As parents, you are well aware that back to school shopping can seriously impact your financial situation. Overspending on school supplies and clothes could easily result in a damaged credit profile as well.
Using credit cards for your back to school shopping can be very helpful, allowing you to purchase the necessities for your children in the upcoming school year. However, be careful about racking up high balances as doing so will hurt your credit utilization ratio. This ratio is based on the amount of debt you are carrying vs. how much revolving credit is available to you, it is the second most important aspect of the FICO formula, accounting for 30% of your FICO score. If your credit utilization ratio is too high, it will imply that you may be overextending your finances, making you appear as a risk to lenders.
Before you start shopping, you will want to know how much debt you are carrying on your credit cards, especially if you are planning to apply for any lending opportunities in the near future. You can see what your balances and limits are by pulling your credit and examining your open revolving accounts. Pay down any cards that are already getting close to their limit as soon as you can, as it is certainly causing your credit score to suffer.
Stick to your budget to avoid a revolving balance and paying interest on your back to school purchases. A helpful trick to manage this is to spread out your school spending. Buy clothing when it goes on sale if you can, and for supplies, keep an eye on the adds as certain items are often on a rotating sale.
If at all possible, pay cash, and if not, make sure to keep an eye on your balances and make your payments on time.
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