While many of us are focused on the safety and wellbeing of loved ones right now, try to avoid putting your finances on the back burner. Take some time to learn how you can protect your credit during this time because financial mistakes made now can impact your finances and your credit score for years. Protect yourself and your financial goals by being proactive now.
Check Your Credit Reports
Earlier this month, the 3 credit bureaus agreed to allow consumers to access their free online credit reports on a weekly basis through April 2021. This is something you should take advantage of because previously you could only get your free credit reports once a year. During these challenging financial times, you should monitor your credit in case something unexpected gets reported. You can get your credit reports on AnnualCreditReport.com, which is authorized by federal law to provide your reports.
If you see any discrepancies, you should file a dispute with each bureau that has the information on the report. Cases of identity theft are on the rise right now, so be vigilant with your credit cards and other personal information and check your credit card statements and credit reports for any suspicious activity. For more info about getting your free online credit reports, read How Can I Get My Free Annual Credit Reports.
Avoid Missing Payments
Congress rejected a moratorium on recording missed and late payments on credit reports during the Coronavirus outbreak. This means that late or missed payments will still hurt your credit if they are reported to the credit bureaus. It depends on the creditor and their policies whether they will report missed payments or not. You should try to pay at least the minimum balance due on each credit account. Otherwise, if a missed payment is reported to the bureaus, your credit score could take a hit. Your payment history accounts for 35% of your FICO credit score, so you should make it a priority to make your payments on time.
Contact Creditors & Utility Companies
If you are struggling to make ends meet, you should reach out to creditors and utility companies to find out what options are available for people struggling financially due to Coronavirus. They may be accepting late payments without reporting them to credit bureaus or waiving late fees. Some lenders may even be suspending payments or interest for a period of time.
Keep Credit Card Spending To A Minimum
Your credit utilization accounts for 30% of your FICO credit score, so it’s best to avoid racking up credit card debt. Lenders like to see a credit utilization ratio below 30% - if your credit limit is $10,000 and you use $3,000 of your credit then your credit utilization ratio is 30%. This is not always possible, especially if your income has been impacted by Coronavirus, but you should be aware of the importance. The current FICO score uses a snapshot of your credit utilization, but the new scores will go back up to 2 years so this means you should be cautious about racking up credit card debt.
Whether you have been impacted financially by Coronavirus or you are simply trying to be cautious with your finances, you can find ways to cut expenses to reduce your spending and take some weight off your shoulders. Review your expenses for the last couple calendar months and look for recurring expenses, such as subscriptions that you can live without. You can even look for cheaper alternatives, such as cancelling your television services and getting a cheaper streaming service instead. To cut spending on food, you can cook meals at home and start shopping at discount stores with coupons. Depending on your financial situation, you may find that you are able to cut a lot of costs for the short-term to prevent building up debt or missing payments. Find other ways to cut costs by reading 9 Ways You're Losing Money Without Even Realizing It.
Your credit history sticks with you for years, so you should be aware of the impacts of late payments and credit card debt on your credit score as it could hurt your chances of being approved for a line of credit in the future. Keep your financial goals in mind.
It goes without saying that safety and health come first, but try your best to avoid sacrificing your credit during these difficult financial times.