Tips for Managing Your Credit During Difficult Times

Life is always throwing difficult times our way and it’s how we handle those hardships that make us who we are. As our world picks up the pieces of lost wages, cut salaries, and failed businesses, credit card debt is increasing at a quick rate. Bad credit leads down an ugly path, placing more roadblocks in our way.

Part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), created in March 2020, ensured that consumers who were impacted by COVID-19 could receive loan accommodations without having their credit score impacted. This was a huge relief, hence the name.

While this helped a tremendous amount, it’s important to understand credit health and how to protect your credit in trying times. If you didn’t qualify for the CARES Act, this information is going to be even more vital.

A credit card can make life easy, but it can also be what nightmares are made of, especially if you’re dealing with credit card fraud. Regardless of what a difficult time could mean for you, here are tips to manage your credit so pay attention.

Get Organized

If you think what you don’t know can’t hurt you, you’re wrong. My apologies, Margaret Atwood. You’re talented and respected but when it comes to credit, what you don’t know can absolutely hurt you. (Don’t feel bad, I had no idea who Margaret Atwood was either until I researched her well-known saying.)

To get started, get a hold of your credit score and reports from the three main credit bureaus, Experian, Equifax, and TransUnion. Be prepared for surprises, either from mistakes the credit report has made, unpaid bills you never knew existed, or unpaid bills someone else made with your information.

The good news is that according to the Federal Trade Commission Consumer Information, now through April 2021, everyone in the U.S. can get a free credit report each week from all three national credit reporting agencies. Take advantage of this!

Don’t Abuse your CC

It’s easy to put bills on a credit card which only alleviates a situation for a short time. While you may have paid off your electric bill and can take that weight off your shoulders for now, if you can’t pay off that credit card in full, finance charges will put on even more weight than you started with. It’s a vicious cycle that you don’t want to get sucked into.

The bottom line is don’t spend more than you have. Yes, I know those boots are a must-have and would look amazing with that dress you bought last week, but as Idina Menzel says or rather sings, “Let It Go.” While you’re at it, perhaps returning the dress wouldn’t be such a bad idea.

Sit down and go through your credit card bills to understand your spending habits. Are there monthly charges you can eliminate like the mystery box of clothes you receive at your doorstep? Who doesn’t love a package waiting for them when they arrive with no idea of what’s inside? EVERYONE! Do you know what else people love? Not being in debt.

When you start to cut out spending here and there, it adds up. These sad, but necessary cuts will allow you to pay off your credit card in full each month which has a very positive impact on your credit score.

Experian says, “Carrying a high balance on your credit cards has a negative impact on scores because it increases your credit utilization ratio” What’s a credit utilization ratio, you ask? “It shows how much of your available credit you’re using and is the second most important factor in your credit scores.” Do you want to know what’s number one? Payment history.

Equifax gives tips to paying off debt without becoming overwhelmed:

• Negotiate with your credit card company to see if they’ll lower your interest rate. (If you don’t ask, you don’t get.)
• Pay your bills on time to avoid penalties like late fees and finance charges.
• Put all your student loan debt into one account for easier management of payments.

Easier said than done, but putting in the work will make a difference.

Finance Gives you Superpowers

As a woman, there’s nothing more powerful and sexier than being in control of your  finances. You work hard to earn your paycheck, so educate yourself, organize yourself and take pride in your killer credit score.

One of the basic tools of financial independence as a woman is good credit. Stacy Feiner, business psychologist, and coach says in a U.S. News & World Report article, “With credit comes power. When women establish financial security, they can feel more comfortable planning for the future and taking risks like starting or growing a business.”

You’ll feel amazing knowing you aren’t weighed down by debt because of your smart choices. The confidence will be obvious to others who wonder how you do it all. As a woman, you have the opportunity to be a role-model when it comes to money management for younger females.

Don’t let bad credit hold you back from being the superhero you know you are. Life throws wrenches without warning. Can we say COVID?  When your finances are in order and your credit score is healthy, a lot more doors open for you and you’ll be prepared for anything.

You are in charge of your financial journey which is empowering and also quite scary. This means whether you’re celebrating that loan you were able to get or panicking because you lost your job during the pandemic, you are your own CFO. The healthy financial path you created for yourself will help you along the way, in both good times and the bad. It’s never too late to construct that path.

Educate yourself, ask for help, and make the changes necessary to build up that credit score. 

Did you know that according to U.S. News & World Report,nearly two-thirds of women between ages 40 and 79 have experienced a major financial transition? You are not alone!

Did you also know that you can now add a consumer statement to your credit reports, explaining your hardships during COVID-19? A simple note can be a helpful tool when it comes to managing your credit score. TransUnion provides you with pre-worded options such as, “I am unable to make timely payments due to the impact on my job/wages as a result of the COVID-19 pandemic,” or you can write your own,

There are a lot of tools available out there to help you manage your credit during difficult times. When you focus on managing your credit during good times, you’ll be prepared when that wrench comes your way.

Knowledge is power. Power is independence. Independence is a beautiful thing.

Hope You Enjoyed the Read!