The pandemic outbreak had a significant impact on the economy; it might have also affected your finances. The pandemic crisis caused many people to lose their jobs and experience salary cuts, affecting their livelihood. Many businesses faced a slowdown and even were forced to shut down due to the financial crunch. This results in people opting for loans and using credit cards, impacting credit card debt, credit history, and other aspects of personal finances. Lack of finances might have led you to max out on your credit card limit to manage your bill payments and daily expenses. However, exceeding your credit limit is a big red alert and doing so may hurt your credit score. Building and improving your score is still possible in such situations. So,
Let’s have a look at the ways through which you can use your credit cards to boost your score during the pandemic.
- Ensure Timely Payments of Bills
One of the essential factors in your credit score is your payment history. An individual must have an account of timely repayments for all the credits. So, paying bills on time is crucial; you must at least pay the minimum amount due every month. To avoid interest and other late payment fee charges, you need to pay the full amount towards your credit card. Individuals with payment defaults will get reported to the credit card company. You will generally have 30 days from the due date to pay the amount before it gets reported.
- Keep a Low Credit Utilization Rate
The percentage of credit that you’ve used at a given time is a crucial factor in calculating your credit score. If you have a high credit utilization ratio against your credit card limit, it means you’re finding it hard to manage your debts. Hence, it is best to keep a low credit utilization ratio. To lower your credit utilization rate, you can opt for a consolidation loan to pay off the debt by transferring it to a personal loan, your credit utilization rate on the card will drop to zero.
- Keep Unused Accounts Open.
You might think that closing your old credit accounts will help your financial situation; however, it is the opposite. You can continue to build your credit score with such credit card accounts, even if they are unused. That’s because the average age of your credit accounts is another component of your credit score. Keep in mind that some credit card companies may close your account if it remains inactive for too long. Try to make purchases through the card every six months or so to keep the card active, and this will gradually help to improve your credit score.
- Monitor Your Credit
Monitoring your credit is an excellent practise to make sure your credit reports are accurate. Always go through all the activities and card statements of all the transactions made through the credit card. This way, you can be alert and identify any fraudulent activity and respond to it before it harms your credit and cause any significant damages. It is advisable to check your credit reports from time to time. You can get a free copy of your credit report from the credit bureau once every 12 months.
Being aware of your credit health and savings potential helps you in taking the right decisions towards maintaining your financial well-being. With the Finserv MARKETS app, you can apply for credit cards, and get pre-approved offers for personal loans and numerous benefits on other financial products. You don’t need any credit score app; you can get a free CIBIL report on your credit at Finserv MARKETS. Also, a Financial Health Check Report (FHCR) that will highlight your credit profile and offer financial advice to achieve your financial goals.