Since March, the COVID-19 pandemic has damaged the finances of millions of Americans.
The economy is showing signs of recovery, but with many Americans still unemployed and needing to dive into their savings to cover basic living costs, the question is: How do you maintain your credit score? Read on for some answers.
• If you cannot pay, contact your lender as soon as possible. Timely payments are the biggest factor affecting your credit score. Many lenders have accepted emergency support, such as deferral or tolerance options that allow you to reduce or suspend payments for a specified period of time. If these terms expire soon, "you should call your lender to discuss what options are available," said Rod Griffin, senior director of consumer education and advocacy at credit reporting agency Experian.
• Look for ways to improve your credit score. Building credit can be difficult, especially if you have a limited credit history. Experian's free tool, Experian Boost, can help you increase your FICO score instantly by giving you credits for timely service, phone and streaming service payments.
Such alternative financial data, known as "consumer consent data", allows you to manage your data with confidence and get better credit. In fact, two out of three Experian Boost users see an increase in credit scores, with an average increase of 12 points. This is enough to make a significant difference when applying for a loan or any type of loan.
• Consider getting a balance transfer credit card or a credit card with an introductory offer. Taken responsibly, this has the potential to boost your credit score while giving you time to pay off your debts or perhaps getting a "welcome bonus" of hundreds of dollars. . If you're looking for personalized credit card options, tools like Experian CreditMatch can help you find the right card for your financial profile.
• Pay attention to your usage rate. Your credit score is based on your total balance-to-limit ratio (a.k.a. "usage rate"). Adding a new credit card increases your total available credit. As long as your total credit balance stays the same, you lower your usage rate, which can potentially increase your credit score. Be sure to transfer the balances to the low interest card and watch out for temporary low interest rates.
You should keep your usage below 30 percent on both general and individual accounts, any balance could result in lower points. Shooting for the highest credit score? “Keep your usage in the single digits, or better yet, pay off your credit card balance in full each month,” Griffin said.
• Fight scammers by checking your credit report regularly. There has been a huge jump in credit and debit card fraud attempts since the pandemic began; According to the Federal Trade Commission, consumers have lost more than $100 million to COVID-19-related fraud.
You can get free weekly credit reports from Experian, Equifax, and TransUnion until April 2021 by visiting Annual Credit Reports.com. Experian also offers a free credit monitoring service that includes real-time alerts, credit score tracking, and a report that's updated every 30 days.
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