As the economy stalls during the coronavius pandemic, and details of a second stimulus check remain unclear, it may feel harder than ever to stay focused on your finances.
Financial institutions are responding to the economic uncertainty by tightening lending rules, and some cardholders are even seeing their credit limits slashed or their accounts closed.
But while change is evident in nearly every corner of life right now, there are a few tried-and-true financial habits that don't seem to be going anywhere. Ahead, Select outlines three steps you can take to help protect your credit score even during the most uncertain of times.
1. Pay your bills on time
Always make your payments on time, whether that's just the minimum payment or the full statement balance. We recommend you try to pay the full balance, since you'll be dinged with high interest charges if you only pay the minimum each month and that will cause your debt to grow even more.
Payment history is the number-one factor in your credit score. Even one missed payment can have a serious negative effect on your score, especially if you go more than 30 days without paying the outstanding balance.
To ensure you make at least the minimum each month, set up autopay for all your bills so you're guaranteed never to miss a payment.
2. Spend and borrow thoughtfully
Whether you're thinking about opening another credit card or charging a large balance on your account, only take on new debt if you have a clear plan to pay it off.
Every time you fill out an application for a new card, it's a hard inquiry on your credit report. It's best to limit hard inquiries to no more than once or twice a year when possible since it can impact your credit score.
If you need to make a big purchase but don't have the funds to pay it off immediately, a 0% APR credit card, such as the U.S. Bank Visa® Platinum Card, allows you to pay for a big-ticket item over time with introductory promotional financing.
Another reason to avoid running up a big balance is that it can increase your debt-to-credit ratio, also known as your credit utilization rate (CUR). This is the second-most important factor in determining your credit score, and experts recommend you avoid using more than 10% to 30% (at most) of your overall credit at any given time.
If you have a high-limit credit card, it's easier to keep your CUR under 10% as compared to someone with a $500 credit limit who should only charge $50 to $150 on their card before paying it off. One way to avoid a high CUR is to pay off your credit card every week or twice a month, so your balance is always low.
3. Monitor your credit
Approximately one in four Americans has an error on their credit reports, which mean your score could be impacted without your knowledge. Your credit report is an in-depth look at your credit history, and it goes way deeper than your credit score, which is just a snapshot.
Lenders check your credit report when you submit an application for a new credit card or loan, but you should be familiar with it as well. It's smart to pull your free credit report a few times per year, look it over and dispute any errors that you find.
Another option is to sign up for a credit monitoring so you be can aware of any activity happening on any of your cards as well as major changes such as paying off a loan and closing or opening an account.
There are two types of credit monitoring services: free and premium. When deciding between free and paid credit monitoring services, choose one that fits your budget and offers enough coverage to make you feel protected.
Select reviewed the best credit monitoring services, and our top pick for overall best free service is CreditWise® from Capital One, and the top pick for paid services is IdentityForce®.
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To learn more about IdentityForce®, visit their website.
