The times that we are living in are quite uncertain. As a result of this, it becomes all the more important to be extra cautious when it comes to our credit history. So, here are 5 smart tips to help you maintain a good credit score even during these difficult times of COVID-19 outbreak.
The global pandemic has overthrown the financial plans of people all around the world. In addition to that, the unprecedented job and pay losses have also stressed out households in UAE. In such a situation, it is very important to understand the nitty-gritty of credit score details to maintain a good credit score. Let us look at various ways to keep a healthy credit score, focused on the uncertainty we are facing in times of COVID-19.
Know more about your credit score
It is important to know what constitutes your credit scores and credit history. With the right financial practice and awareness, you can take adequate remedial measures if your score is low. Usually, a credit score above 750 is considered a great one. This will enable you to easily avail a loan or a credit line. Your credit score is highly dependent on your ability to repay your debts regularly. Keep a quarterly track of your score – if it is below 700, then work on regularising your repayments so your score can improve.
Keep a regular check on your credit report
This may be the time when your income is uncertain or irregular. Monitor your credit score generated from your respective credit bureaus. Banks provide the required data to generate authenticated scores from an individual’s or an organization’s active credit accounts, financial history and payment records. Your credit score signifies your repayment capabilities and creditworthiness for loan applications. Credit report mistakes are very common – regular checks can avoid major discrepancies. A low or irregular credit score can severely impact your worthiness and lenders might hesitate to give you future loans.
Pay off your credit card debt
Credit card interests are among the highest in the market – this makes credit card debt the most expensive. It is advised that you pay off credit card debt in full, whenever possible, to maintain a high credit score. In case you are financially hit right now and can’t pay off the debt in full, keep making the minimum payment – this will keep the account in a standing position. It helps you avoid late fees, helps you conserve some cash in the short run and also keeps your credit score high. Maxing out a single credit card is a big no-no as it impacts your credit score drastically.
Repay your bills on time
As stated earlier, the most important criteria to maintain a good credit score is to pay all your bills on time. Any delay in payments adds to the existing dues as penalties. It can lower your credit score and rebuilding a poor credit score takes a significant amount of time. If you are making multiple payments on credit card bills plus EMIs on term loans, try and set reminders to avoid missing your due date. You can also opt for automatic payment options to pay your dues on a particular date of every month.
Avoid using your credit card to get cash
Credit cards may offer reward points for withdrawing cash using your credit card but avoid this option at all costs. This comes with various hidden charges such as cash advance fees, finance charges and late payment fees, all of which add up to your withdrawal amount. Ultimately, it leads to a debt trap at high-interest rates and severely affects your credit score. In case you need cash for emergencies, you can always dip into your savings or ask your family or friends to help out.
Remember that during any crisis, it is always a good idea to take every step with caution. Make sure that you contact your lenders and financial institutions if you are facing any financial difficulties. If you follow a few basic rules, you will be able to maintain a good score and therefore, also increase your options for future credit needs.