What a difference a year can make. Once upon a time, in early 2020 I had a thriving wedding business, I was finishing up a book and the kids were harassing some other poor schmucks during school hours leaving me to work in peace. Talk about having the rug ripped out from under our feet. Before I knew it, we had 5 children learning from home, I was about to give birth to a sixth and there was a last minute mask order across the state. I was battling with a sewing machine (see terrible ill-fitting masks), hosing the house with disinfectant and we were wiping our butts with coffee filters. If you too are faced with ongoing financial challenges from the pandemic then here are a few tips to stop this blip from affecting your credit score.
Call your creditors. Many credit card companies are offering to waive minimum payments without penalty and without affecting your credit score. The same may be true for your mortgage company, certain taxes, loans etc. The one thing you must do however, is call the companies to arrange this prior to the date the bill is due.
Ask for more credit. If you are unable to pay off your card this month as you normally would then ask to increase your credit limit. This isn’t meant to encourage you to borrow more if you can possibly avoid it. Instead it is so that your credit score doesn’t get kicked in the credit utilization department. This part of your score is calculated based off how much you borrow versus how much credit that you have available. If you are borrowing $4000 out of a $5000 limit, that is an 80% credit utilization rate and ideally you want to keep that number below 30%. By asking to increase your line of credit you can get that percentage back down again, even if you can’t pay off your card.
Consider a new card. Corona doesn’t seem to be going away anytime soon. If it is likely that paying down your credit card is going to have to become a long-term, rather than a short-term goal then consider taking out a card with a 0% introductory rate and rolling your debt onto that. You don’t want to use this method too often as opening up new cards too frequently hits you in the Age of Accounts section, where they look at the average age of all of your accounts, however, carrying a large balance for 6-12 months can wind up being pretty costly. In addition, if you haven’t had any luck implementing tip 2 with your existing credit card, this would also work to increase your overall credit limit and decrease your credit utilization rate.
I hope that taking control of a small corner of your life today helps you to make it through the mayhem. These are trying times with unique challenges, especially for those of us who are battling with too many children and not enough gin! Things can and will get better for you.
Stay safe out there and most of all, stay home.