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If you're worried that the economic uncertainty surrounding coronavirus may put a strain on your personal finances, you aren't alone.
You may be charging more than you normally would onto your credit card (thus utilizing more of your credit limit) and having a larger balance to pay off at the end of your billing cycle. Meanwhile, your job could be in flux, making your future income projections uncertain.
All of these factors could affect one important 3-digit number: Your credit score.
Below, Select speaks to Rod Griffin, Experian's senior director of consumer education and awareness, about how to prevent harm to your credit score as you navigate this new normal brought on by the growing coronavirus pandemic.
Although experts always recommend checking your credit report regularly, it is especially important to do so at this time.
"Regularly monitoring your credit report can help you identify potentially fraudulent activity and respond to it before it causes significant damage to your credit history and scores," Griffin says.
The good news is that there are many resources available for you to get a free credit report.
Every year, you're entitled to one free credit report from each of the three main credit bureaus: Experian, Equifax and TransUnion. You can access these reports at annualcreditreport.com, which is authorized by federal law. To take full advantage of these three free reports, space them evenly throughout the year (about once every four months). That way, you'll keep a consistent eye on your score all year long.
You can also opt to receive regular reports from each individual bureau. More information about this can be found on each of their websites. Free credit monitoring from Experian includes alerts and an updated monthly credit report — and you don't even need a credit card to inquire.
Paying your bills on time is one of the most important steps in achieving — and maintaining — a positive credit score. If you don't make on-time payments, you may incur a late payment fee, a penalty interest rate and ultimately risk damage to your credit score.
But particularly during this time, to whatever extent possible, it's important you continue to make your payments on time.
"If you think you're going to miss a payment, the first and best step you can take to protect your financial health is to contact your lender as soon as possible," Griffin says. "Your lender may have several options for working with you during this time."
Keep in mind that lenders and card issuers typically do not report an account late until you've missed an entire 30-day payment cycle, so a late payment would not appear in your credit report right away. But still, there may be immediate implications of missing a payment, such as late fees or penalty APR, so you shouldn't wait until a missed payment appears on your report to say something.
"Early communication is key so that your lender can assess your circumstances and identify alternative, workable payment solutions appropriately," Griffin says.
Another reason why speaking to your lender can be helpful: Some major credit card issuers are helping consumers claiming financial hardship from the coronavirus pandemic by increasing their credit lines, waiving late fees and forgoing interest charges.
"You may also request that your lender add a statement to your credit report indicating that you've been impacted by a natural or declared disaster," Griffin says.
Your lender may request specific criteria before offering you financial relief, such as how the coronavirus has personally impacted you. Eligibility for these programs varies for every card issuer and borrower. There are no guarantees, but it's worth having your credit accounts reviewed if you've been impacted.
This may not seem like the perfect time to apply for a credit card, but there are certain cards that, if used responsibly, can actually better your credit history. We don't recommend this for everyone, but for some people it may be a good time to explore balance transfer or introductory credit offers.
"Transferring balances to a lower interest credit card may reduce monthly payment amounts and help you through a difficult financial time," Griffin says. "While debt is a financial problem, credit can be a financial tool that can help improve your overall financial health in the long run."
You may want to consider a balance transfer card that offers a lot of time to pay off debt, such as the Citi Simplicity® Card with 0% intro APR for 21 months on balance transfers from the date of first transfer (then 15.49% to 25.49% variable APR; balance transfers must be completed within four months of account opening).
Or if you want to minimize fees, consider a no-fee balance transfer credit card, like the Chase Slate® Credit Card with a 0% APR for the first 15 months on balance transfers (then 14.99% to 23.74% variable APR).
If you see yourself charging a lot more onto your credit card during this time, it could be an opportunity to earn extra rewards or take advantage of a welcome bonus. A no-annual-fee card with a generous welcome bonus is the TD Cash Credit Card, which lets you earn $150 cash back when you spend $500 within the first 90 days. Plus you can earn 2% cash back at grocery stores and 1% on all other eligible purchases.
If you don't have spare cash for additional spending during precarious times, it's easy to rely on credit cards — and they can offer a lot of assistance. Just make sure you have a realistic plan to pay off your balance arising from these extra expenses. While it's important to feel prepared and in control during uncertain times, be cautious of just how much you're charging.
"As always, avoid making rash decisions when it comes to credit and your financial health," Griffin says. "If you are planning to explore new credit offers, make sure you understand the terms you are agreeing to and have a plan for making your monthly payments on time."
Information about the TD Cash Credit Card and Chase Slate® credit card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.