Protecting your credit

3 things that could impact your credit in 2024

Getting ahead of surprises will go a long way in protecting your credit. Here are some things to look out for that could impact your credit in the new year.

1 Holiday debt Holiday purchases could follow you for months. Payment history is the biggest factor influencing your credit scores. If you’re carrying debt, make at least the minimum payments on your cards to keep your payment history intact and shield your scores. But paying a higher amount, if you’re able to, is better for your credit utilization — another major factor in score calculations. Using too much of available credit can make you appear risky to lenders.

To prevent bookending the year with debt, start planning 2024 holiday spending now, says Heath Carelock, a financial counselor in Prince George’s County, Maryland.

Setting spending limits for gifts, making lists and being honest with loved ones about your situation are strategies Carelock recommends.

2 Credit card delinquencies Debt is surging outside of holiday spending, too. Debt balances of all types grew by $228 billion in the third quarter of 2023, according to a report from the Federal Reserve Bank of New York.

If your credit card account becomes delinquent, usually when it’s 30 days or more past due, pay the bill as soon as possible. The later a payment gets, the more damage it does.

Negative marks may hinder your ability to open new lines of credit or secure desirable interest rates.

Try calling your card issuer or writing a goodwill letter to ask if it will remove the missed payment from your reports.

3 Student loans Federal student loans started accruing interest again in September 2023, and payments resumed in October. Making payments after a three-and-a-half-year-long pause has put pressure on borrowers’ finances.

The Education Department established a 12-month “on-ramp” period to help those who might be struggling with student loan bills protect their credit. During this period — which lasts through Sept. 30, 2024 — missed payments won’t be considered delinquent, go into default or be reported to credit bureaus and debt collection agencies.

Still, skipping payments is risky. Interest will keep accruing and your balance will rise. If you’re able to make loan payments during the on-ramp period, it’s best to do so. payment on a house or build a healthy emergency fund. Once you’ve nailed down your goals, you can determine how much money you’ll need, then set a timeline for saving it.

This article was provided to The Associated Press by the personal finance website NerdWallet. Want to suggest a personal finance topic that Quick Fix can address? Email apmoney@ap.org