How to Protect Your Credit Score During the COVID-19 Pandemic
18 November, 2020
The COVID-19 pandemic is as much a threat to the economy as it is a threat to public health and safety. Nobody could have foreseen how significant the effects of the virus were going to be. These past few months, we've heard of market crashes, business closures, and mass layoffs. It's easy to neglect your bills and obligations during a crisis, but the effects of doing so will last long after the pandemic passes.
It's for this reason we need to protect our credit score, even in the middle of a crisis. With this in mind, here are a few ways to keep your credit score from diminishing during the pandemic:
Pay Your Bills On Time Whenever Possible
The simplest way to maintain your credit score is to pay your bills on time. While the current state of the economy may make this difficult, try to at least make the minimum payments on or before the due date of your obligations.
Suspend Unnecessary Expenses
You might also want to reassess your expenses. Non-essentials like your video-streaming subscriptions or gym memberships need to be put on hold. Other essential expenses like your car insurance need to be adjusted to lessen the financial burden that you have to carry.
Inform Your Lenders If You're Unable to Pay
If you're unable to pay your lenders, it's best to get in contact with them and to inform them of your situation. This is one of the many instances where honesty will help keep you out of trouble. Lenders may be able to temporarily lower your interest rate or they may even pause your payments for a determined period.
This puts your loans in deferment or forbearance, which means that the obligation you owe to your lender is temporarily paused. You won't have to worry about your lender reporting to credit bureaus. Now, if your lenders don't pause your payments, the impact to your credit score is going to be significantly lower than when you choose to avoid your obligations.
Why Does Your Credit Score Matter?
The short answer is that your credit score is the one and only criterion that lenders use as a representation of your financial health. A good credit score means that lenders are going to be more likely to loan out money to you with lower interest rates and more manageable terms.
This is going to be a big help in the future should you decide to start a business, or buy a car or a house. This is especially valuable considering the fact that we don't know how much longer we're going to have to endure the pandemic. A business owner with a good credit score is far more likely to secure a business loan than someone who has bad credit history. It's also for this reason that many people opt to use superior tradelines review websites to determine which tradelines to buy. This is a quick way to improve credit score.
It's important to take care of your credit score during the pandemic. We don't know how much longer this crisis is going to last, but we do know that allowing your credit score to deteriorate will have adverse effects that are bound to remain long after the pandemic is over.
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