your credit utilization rate, which is one of the most significant factors in your credit score.

Once you have a clear picture, it’s time to prioritize your debts. Pay attention to which debts have the highest interest rates. These debts should be tackled first because they cost you more over time. If you have any bills that are approaching their due dates, tackle those immediately to avoid incurring late fees or causing further damage to your credit score.

The Role of a Post-Holiday Budget

Creating a post-holiday budget is crucial to getting your finances back on track. A budget allows you to manage your expenses more effectively and avoid future spending pitfalls. The best place to start is by listing all your essential expenses—think rent, utilities, groceries, and transportation. These are your non-negotiables.

Next, account for any holiday debt payments. Ideally, you should set aside a portion of your income or any bonuses you receive to pay down these debts. Rather than just covering the minimum payments, try to pay more than the minimum whenever possible to reduce your debt faster. The sooner you can reduce your credit card balances, the better it will be for your credit score in the long run.

Additionally, it’s essential to allocate some funds toward savings. It might feel counterintuitive to save while you’re tackling debt, but having an emergency fund in place will prevent you from having to rely on credit cards for unexpected expenses in the future.

Automating your payments is another excellent strategy. Set up auto-payments for your bills to avoid missed payments. Timely payments are the most significant factor influencing your credit score, and staying on top of due dates will help you build a positive credit history over time.

Building Momentum with Smart Repayment Strategies

Paying off holiday debt can feel like a daunting task, but breaking it down into manageable steps can make it much easier. Two popular strategies for paying down debt are the snowball method and the avalanche method.

  • The snowball method involves focusing on paying off your smallest debts first, regardless of interest rates. This strategy can build momentum quickly, as you see the balances decrease. It’s motivating to knock out smaller debts and can give you the confidence to tackle larger ones.
  • The avalanche method focuses on paying off debts with the highest interest rates first. This strategy saves you more money in the long run because you’re reducing the debt that costs you the most. While it may take longer to see individual debts disappear, it will ultimately help you get out of debt faster and pay less in interest.

Another strategy to consider is a balance transfer. If you’re carrying debt on a high-interest card, transferring the balance to a card with a 0% APR introductory offer can help you save money on interest, giving you more room to pay down the principal. But be careful to pay off the balance before the promotional period ends. Otherwise, you’ll be hit with interest charges on the remaining balance.

If you have multiple debts with high interest rates, a debt consolidation loan might be an option. This combines multiple debts into one loan with a potentially lower interest rate, making it easier to manage payments. Just make sure you’re not racking up more credit card debt as you pay off the loan.

Avoiding Common Post-Holiday Credit Pitfalls

As you work to rebuild your credit, it’s essential to avoid common mistakes that could set you back. One of the biggest pitfalls is missing payments. Even one missed payment can cause your credit score to drop significantly. Setting up automatic payments for bills can ensure you never forget a due date. If you’re unable to make the full payment, make at least the minimum payment to avoid late fees and negative marks on your credit report.

Another mistake is applying for too many new credit cards or loans. Each time you apply for credit, the lender performs a hard inquiry on your credit report. Multiple hard inquiries within a short period can damage your credit score. It might be tempting to apply for new credit cards to ease your financial situation, but it’s better to focus on managing the credit you already have before seeking new lines of credit.

Lastly, don’t neglect savings. While it’s important to pay down debt, having an emergency fund in place can prevent you from relying on credit in the future. Even if you start with small contributions, setting money aside for emergencies will help you avoid the temptation to use credit cards when unexpected expenses arise.

Adopting Habits That Strengthen Your Credit

Once you’ve made a dent in your holiday debt, it’s time to focus on maintaining strong credit habits. Consistency is key to rebuilding and maintaining a healthy credit score. One of the most effective ways to do this is by monitoring your credit report regularly. You can check your credit report for free once a year at AnnualCreditReport.com, and it’s important to stay on top of any errors or fraudulent activity.

Another essential habit is keeping your credit utilization low. Aim to keep your balance under 30% of your credit limit. If you’re using more than 30%, it may signal to lenders that you’re overextended. Paying off your balance in full each month is ideal, but if that’s not possible, try to make larger payments to keep your utilization under control.

If your credit score has taken a significant hit and you’re struggling to rebuild, consider applying for a secured credit card. With a secured card, you deposit money upfront as collateral, and your responsible use of the card helps you build or rebuild your credit. These cards are great for those with poor or no credit history.

Resources That Can Help You Succeed

Rebuilding credit doesn’t have to be a solo effort. Many financial resources are available to help you along the way. Nonprofit credit counseling services, like MoneyFit.org, offer free or low-cost consultations to help you understand your financial situation and create a plan for getting back on track.

Credit builder loans are another excellent resource. These loans allow you to build your credit by making small monthly payments, which are reported to credit bureaus. In addition to improving your credit, you’ll also have a savings component at the end of the loan term.

Finally, make use of budgeting apps and calculators. These tools help you track spending, set goals, and stay on top of your financial plan. A little extra organization can make a huge difference in the long run.

Turning Holiday Spending Into a Financial Opportunity

The aftermath of holiday spending may feel daunting, but it’s also an opportunity to reset your financial habits and strengthen your credit. By understanding where you stand, creating a post-holiday budget, avoiding common mistakes, and adopting smart credit habits, you can turn this temporary setback into a stepping stone toward a stronger financial future.

About the Author

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Rick Munster

Rick Munster is a personal finance expert and author with over 21 years of experience in the credit counseling industry. He currently serves on the board of directors for the Financial Counseling Association of America and has written over 200 articles on personal finance. Rick's expertise has been recognized by several prominent online organizations, which have quoted him on issues related to credit counseling, debt management, and financial education. With more than 20 years of experience at Money Fit, a non-profit credit counseling organization, Rick has established himself as a trusted authority in the field of personal finance.
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6213 N. Cloverdale Rd, Suite 130, Boise, ID 83713
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You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
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Your credit report will be obtained from a credit reporting agency chosen by DRS. You understand and agree that DRS intends to use the credit report evaluate your financial readiness to purchase or rent a home and/or to engage in post-purchase counseling activities and not to grant credit. You understand you may ask any questions pertaining to your credit report. However, while DRS will review the information with you, the company is not able to furnish you with a copy of your credit profile. You hereby authorize DRS to share your information from your credit report and any information that you provided (including any computations and assessments produced) with the entities listed below to help DRS determine your viable financial options.
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Entities such as mortgage lenders and/or counseling agencies may contact your DRS counselor to evaluate the options for which you may be eligible. In connection with such evaluation, you authorize the credit reporting and/or financial agencies to release information and cooperate with your DRS counselor. No information will be discussed about you with entities not directly involved in your efforts to improve your housing situation. You hereby authorize the release of your information to program monitoring organizations of DRS, including but not limited to, Federal, State, and nonprofit partners for program review, monitoring, auditing, research, and/or oversight purposes. In addition, you authorize DRS to have your credit report pulled two additional times to conduct program evaluations. You also agree to keep DRS informed of any changes in address, telephone number, job status, marital status, or other conditions which may affect your eligibility for a program you have applied for or a counseling service that you are seeking. Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Client Privacy, Data Security, and Client Rights Policy

NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
  8. Other: You have the right to be treated with respect by our staff, and we expect the same from you in return. We encourage you to always ask questions if something is not clear. We also encouraged you to express your thoughts and advocate throughout our services.

You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

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NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

Program Disclosure Form

Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.
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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Close

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).