Many of our Liberty Bay members may be concerned about maintaining good credit – not just during the coronavirus pandemic, but any hard times. Our financial advisors can help you understand and build healthy habits for keeping your credit score up.
An important note before we begin: if you have recently lost your job, or you are struggling financially, our Liberty Bay experts are here to help you prioritize. It can be easy to focus on small items you can control, such as your credit score – but the most important thing is to take care of yourself, your family, and your necessities.
If you are able to work on maintaining good credit at this time, keep these 4 habits in mind.
1. Spend Thoughtfully, Pay on Time
The most important thing you can do to build and maintain good credit is to make payments on time. This may involve adjusting your spending habits or plans, and only taking on new debt if you know you can pay it off. Consider enrolling in Liberty Bay’s Bill Pay to automatically cover minimum and recurring payments so you always pay on time.
The key to thoughtful spending and on-time payments is creating a strong budget. This will help you identify your essentials: what you NEED to spend money on, such as groceries and utilities, what you can cut from your budget, and what payments to prioritize. You should also build an emergency fund to help cover payments when times are tough.
If you are struggling with Debt Management, make sure you don’t throw large, high-priority bills and debts aside to pay off small, low-priority items. Though it may seem easier to pay your $25 credit card minimum instead of higher mortgage, loan, or utility bills, you should continue to make payments on those high-priority items, or contact your lender if you’re having difficulty doing so.
2. Monitor Your Credit & Identity
If your credit score seems lower than it should be, check for any errors in your credit report. You should pull your credit report a few times a year to make sure you catch errors early. You can get your official credit report for free once every 12 months from Annual Credit Report, but other free sources such as Credit Karma are also reliable ways to keep tabs on your history.
Make sure you are also tracking your credit use and keeping your private information safe to prevent identity theft. Don’t let anyone else use your credit card, and only add authorized users you trust. Liberty Bay’s Money Management Tool can help you keep track of your spending and set up alerts for when something looks fishy. Learn More About Protecting Your Identity
3. Stay Informed
What impacts your score? What caused your score to increase or decrease most recently? What protections are in place to help you, especially during the pandemic? These are all questions you should be familiar with. The Liberty Bay FA$Ttrack courses on Credit Cards and Credit Scores & Reports will help you familiarize yourself with credit cards and scores.
The most important thing you need to remember is that missing or late payments have the biggest impact on your credit score. If you were worried about unemployment causing your score to take a big hit, that’s not the case: continue to make timely payments, and you should be just fine!
If you’re having trouble making payments, you should know that deferment and forbearance look better than late payments. In fact, due to the current U.S. State of Emergency, the Fair Credit Reporting Act has been amended to help better protect your credit (Section 4021 of the CARES Act). If you are granted deferment or forbearance, and you enroll in a qualifying assistance plan, no missed payments will be reported and your credit will remain in good standing for up to 120 days after the declared State of Emergency ends.
4. Seek Assistance When You Need It
One of the most important habits you can form is learning to recognize when you need assistance and how best to seek it. Talk to one of our Liberty Bay advisors if you need help getting started.
For example, a certified credit counselor will work with you to provide advice or help you form a debt management plan that you can handle. You can also contact your lenders directly (for credit cards and other loans) to see if they can help you work out a more manageable payment plan.
If you have been affected by COVID-19, many lenders already have established plans and procedures for providing credit line increases, collection forbearance, or other forms of assistance. The best way to know if you can benefit from these forms of assistance is to call and find out.
Through all of this, remember again that your experts at Liberty Bay want to help you prioritize and improve your financial health. By building these healthy habits, you can refocus your attention on the things that matter most to you.