So many of us had financial troubles early on during the lockdown period of recent weeks. Even if we have received unemployment and stimulus payments now, that doesn’t help the negative scores we received after missing payments earlier on during the lockdown period.
With the risk of second and third waves of infections looming, it is important to rebuild our credit while simultaneously preparing ourselves for any negative marks moving forward. You may think that rebuilding credit scores is an uphill task, but there are ways in which you can speed things up.
Here are some of the things we can do in order to rebuild bad credit and to keep our credit score protected during financial uncertainty.
How To Pay Some Loans Early
Many Americans are now finding themselves with more in savings than they have ever had due to decreased spending and stimulus payments. For some Americans, their unemployment benefits are higher than their previous income, thanks to the CARES act.
If this situation sounds familiar to you, it is important to leverage those savings into more savings later down the road. One way to do this is to pay extra on your car payment. The more you pay earlier on in your car payment, the less you will owe later on. Paying down your principal early and fast is a great way to save money.
If you’re worried about unemployment running out before you’re able to start working again, you should still pay more early. If that does happen, your extra payments will apply to later payments, so you won’t owe any more for a while, depending on how much extra you paid.
How To Rebuild Bad Credit During COVID-19
There are many ways to rebuild bad credit. Paying down your car payments, as we mentioned previously in this article, is one of those ways. To do this, either pay down existing credit cards with your stimulus payment, or apply for new credit cards but leave them with full balances.
Part of your credit score is how much available credit you have. If you increase the available credit, you will improve your credit score. However, be careful not to apply to a bunch of credit cards, as this will hurt your score. Make sure you are only applying for credit cards for which you are pre-approved if you decide to go that route.
How to Protect Your Credit During COVID-19
If you are unable to make a payment for any reason be sure to talk to your lenders beforehand. Most are working with customers during the pandemic, and you may be able to delay payment without negatively impacting your credit score. However, you must do this before you ever miss a payment, so make sure to stay on top of this.
You should also analyze your credit reports weekly for errors. You can dispute any errors you come across and dispute them. A successful dispute will help improve your score and keep your credit score high during the pandemic, and afterward.