Here's How to Protect Your Credit Score In 2021 Understanding how you can protect your credit score despite tough times.
Opinions expressed by Entrepreneur contributors are their own.
One of the strongest lessons I learned after my military service was how important credit is in life and business. It's a key part of being an entrepreneur at any level. The credit industry has changed over time and especially during this time during the pandemic, we should take actions to protect our selfs no matter what obstacles we might face.
The kind of world we live in right now is something most of us did not even imagine a year back. This is something that has shaken the world completely and how. Many people lost their jobs, and many businesses had to shut shops and lay off employees due to the effects caused by what is today known as a global health pandemic. Amidst all this, the financial health of people was majorly affected, and people did not know how to maintain a good credit score. The business closures led to millions out of work, where many Americans struggled to pay their bills, which directly impacted their credit scores. Experts noticed that more than half of the American's household income was negatively affected by Covid-19. Now that many Americans face the possibility of becoming delinquent on their bills and debts, their credit score could be affected adversely.
Here are three steps that people can take to ensure they maintain a decent credit score throughout the pandemic.
Related: Five Ways to Build Business Credit
Pay whatever you can
The times have been so tough on many people and businesses that forget about saving anything. People have not got the chance to make their full payments. However, Adam Reich from True Credit Repair is of the opinion that people must try to make whatever little payments they can, as full payments by them may not be possible right now. Stating that minimum payment is still better than a late payment as late payments can negatively impact credit scores.
Related: 10 Steps to Establish and Build Credit for Your New Startup
Request lenders to either reduce or delay the payments
Some lenders have shown enough compassion and empathy for people and have relaxed payment terms or payment deferrals during the pandemic. Banks have also offered to defer payments and waive fees for credit cards during this health emergency. When a borrower is granted forbearance, deferrals, or loan modifications, the same information also gets noted in the consumer's credit report. The lenders can indicate that the help was provided because of the hardships the borrower faced due to the pandemic.
Get a copy of the credit report
Under the law, consumers can get one free copy of their credit report from each major credit bureaus every year. Getting the credit report will help consumers to know where exactly they stand and from where they are starting. It will help people know in which direction they need to go. Reviewing the credit report will also help them see any incorrect information or even the signs of identity theft. If one finds it, he/she can immediately start getting it corrected to ensure it doesn't ruin the credit history.
Taking smaller steps now to protect the credit scores amidst a pandemic will help consumers in the long run, is what experts in the industry believe.
Related:5 Simple Ways to Improve Your Credit Score and Help Your Business