Protect your credit score amidst the pandemic

Building a compact financial record requires adherence to three simple rules, minimising debts, spending only as you can manage to pay for, and saving money. With the coronavirus pandemic’s onset, the resulting sharp economic downturn has made it difficult to follow these rules. The pandemic forced lots of individuals to turn to credit companies to borrow. Other people were forced to default on their loans owing to the economic crisis caused. This has resulted in a majority of individuals having a negative credit score. This article seeks to offer some tips that will help protect your credit score during the pandemic

Before getting into the tips, it is essential first to understand what a credit score is. It refers to a number that depicts an individuals or a borrower’s creditworthiness. Typically high credit scores fetch lower interest rates and better loan deals. Some factors that influence a person’s credit score include debt levels, number of open accounts, and repayment history.

Tip to protect your credit score during the pandemic

  • Minimise using your credit card
    The credit card may look like your only option during this period; however, you should be very careful on the amount of credit you are using. Typically using over 30% of your accessible credit will lower your score. For example, if you have a $10,000 limit, ensure that in all your credit cards, you utilise less than $3000. Using more than this amount will decrease your score.

  • Communicate with creditors
    Everyone, including creditors, is aware of the prevalent financial hardships brought by the Coronavirus pandemic. Some creditors have responded to this hardships and have offered various reliefs. Stay in touch with creditors and be candid with them about your present financial situation. By explaining your financial situation with creditors, they may for the moment lower the amount you pay, lower interest rates or even suspend your payments for a particular duration of time. At times creditors can place your loans in forbearance or deferment, and you don’t have to make payments for the loan if you are struggling financially. You will also not be reported to credit bureaus for late payments
  • Ensure that you are vigilant and protects your identity
    Scams that related to identity theft often spike when there’s a crisis. It is thus essential that you ensure that you keep your personal information safe and protected during the pandemic. If you suspect that identity theft has occurred, you can always contact your financial institution who will put up measures to prevent persons from gaining access to your personal information and using it to apply for credit using your name.

  • Ensure that you regularly check on your credit

Always ensure your credit reports are correct, especially in times of a pandemic. This way, you will detect any potentially fraudulent activity on your credit reports and respond to it before it can cause damage. Visit credit bureaus and have a look at your credit reports.

  • Take advantage of ways that are available to boost your score

Certain credit evaluation agencies have programs which help in boosting their client’s score. By making specific payment, for example, mobile phone payments, certain credit evaluation agencies will add on your positive credit score. Ensure that you use such available resources and tools to boost your credit history. This you will come out of the crisis stronger financially.

  • Know what makes an impact on your score
    Knowing what makes a difference on your credit score will help keep it in check during the pandemic. For example, being jobless will not affect your credit score; however, failing to make payment will negatively impact your credit score. Generally, late payments aren’t reported immediately to credit agencies. Instead, it takes about a whole billing cycle. With such information, you can plan how you’ll go about your bills to ensure your credit score stays in the right directions.

  • Prioritise your payments.
    Prioritising your payments amidst a pandemic will help defend your credit score. If you’ve got several loans, try clearing the loans with high-interest rates first as they have the biggest impact on your credit score. If you have had a substantial loss of income, ensure that you place your emphasis on clearing the debts with the highest interests then proceeds to those with lower rates of interest. This will help keep your credit score positive.

In conclusion, with the onset of the pandemic, most individuals were adversely impacted, from layoffs to total loss of Jobs, most people found themselves without a source of income. However, with the tips discussed above tips, you can still keep your credit score in check. Another essential tip is ensuring that you only borrow from reputable institutions. Reviews sites such as UKCollectedReviews can help identify reputable borrowing platforms.