Did the pandemic wreak havoc on your credit score? You aren’t alone.
The good news is that credit scores are fluid. Just because your score fell now doesn’t mean it will stay there forever. With a few simple steps, you can bring your credit score back up where you need it.
- Get Current on your Bills
Millions of people damaged their credit score during the pandemic because they couldn’t pay their bills. Even if your mortgage was in forbearance, you had other bills to cover. If you missed payments for longer than 30 days, it damaged your credit.
If you’re caught up and getting back on track, bring all bills current and continue making your payments on time. Even just one month of on-time payments will help your score, but consistent timely payments have a greater effect. In a few months, you’ll see your credit score bounce back up.
- Ask for Higher Credit Limits
This sounds crazy. Why would you ask for more credit? It comes down to your utilization rate. Did you use your credit cards a lot during the pandemic? If so, you have a higher utilization rate. This compares your credit usage to your credit lines. Any usage above 30 percent of your credit line damages your credit score.
If you can’t pay your balances down fast, consider asking your credit card companies for a higher credit limit. If you made your payments on time, you might be surprised to learn that the credit card company will increase your line. If you get below the 30 percent threshold, your credit score will increase.
- Don’t Close old Accounts
I know it’s tempting to close accounts you no longer use – it’s human nature, right? But don’t do it.
Your credit length makes up 15 percent of your credit score. If you close old accounts, it lowers your credit length, which lowers your credit score. If you are swearing off credit cards or just don’t want a specific card anymore, lock it up, but don’t close it. Your credit score will thank you.
- Get Payment Arrangements
If you can’t get current on your bills, get in touch with your creditors. Just letting the bills remain late hurts your credit more each month. Instead, call your creditors and ask for a payment arrangement. Once established and if you pay it as agreed, creditors will report the good payment habits to the credit bureau, helping to improve your credit score.
Do you Need to Fix your Credit Score?
If any of these issues resonate with you, take the steps now to fix your credit score. They aren’t hard and they can have a dramatic effect on your score and future lending abilities. Moving forward, try staying on track with your credit by only taking on what you can afford even during the worst times. No one can predict when things will get hard again, but if the pandemic taught us anything – it’s that we need to be prepared for anything!
