Could My Credit Impact My Travel Plans?
Since the end of the pandemic, people have been spending much more time and resources on travel. This comes as no surprise, as many realized how travel can positively impact physical and mental well-being. In fact, travel spending totaled $93 billion in February 2023 – 9% above 2022 levels. Statistics from Earth Web also revealed that 74% of millennials reported having a budget as a leading factor for making travel decisions. So despite the travel industry boom, not everyone can confidently participate in it.
If you’re qualified, traveling via credit or loan is always an option. However, this depends on your overall credit score, which you need to understand to plan your travels seamlessly. Keep reading to know more.
State of the Travel Industry
The current economic situation could result in a shift in travel preferences – for instance, local visits to beaches, national parks, and other natural destinations might be prioritized. For overseas travel, countries in Southeast Asia still offer some of the cheapest travel destinations around the world. But because most areas are experiencing high inflation rates, the “buy now, pay later” lending model has become a popular way to cover one’s expenses.
Credit Score Basics
If you plan on getting a travel credit card or loan, financial institutions will need to check your credit history before they give you their approval. Your credit score will range from 300 to 850 depending on factors such as your number of active accounts, debts, and repayment habits, among others. With an optimal to excellent travel score, you can qualify for travel benefits, discounts, cashback, and even exclusive airport lounges. A higher score will also likely equal more travel insurance coverage.
Credit Checks and Travel
Upgraded Points explains that hard and soft credit checks are performed mainly to assess your financial standing. The difference between both lies in their consequence on your credit score. Hard checks are for any travel, hotel, or flight credit card application. Although these can reduce your score by up to five points, the effect is not as palpable if you have an already good standing. Soft checks, on the other hand, are often performed to check for reward eligibility, and will not affect your score whatsoever.
Keeping Your Credit Score Healthy
Having a good credit score definitely comes with a lot of pros. But U.S. News reminds readers to be wary of the interest charges that can be added on top of the cost of your vacation. Furthermore, purchases made on credit during your trip can quickly pile up and cause you too much stress in the long run. The best route is to save up money and budget finances well so you don’t have to rely completely on loans and credit in order to get to your dream destinations.
Other Money-Saving Tips
If you want to raise your credit score in preparation for a trip, be mindful of your financial applications. Consecutive credit checks can lower your score significantly, so be sure to pace them out. Pay off debts and tend to your bills responsibly to raise your score. During your trip, we recommend using applications like GasBuddy and XE Currency to help you save even more money for gas and exchange rates. These are also very useful for long-term travels, digital nomads, and work-from-anywhere travelers.
Here at World Wild Hearts, we encourage ‘slow travel’ and authentic experiences. You don’t have to prioritize the most Instagrammable destinations or the tourist hotspots in order to enjoy a vacation. There are lots of walkable cities that have free activities and amenities for travelers if you just do your research. Yahoo Finance also suggests making good use of points, miles, and rewards if you’re looking to mobilize your credit score. If saved up correctly, it can go a lot further than cash – you’d be surprised!