Rebuilding Your Credit Score After The Pandemic

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Post-pandemic financial management will likely include an element of reconstruction. For many, this will mean rebuilding their credit score. Whether you’ve been on a period of leave or been laid off, the pandemic may well have left its mark on your finances.

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Let’s take a look at what you can to rebuild your score sooner than you think.

Check your credit score

Checking your current credit score is an important first step. It will let you know where you are at and how much you need to do to rebuild it. Knowing your current score puts you in a better position to negotiate favorable interest rates or financial contracts.

In the UK there are three major credit reference agencies and each has its own criteria for what a ‘good’ credit rating is:

Get back to full payments ASAP

If you requested reduced payments or a payment holiday during the pandemic, it can affect your credit score. Although you may have made an agreement with your credit provider, they should still report changes to credit reporting agencies as partial or missed payments.

It may not seem fair, but a declining credit score isn’t the only consideration here.

For homeowners, making such an arrangement can affect their credit score, but it can also save their property. If you are able to start making full payments again, contact your lender to make arrangements as soon as possible.

Could you be rewarded for your daily expenses?

Reward credit cards include programs that simply reward you for using your credit card. When you spend money on a loyalty card, you can earn loyalty points, in-store vouchers, airline miles, and more. MyWalletHero makes it easy for you to find a card that matches your spending habits so you can get the most out of your rewards.

Reduce credit balances

If you’ve been using credit to get through the worst of foreclosure, it’s time to reduce those balances. Try to pay more than the minimum required to reduce the balance faster. Credit scores are often affected when credit products are at peak.

The rule of thumb with credit balances is that your usage should not exceed 20% to 30% of your credit limit. So if your limit is £ 1000, try not to use more than £ 200 to £ 300.

Rebuild your credit score with a credit replenishment card

If your credit score has fallen below a “good” level, there are still options. Bad credit credit cards are worth considering.

Bad credit credit cards generally have low borrowing limits and high APRs to offset the risk to the lender. These cards are designed to help you rebuild your credit and over time. As you prove your reliability, the lender may lower the APR or gradually increase your credit limit.

However, as soon as you’ve hit a satisfactory rating, it’s time to switch to a less expensive product.

Keep your credit provider informed

While there is still a good chance that your credit score will drop as explained above, there are some credit “sins” that are worse than others. For example, defaults and county court judgments (CCJs) are major issues that can take months or even years to resolve, depending on your ability to pay.

Keeping in touch with your credit provider and being honest about your financial situation can prevent them from taking more serious action. It is important to stick to any new arrangement in order to restore confidence.

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