Eric Brown

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How to Preserve Strong Credit Scores During Times of Economic Uncertainty

Posted On: June 11th, 2020 12:00AM

We’ve been fielding quite a few questions in the past few weeks about how to preserve credit scores in times of economic uncertainty.  

Whether it’s COVID-19, job loss, or any other unforeseen circumstance causing you financial stress, there are a few sure-fire things you can do to help maintain strong credit despite the unknown:

 

CREDIT PRESERVATION TIPS:

  • Call your creditors and ask for “skip pays”:  Especially now, most creditors will be willing to defer payments for a month or two and not report you as "late" to the credit bureaus.  This can help free up some extra cash and save your credit score in the process.  In fact, most creditors have a policy of allowing 1 skip pay a year anyway.  Even more so in times of widespread economic turbulence.  

 

  • Prioritize bills according to who reports to credit bureaus:  If you absolutely have to prioritize paying one bill over another, try to pay the ones that report to credit first (mortgages, credit cards, auto loans, etc).  It’s important to know that a single late pay can be one of the most damaging things that can happen to your credit score, and it will affect you for years to come.  On the flip side, if you go late on something that doesn’t report to credit (such as a utility bill, phone bill, etc.) you’ll likely have to pay a late fee, but it otherwise won’t continue to affect your financial opportunities into the future.   

 

  • Refinance:  If your credit score is strong, but you’re nervous about falling behind on payments, we highly recommend taking advantage of interest rates while they are near 0%.  Whether you need to refinance your car, home or credit card debt, there are plenty of options available.  This can help lower your monthly payment and sometimes the lender will even offer no payments for 60 days to start out.  

 

  • Request credit limit increases:  Handle this tip with caution!!  That last thing you want to do if you can help it is to get into more debt than you can handle.  The reason that this one is on the list, however, is because credit card balances are worth almost 1/3 of your credit score!  So, if you can get your credit card providers to bump up the limit (and not use the additional credit), then you’ll see your scores go up because you’ll free up more available credit.  Plus, it’ll be there if you need it as an emergency fund.  

 

Remember, all of these tips are designed to preserve credit now!  It’s important to know that nothing comes for free, and creditors will likely move any skipped payment to the back of your loan, which means you’ll end up paying more in interest.  However, as the old adage goes, “cash today is more valuable than cash tomorrow”.  

As always, CreditAdvisor is here for you!  Don’t hesitate to reach out if you have questions about any of these tips, or any other credit questions.

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FREE Credit Report Analysis

Posted On: June 10th, 2020 11:53PM

Woud you like to have acess to professional investigation services, disputes, credit report management, debt reduction programs, and all around 411 credit resource.

 

For a complimentary credit report analysis and free consultation, click here.

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3 Tips to Preserve Credit Scores During Financial Harship

Posted On: June 10th, 2020 11:43PM

In the unlikely event you find yourself between jobs, recovering from a financial emergency, or I don't know, maybe caught in a government shutdown and unsure when you'll get paid again, here are 3 tips to protect your credit score:

 

1.  Call all of your creditors who report to the bureaus and ask them to defer payments or negotiate partial payments until you get back on your feet.  Most problems start from a lack of communication.  The reality, however, is that most of them are willing to work with you if you give them the chance.

 

2.  If you have to go late on anything, go late on a utility bill, cell phone bill, or anything else that doesn't use credit for reporting.  Yes, you'll probably have to pay a late fee, but it won't demolish your credit in the process.  The big 3 to never EVER go late on are home and auto loans and credit cards.

 

3.  Work out payment plans with creditors once your paychecks start rolling in again.  I won't sugar coat anything here- it's tough to recover from a setback.  You'll have to tighten up your belt for a little while and make some sacrifices, but it is possible to recover quickly if you take proactive measures.

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