This is how you will survive a financial emergency and not ruin your credit
While we all hope we never find ourselves in a situation where it is difficult to pay the bills, things do happen. You could be on vacation due to circumstances beyond your control such as the hundreds of thousands of people currently unemployed due to Covid-19. Or maybe you or your spouse have been laid off, laid off, or forced to take a significant cut in wages. Perhaps an unforeseen expense makes things difficult. Even if your financial hardship is temporary, that doesn’t mean it will be easy. It can get particularly tricky when you rely on your credit card to make ends meet with your bills. This strategy can significantly increase your debt and decrease your credit score.
The good news is that there are certain tips and tactics you can follow when you have run into difficult times to help you navigate things without affecting your credit score. Here’s a look at how to do it:
How To Keep Up Your Credit Score During Troubled Times
- Find out about hardship plans with your credit card company: The credit card companies don’t typically disclose this benefit. Hence, there is a good chance that you will initiate it. However, many companies offer hardship plans to help people better manage their debts. Hardship plans are essentially repayment plans that are specifically tailored to a particular consumer’s financial condition – and inclusion in such a plan has no direct impact on your bankroll. Be honest with your believer about why you need to sign up for such a plan.
- Stick to the necessities: you will likely need to keep track of your car payments, mortgage payments, utilities, and possibly your phone bill. But your cable bill? Your Netflix, Hulu, Amazon Video and other streaming services? To eat out? Your daily morning Starbucks? These are all things you can probably live without. Don’t be afraid to cancel this luxury or get a grip on it until you get back on your feet. You will thank them in the long run.
- Get a part-time job: If you are unemployed and your unemployment benefits are not being cut, don’t be too proud to get a part-time job that will help you get through the difficult times. Even bringing in just a few hundred more dollars a week can turn off some of the major bills you’re hooked on. You can also leave the part-time presence at any time as soon as you have secured full-time work in your desired area again.
- Minimum Payments Always On Time: Even if you can only pay the minimum payment with your credit card, make sure you do. Credit scores are largely weighed up on whether or not you are making payments on time. Skipping it once can cause your score to drop – and you don’t want to be docked for something that seems so easy to avoid.
Especially when you’ve gotten into tough financial times – don’t panic. Develop a strategy for how to approach your situation and then act. It is possible without having to sacrifice your credit score.