In these trying times, it’s best to know how to improve your credit and money management. The United States GDP shrank by 32.9% in its 2nd quarter for 2020 due to the pandemic.
This means you should have easy access to credit and abundant funds for emergencies. These will help you adapt to possible financial difficulties in the future.
Fortunately, there are various ways you can boost your credit and savings. Many of these are free, but you may pay for further assistance. These will require your utmost discipline and patience as it may take several months or a few years.
Persevere with these tips though, and you’ll be able to weather the economic difficulties ahead.
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Why You Need to Improve Your Credit Score
We are all aware of the COVID-19 pandemic, but most fail to grasp its destructive effects on the world’s economy. The United Nations has confirmed that we are headed towards the worst recession since the Second World War.
Currently, incomes are decreasing and poverty is increasing all around the world. The US Center for Budget and Policy Priorities even proves its devastating effects on Americans.
These dismal statistics should underscore the importance of maintaining an excellent credit score. A good credit score facilitates access to loans with favorable terms and conditions. This is vital for your survival as many essential services require good credit.
In addition, a good rating will help you save money, so you have plenty set aside for urgent needs.
How Fast can You Raise Your Credit Score?
Of course, you won’t complete the many ways on how to improve your credit and money management overnight. Boosting FICO scores depend on one’s financial situation.
Nevertheless, they’ve assured that people can enhance their credit rating within months or years. People need to focus on specific components of their score and use the helpful services available.
What are 5 Ways to Improve Your Credit Score?
We also recommend these five methods for a better credit rating and money situation. Monitor your credit report regularly for errors, and check which of its aspects are problematic. Also, it’s best to pay your bills on time and speak with your lenders for assistance.
You may consider secured credit cards, but you should also keep your credit inquiries at a minimum.
Check Your Credit Report
You should monitor your credit report for factors harming the score and check ways to improve them. Your credit report details the several components of your three-digit rating, such as credit utilization ratios.
You’ll see the factors that may have decreased your score, so you can perform necessary solutions. What’s more, you can find discrepancies in the document that you could report to your credit bureau.
Pay Bills on Time
Credit scoring systems assign a huge bearing on payment history. After all, credit scoring systems are supposed to gauge a borrower’s trustworthiness. Completing your installments punctually definitely assures lenders that you can return their loans diligently.
Submit payments on time for a few months in order to improve your credit history and rating.
Explore Secured Credit Cards
While millions of people carry bad credit due to credit cards, a particular kind may actually help improve it. This peculiar way on how to improve your credit and money is called a secured credit card.
As the name suggests, these cards require collateral before a provider may grant one. However, they are meant to help people improve their credit status.
It functions just like the classic ones in your wallet. Secured credit cards can be used to purchase products and services and they resemble regular plastic swipers. After using them, you must complete your unpaid balances on time, so you can raise your credit score.
These are designed for this purpose, so you could receive additional features that facilitate credit improvement.
You should scrutinize all your options for secured credit cards, so you can identify the most beneficial ones. Some credit card companies offer better terms and conditions than their competitors.
Also, check if your chosen card is accepted by your credit bureau. Alternatively, you may request to be an authorized user for a friend’s or a relative’s credit card instead.
Negotiate with Lenders
Due to these difficult times, millions are struggling to repay their lenders. The pandemic caused many around the globe to lose their source of income, so their debts continue to grow.
Thankfully, lenders are quite aware of the situation, so they are willing to discuss it with borrowers. For example, you can ask your creditors to temporarily lower or defer monthly installments.
You may also request a credit counseling agency to assist with debt negotiations. They may create a personalized debt management plan that contains a modified version of your existing repayment plan.
They can analyze your financial situation and recommend viable solutions. Even better, some agencies offer specific COVID-19 services to help during the pandemic.
Limit Credit Inquiries
You may have heard of credit inquiries when applying for a credit card or other unrelated services. Inquiries that negatively impact your score are called “hard” inquiries, while “soft” ones are harmless.
Some establishments perform hard inquiries in order to determine the appropriate deals for their customers. In contrast, requesting your credit report is a soft inquiry since it doesn’t impact your credit score.
Limiting hard credit inquiries is actually one of the ways on how to improve your credit and money management. This means applying for lines of credit only when necessary, so your provider won’t perform frequent hard inquiries.
Be wary of other services that may require multiple hard inquiries. These include applying for a new mortgage or auto loan, so they can significantly damage your credit.
Manage credit inquiries effectively by improving the other aspects of your credit score. You may need to perform necessary hard inquiries and unfortunately harm your rating. However, you may eventually negate its effects with diligent payments and minimal credit utilization.
Your report can also reflect unknown inquiries, so you should regularly check yours.
Ways to Further Improve Your Credit Score
If you need additional assistance, you may use other ways on how to improve your credit and money management. They are debt reduction strategies that are meant to ease your debt obligations.
These may be especially difficult to repay nowadays, so they may be reducing your credit score. Thankfully, you may request for debt consolidation or relief to restore your credit.
Debt consolidation involves replacing several unpaid balances with a borrowed lump sum. This singular debt will have a lower interest rate, facilitating your debt payoff. You can perform debt consolidation using a loan or a balance transfer credit card.
These are usually for credit card balances, but other debts like student loans also have consolidation options.
Debt settlement or relief companies negotiate with creditors to reduce the amount you owe. This is reserved for those in dire financial straits since it damages credit reports. However, it can help you repay student loans and other debts faster, so you repair your credit sooner.
What’s more, most of these agencies are providing special offers in response to the global pandemic’s economic impact.
Nowadays, it’s wise to have an excellent credit score, so you can adjust to these turbulent times. Pay on time, limit your utilization rate, and employ other services that can boost your credit further.
These measures are meant to facilitate opening new lines of credit and setting money aside. In the long term, excellent credit prepares your finances for difficult times ahead.