How to prepare your credit
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As the coronavirus pandemic continues to alter almost every person’s daily life, it’s important to be prepared for what this means for your finances in the future.
It doesn’t matter if your credit score is not a priority at the moment, given the financial uncertainty many are feeling, but it’s crucial to at least think about the health of your finances as we head into the future.
A good credit score can open up borrowing opportunities when you need loans and help you get a lower interest rate on the best credit cards. Acting now to improve or maintain your score can save you money in the long run.
Below, To select explains why it’s important to prepare your credit for life post-pandemic and how to do it.
Planning ahead can help you prepare for surprises later, like a drop in your credit score or creditors limiting your available credit.
“It’s not uncommon for creditors to reevaluate credit and loans in times of uncertainty, and this is one of those times,” says Leslie Tayne, debt relief attorney and founder of Tayne Legal Group. Be aware of the certain card benefits and conditions that issuers can change without notice, such as your credit limit, rewards rate, and variable APR.
There are other time-limited changes that issuers are making in response to the coronavirus that may benefit cardholders. Some are revising their rewards programs to account for new ways people are spending their money.
For example, Capital One recently announced new reimbursement rates for its Savor cards. Capital One® Savor® Cash Rewards Credit Card and Capital One® SavorOne® Cash Rewards Credit Card cardholders can automatically earn 4% (Savor) and 3% (SavorOne) cash back on eligible streaming services through September 30, 2020. Previously, streaming purchases only earned 1% cash back .
American Express also has added new perks geared towards grocery, food delivery, streaming and wireless categories on 11 of its premium cards. Co-branded credit cards like the Blue American Express Delta SkyMiles® Card and the Marriott Bonvoy Brilliant™ American Express® Card now include bonus rewards at Worldwide Restaurants and US Restaurants (respectively).
There are a number of steps you can take to prepare your credit for the post-pandemic future that awaits us all.
- Monitor your credit: Credit monitoring products can help you track your credit and receive alerts for potential fraud. You can check your credit score and report credit regularly using the free resources available to you, such as Capital One’s CreditWise, Chase Credit Journey or Discover Credit Scorecard (whether or not you are a cardholder). Access a weekly free credit report from each of the three major credit bureaus by visiting AnnualCreditReport.com and make sure you know your credit report balances and acknowledge all listed creditors.
- Read your credit card statement carefully: Even if you haven’t used your card recently, be sure to check your statements regularly for any unauthorized charges. Contact your issuer immediately if you spot a purchase you don’t recognize. “In times of crisis, scammers and identity thieves are even more important as they prey on vulnerable consumers,” Tayne says.
- Protect your credit from scammers: If you do not plan to apply for new lines of credit in the near future, consider freezing of your credit so that no one can open new accounts in your name. Credit freezes don’t take a lot of time, around 30-45 minutes, and you’ll want to set it up with all three credit bureaus (Experian, Equifax and Trans Union). They are easy to thaw when you need them; just call the credit bureaus or visit their websites.
- Think about your post-pandemic budget: This is especially important if you have only made minimum payments during this period. Take a look at your expenses and income and start making a plan to pay off your debt. “The pandemic may have enlightened you on areas where you can continue to spend less in the future,” says Tayne.
- Know when issuers are canceling their difficulty programs: Many card issuers offer help with financial difficulties during this period, but it is important to know when they end. This will save you from missing payments accidentally, which could cause late fee and a ding to your credit.
While preparing your credit for a post-pandemic life may seem daunting, start with the simple step of reviewing your credit report first.
Monitoring your credit is a good habit to have, and half the battle in preparing your credit for the future is knowing what has affected it over the past few months.
“Remember, this won’t last forever, and when you have a steady income again, you can work to get back on track,” Tayne says.
Information about the Capital One® Savor® Cash Rewards Credit Card and Capital One® SavorOne® Cash Rewards Credit Card was independently collected by Select and was not reviewed or provided by the card issuer prior to publication.
Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.