Protecting your credit score might be the farthest thing on your mind right now but it is still an important part of your finances. If it was difficult in the past, it certainly is a lot more challenging now with the pandemic affecting a lot of industries and businesses in the country. As a result, you could be having a difficult time managing your finances.
The health crisis could force you to make do with a tight household budget as your income could have been impacted by the health crisis. When this happens, there is no denying the fact that your credit score could be the least of your concern. You will focus on your ability to provide for the basic needs of your family.
If you had to choose between maxing out your credit cards and buying food for your family, you will grab the groceries and worry about the payments on your card after. That will be an easy decision for you at this time. If it was between missing a payment due date on your card payment and paying rent, protecting your credit score will take the backseat.
The health crisis has impacted American households in a number of ways. But one common dilemma people face is having to make financial decisions which can have a negative impact on their credit score. Although priorities are quite clear when it comes to what you need to spend on, there are ways to help you come out with your credit score intact.
Protecting your credit score by monitoring your report
One of the barriers in trying to get ahead of your credit score is the cost that comes with getting your credit report. But you do not always have to spend on one. The Federal Trade Commission shares how the FCRA gives consumers free a copy of their credit report. This gives consumers one free copy every 12 months from major credit reporting bureaus.
At this time when money is tight, it would be a good idea to take advantage of this benefit. You still have the option to pay for your copies but this free report can come in handy. If you spread it out over the three bureaus, you can essentially get a copy once every four months. This can help you understand and review your financial activity.
Though credit reporting bureaus will have variances in how they compute for your score, most of the components that go into that computation are fairly the same. This allows you the chance to be able to focus on the same credit score components which can have a positive impact on your score across several reporting bureau numbers.
Report inaccuracies as soon as you find them
If your goal is protecting your credit score during this pandemic, you need to be proactive in reporting credit report inaccuracies. For one, it can help you catch identity theft. Even with the health crisis, a lot of scammers are trying to use that to their advantage. The FTC warns about COVID19 scams people need to avoid.
This can be anything from illegal robocalls offering insurance and even offers for test kits and vaccinations. There are even scammers who will make it seem that you are getting official emails from WHO asking you to click a link. Most of these are meant to mislead you into giving up personal information. Once they get a hold of this, they can start charging expenses on your card or opening new lines of credit under your name.
This is why you need to check your credit report. Once you see charges on your credit which you did not make, you have to report it immediately. One thing to remember is that a lot of scammers will begin with a small insignificant amount. Once they are successful with that, then they will begin to charge larger amounts on your card.
Make the minimum payment at the very least
One of the biggest components of your credit score computation is on-time payment. But the health crisis could be forcing you to miss a lot of payments as you try to make do with tight finances. One of the ways to look into when you are protecting your credit score is to make the minimum payments. This is the middle ground between staying current on your payments but softening the blow to your finances.
One benefit you get from this is that you stay current on your payments. It is challenging enough to meet all your payments and getting behind some of them will only make matters worst. If you miss a payment on a secured loan, you put your asset in jeopardy. If it is unsecured like your credit cards, your lender could start adding penalties and charges on your account. This will make it a lot more difficult for you to meet your payments.
Making the minimum payment on your account also takes away a lot of financial stress on your budget. Yes, it goes against paying your bill in full but the impact of the health crisis has on your finances makes you rethink your strategy. Paying your card statement in full will do your credit score wonders but will put your budget in jeopardy.
Make budget adjustments where necessary
Protecting your credit score also means making adjustments to your household budget. You need your household budget to help you make informed financial decisions. And with the health crisis still affecting a lot of people, you need your budget now more than ever. When finances get tight, you need to make sure that you are able to pivot towards your priorities.
Adjusting your budget means you need to have a clear cut vision of your priorities in life. This is important since a lot could have changed when the pandemic hit. Suddenly, that car you have been saving up for seems irrelevant when you start to think about rent or mortgage payment. Your priorities can shift and when this happens, your budget needs to be able to adapt to it.
Communicate with your lenders
There is no denying the fact that the health crisis has impacted not only industries and businesses but even your finances as well. As a result, you could be behind on some payment and you are not alone. Business Insider shares that about 14.7 million accounts were in financial hardship in April. This just goes to show that people are struggling with their payments.
One of the best things to do is reach out to your lenders. There are a lot of then who are putting programs in place to help their clients deal with financial hardship. It could help you manage your payments, get payment extensions, or some elbow room to help you meet your financial obligations while keeping your score intact.
Protecting your credit score may not be a priority but there are ways to help you accomplish this while making changes to your priorities and budget. If you are able to take care of your score, you gain access to a number of financial benefits you might need down the line.