|| Guest Blog : Hugo Morris ||
The COVID-19 pandemic keeps evolving every single day. But what’s even worse is that there seem to be no guarantees during this time. Being the case, this is the time more than ever to work on your finances. And one of the areas you can focus on is growing your credit.
In this short guide, we share five simple tips on how to grow your credit during COVID-19.
Pay your bills on time
To bump up your credit during this difficult time, it’s vital for you to pay your bills on time. Sure, times are tough and things may be looking bad for you, but do not be tempted to miss your payment dates.
According to Crediful, your payment history has the most significant influence on your credit score and the reason you need to be very careful about this crucial aspect. Worse still, late payments can stay on your credit report for up to 7 years!
In case you miss any payment by 30 days, make sure you call your creditor as soon as possible. Ask if they can give you a payment plan and request them not to report you to the credit bureaus. Should they decline it, do whatever you can to settle the bill.
The secret to growing your credit fast is by consistently paying your bills.
Dispute errors in your credit report
This is the time to dispute any errors on your credit report. To do this, start by getting your credit report from the government-mandated AnnualCreditReport.com website. You can request it over the phone or ask for it to be mailed to you.
The good news is that up until April 2021, credit reports, which had hitherto been limited to once a year, will be available weekly. Take advantage of this offer to track your credit closely during this period of COVID-19.
When you get your credit report, check for possible mistakes like late payments for bills that you in fact paid on time, look out for identity theft, or negative information that’s too old to be listed. If you spot any discrepancies, raise a dispute with the credit bureaus and have them deleted or corrected.
Reduce your credit card debt
Did you know, the balance of your debt vis-à-vis the available credit (credit utilization) contributes 30 percent to your overall credit score? To improve your credit utilization, start paying your high-interest rate credit cards and maintain minimum repayment for your other accounts.
On top of this, if you can make more frequent payments, say every two weeks, please do so. These micropayments will push your credit score up. Eventually, this will enable you to get more favorable terms of credit including lower mortgage rates, better lines of credit, and more favorable credit card terms.
Piggyback someone with a higher credit limit
If you have little or no credit history to your name, this is the opportune time to grow it. To do this, request a close family member who has a great score and a high credit limit to add you to their credit card as an authorized user. It may seem like too much to ask but it will tremendously grow your credit.
A caveat though is if you choose to use this method, be sure to make the person whose credit you’re piggybacking to feel comfortable adding you to their card. Let them know you do not need the card or their account number, and that by them adding you, it will not in any way affect their credit.
We can bet you won’t find many easier ways to grow your credit limit!
Keep your credit cards open
It might be tempting to close your credit cards especially if you’re no longer using it. However, doing this will only hurt the credit you’ve worked so hard to build.
When you close your credit card, you lose that card’s credit limit, and when your credit utilization is calculated, you’ll have a lower score. Consequently, your available line of credit will reduce which obviously isn’t a good thing especially with everything happening now.
We highly advise you to keep your credit cards open and preferably even use them once in a while to prevent your bank from closing them. It’s another incredibly easy way to keep and grow your credit fast.
This is the time to be more conscious about your credit and finances in general. It’s only when you’re intentional about improving your financial situation that you can turn it around fast. Implement the five strategies we’ve discussed here to grow your credit. It will surely come in handy post-COVID-19.
Hugo Morris is the content outreach manager at Crediful.With a background in English language he has been able to use his skills to great effect to the point where he is the head of content creation at Crediful.
Photo by Norma Mortenson from Pexels