HOW TO MANAGE YOUR CREDIT SCORE POST PANDEMIC?
31-12-2020 by Evelyn john
Covid 19 pandemic hit us not only as a health crisis, it caused financial hardships also. Rate of unemployment increased as social distancing and quarantining requirements forced companies to reduce their work or shut down completely.
This situation has lead people into making important decisions about their credit bills and debts. Planning what to pay and when to pay has become important all of a sudden. Now as unemployment is being slowly resolved and as consumers are regaining their financial base, their credit may start to show the consequences of the crisis period.
The short term damage caused to your credit score doesn’t need to turn to long term destruction. Clearly assessing your credit now and taking needed actions immediately can repair the impact caused by the pandemic and improve your credit scores for the future.
# reviewing credit report
Checking on the credit report annually is always a smart thing. And if you have experienced some financial challenges which lead to missed payments and increased debt, constantly check your financial position becomes a necessary. Request for a copy of your credit repot from respective agencies, to know your current position. Almost all agencies provide a free copy.
Make sure the report represents everything you know about your financial circumstances. Make sure every action done by you are present in the statement and nothing is missing, or extra.
# know about offers and reductions
Most of the banks and institutions have introduced COVID related relief plans to help their borrowers who are affected by the pandemic. They offer deferred payments, no late fees, and promise that they won’t report short term solutions to the credit bureaus. Contact your lenders to know what is your situation and what can you avail as offers.
Do you have any exceptions or offers in the light of pandemic? Do you have the same schedule of payment? Did you accrue interest on your deferred payment? Know answers to all these questions. Make sure you understand what’s happening with your debt and credit.
# Have a repair plan
If you are severely affected by the pandemic and accrued a great amount as debt or missed payments, don’t worry. Act fast and take actions for repairing your credit score. Build a strategy to pay off the debt systematically, begging with paying off dues. Give special attention to accounts which require immediate repayment in order to avoid penalty and a damaged credit score.
After the accounts are stabilized, access your credit utilisation ratio to know how much of your available credit you used. Paying down the debts to ensure it is within this rate will help you keep your credit score safe.
Also, don’t close your unused credit cards. It will help maintain and increase the credit score. At last, establish a systematic plan for paying off debts and act according to the plan and give priority in paying debt with the higher interest rate first.
# create a pandemic based budget
Prepare a budget considering the changes in income and expenses. Like, reduce spending amount in order to pay off the debts. or divert the money you spend in entertainment and fun into debt payment.
Create an emergency savings provision for emergencies are a good option; So that you don’t have to lean high interest credit. Finally, continuously monitor your credit score throughout the recovery process.
The pandemic was terrible for all of us, and hopefully it will come to an end soon. In the mean time, do what you can do rectify the damages in your financial state, as soon as possible. Hope we all recover from the crisis quickly.
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