The coronavirus pandemic has wreaked havoc on the American economy, and most people have been impacted. Even if you’re still doing alright, it’s a good idea to keep a watchful eye on your finances in turbulent times. In particular, pay close attention to your credit score.
You may not need good credit now since you’re probably putting off big purchases. However, a damaged credit score can take months to rebuild, and a good score can change a lot in your financial life. It’s crucial to keep your score in good shape, especially in uncertain times like these. Here’s how you can protect your credit score during the pandemic.
Stay on Top of Your Score
The first two tips are evergreen rules, but matter now more than ever. First thing’s first, you should check your credit score as often as you can. Ordinarily, this could hurt your score, but the three major credit bureaus are offering free weekly credit reports during the pandemic. Now you can keep track of your credit score regularly, which is the first step to protecting your score. Knowledge is power, and knowing what range your credit score falls into is crucial.
Understand What Goes Into Your Score
In addition to knowing what your score is, you should be aware of what actually makes your score. These are the factors in your credit score:
- Payment history
- Credit utilization ratio
- Length of credit history
- New accounts
- Credit mix
Now that you know what your score is and why it moves, you’re better equipped to protect it. In addition, knowing what doesn’t impact your score can be just as important, since you’ll have a better sense of what to prioritize. Employment status, for instance, has no direct bearing on your score.
Know the New Guidelines
Just as the pandemic itself has shaken up life, the federal response has attempted to smooth those issues. The CARES Act includes some new, temporary protections that you can utilize to keep your credit score from being damaged.
If you made an agreement with a creditor after January 31 to defer or lessen payments, for example, your credit score will only be hurt if you break that agreement. If you planned to not make regular payments on a debt and the creditor agreed, you can remain in forbearance without issue until the national emergency ends. Knowing this leads to the next, and potentially the most important point.
Talk to Creditors
If you have any outstanding debts, they can do serious harm to your credit score, especially if you’re struggling to make payments. It’s critical that you reach out to creditors and discuss your situation. Unlike past financial disasters, most creditors are aware that things should rebound and are willing to work with you to figure out a plan.
At the end of the day, creditors want to get their money. If you cannot pay now, they’re willing to figure out a way for you to pay later without destroying your credit. All you have to do is call and talk things through. It can be intimidating, but more than ever creditors are willing to work for solutions.
Try to Boost Your Score
The best defense is a good offense, so the best way to really protect your credit score is to actively try to improve it. Luckily, there are plenty of ways to do that and we put together a list of some of the best strategies. Some tactics take a bit of time but can have a serious payoff. For instance, using multiple credit cards responsibly over the course of a month can show boost your score.
There’s also an immediate shot in the arm you can give your score: Experian Boost. Provided by Experian, one of the 3 major credit bureaus, the “Boost” improves your credit score by adding positive payment history from utility and telecom bills to your Experian credit file. Those payments usually aren’t considered part of your credit history, but they’re debts you pay off regularly like any other. As long as you make your electric, gas, water, TV, and phone payments regularly, using Experian Boost can result in an immediate credit score spike.