Avoiding COVID-19 Credit Chaos

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Avoiding COVID-19 Credit Chaos

(DailyProsper.com) – Living through a pandemic can be stressful and uncertain, but it’s still important to retain control of your finances. This starts with paying close attention to your credit. If you’re experiencing a lack of consistent income flow, it can be easy to skip a payment or two. This ultimately affects your credit score. Here are a few ways you can protect your credit during COVID-19.

Prioritize Your Debt

When it comes to keeping your FICO score in check during tough financial times, it’s important to prioritize your debt, says US News. It’s important to put utilities and basic necessities like gas and food first, but you also need to pay the following on time:

  • Your mortgage or rent payment
  • Auto loan or lease payment
  • Revolving credit card accounts

These are the main types of accounts that are reported to the big three credit agencies, TransUnion, Equifax and Experian, and will ultimately cause your credit score to fluctuate. If you have other credit and debt obligations, try to work out an extension or payment arrangement with each personally.

Consider Extending Your Credit Line

Taking on new debt is rarely a good move, but if you’re desperate to make ends meet and have no income coming in, extending your existing credit lines is less likely to affect your credit score overall. According to NerdWallet, when finances have come to a screeching halt, extending your credit can help you pay off important debts and give you more time to pay them off. Just make sure the move is temporary, or it could come back to bite you.

Don’t Accumulate Additional New Debt

Protecting your FICO score during a pandemic starts by keeping new debt off your credit report. Buying a brand-new car or taking on a second mortgage could get you in hot water, especially if you’re unsure whether you’ll be laid off from your job. Hang on to what you have and work on paying those balances down every chance you can.

Avoid Significant Changes That Could Affect Your Score

Now is not the time to be co-signing for a child or relative to help them obtain new credit. While you may have the creditworthiness to help, it could cause your score to plummet, especially if they fail to make on-time payments.

Having someone added to a credit card as an authorized user is also not a good idea. If they fail to make a payment or overextend the credit line amount, it could cause the account to go over the limit, resulting in a negative credit rating.

Surviving through economic hardship can wreak havoc on your credit score. Keep it all in check by being savvy about how you spend and prioritizing how and when you pay your bills. This is only a temporary situation, and your credit score shouldn’t have to suffer for it. Being responsible will help you come out on top when everything blows over.

~Here’s to Your Success!

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