How To Protect Your Credit Rating While On Vacation In A Pandemic
LOUISVILLE, Ky. (WAVE / WYMT) – The COVID-19 pandemic has taken its toll not only on our vacation plans, but also on our finances.
The economic fallout from the coronavirus continues to devastate families and businesses. According to a study carried out by WalletHubKentucky ranks among the 20 states with the most financial stress due to the coronavirus pandemic.
It might not be what you want to hear during the holiday shopping season, but Kentucky came in third in the credit score category.
Since the start of the pandemic, the state’s personal bankruptcy rate has been among the top five states in the country.
“We’ve seen people lose their jobs,” WalletHub spokesperson Jill Gonzalez said. “We have also seen the credit scores drop.”
A person’s credit rating is one of the primary factors that determine the course of their financial life, from obtaining credit cards to qualifying for a home loan to renting apartments.
“Kentucky is ranked 45th out of all states, so number 1 would be the highest credit score,” Gonzalez said. “The fiftieth would be the lowest. Kentucky is 45th. “
In general, credit scores of 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and over are considered excellent.
“The Kentuckian’s average credit score is 671,” Gonzalez said.
Your credit score may not be at the top of your list of things to think about this holiday season as you get ready to celebrate with family and friends, but what you do now can affect what you are eligible to do later.
“Credit scores are basically how lenders, how employers, how landlords assess how you’ve done as a consumer so far,” Gonzalez said.
During the pandemic, many families struggled to finance their daily needs. The holiday season brings additional financial stress to the image.
“I think most of us are used to getting everyone’s wish list, the holiday wish, fulfilling all of those wishes,” Gonzalez said. “This year, I think it’s important to keep those expenses under control.”
If you don’t have cash, don’t spend and charge it, either, Gonzalez said. Your credit score is determined by evaluating the data on your credit report to determine the likelihood of you paying off your credit obligations. Factors to determine this score include:
- Payment history: Did you pay your debts on time?
- Amounts owed: how much debt do you have?
- Length of your credit history: How long have you had credit accounts open?
- Credit Activity: How many times have you applied for credit in the past 12 months and how many requests have you had on your credit?
- Type of Credit: This applies to your credit card accounts, mortgages, car loans, installment loans, and any debt you may have incurred.
“I think one of the biggest mistakes people make is, ‘My credit rating has already taken a hit; I can not do anything about it; I might as well just sit and watch him fall, ”Gonzalez said.
Maximizing your credit cards to cover some holiday cheer can really hurt your credit and future opportunities
“You want to stop the bleeding,” Gonzalez said. “You really want to do whatever you can to make sure the drop in your credit score stops now so that you can slowly start to rebuild yourself.”
To improve your credit score;
- Pay your bills on time.
- Pay off as much debt as possible.
- Keep your credit card balance well below the limit.
- Apply for credit sparingly.
- If you are having financial difficulties, especially due to COVID-19, contact your creditors immediately.
“One positive aspect is that this is considered a disaster,” Gonzalez said. “In the same way that Hurricane Katrina or Hurricane Sandy affected people’s livelihoods.”
Many programs have been developed since the start of the pandemic to alleviate the financial stress of those affected by the coronavirus. From mortgage lenders to school loans, creditors are finding ways to help families cope during this difficult time.
“They are really doing a lot to help consumers right now, but you have to ask for that help,” Gonzalez said.
Some things you can do to keep Christmas from going broke this year, including cutting down that gift list, donating time instead of expensive merchandise, and trying to keep track of what you spend.
Experts recommend that you check your credit score at least once a year. There are several free and paid services that will allow you to check your score. You can also get a free credit report every year from Equifax, Experian, and TransUnion from the official website. www.annualcreditreport.com. This will not include your credit score, but will allow you to check for errors or fraudulent accounts.
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