Recent world events have left many of us scrambling to keep up on our bills. Even if you’re in a good place financially, the risk of fraud is ever-present. Protecting your credit score requires monitoring and vigilance.
Don’t Close Paid-Off Credit Cards
Once you’ve paid off a card, you may be tempted to call and close the card. However, new credit accounts can lower your score because they cut into your good credit history. So, for example, if you have an old card that provides cash-back or miles, keep using it and pay it off each month. If you can’t pay it off, it’s time to look at your spending.
Open new accounts with care. If you have a terrific credit card offer for miles on a trip you would take anyway and need a new refrigerator or washer and dryer, go for it! Pay off the card in equal payments for the item you need before the 0% APR is up, but leave the card in a dresser drawer. If it has a yearly fee, use your miles and call to cancel the card before the fee is assessed. If you don’t get a great bonus and 0% APR, don’t open a new account.
Protect Your Data
Review your credit report each year. Dig deeper if you know you paid something off and can’t get rid of the line item on the credit report. Is your social security number correct? Are there old collections fees or late fees clogging up something you’ve paid off? Dig in and get these off of your report.
If you shop online or enjoy free subscriptions, consider using a virtual credit card number or purchasing a gift card to cover the reduced introductory rate fees. Once the card is empty, the subscription will lapse. Never give a legit credit card to an online retailer you do not trust.
Go Into Financial Lockdown
If you lose your job or hit a big financial disaster, be prepared to cut back sharply. Immediately apply for unemployment. Review your budget to make sure you have food and shelter covered. Stop automatic withdrawals from your bank account and cover the minimum payment on each debt. Before you dip into emergency savings, utilize free services in your region.
Cut Down on Payments
Let your landlord know and ask them about finding a roommate if you’re renting. This is crucial; if you rent out space to another person, you could be breaking the terms of your lease. If they won’t allow you to rent to another person, ask for a lower rent or an extension.
You can also try lowering other household bills, such as your car payment. For example, according to Lantern Credit by SoFi, “You can lower your car payment by extending the terms with their car loan refinance calculator.”
Once you have your shelter and transportation needs covered, it’s time to get a handle on other monthly bills. Look for peak hours on your electrical bill and avoid them. Consider cutting back cable by reducing your television use or cutting it out altogether. Use your hotspot for online work and streaming if your phone has a data plan.