There’s no denying that the effect of COVID-19 on our lives is far-reaching. For many people it means job losses; for others, it means greatly reduced hours and a lower income. Down the track, this could even affect your credit score.
Even though times are tough now, try to reduce the risk of an impaired credit score to give yourself the best chance of your loan being approved at the best rates. After all, why pay more interest than you need to?
There are a number of things you can do to help preserve your credit score - even if you’ve lost your job and are struggling to pay your bills. What’s important is to take action now. Being proactive will help to maintain, and even boost, this key part of your financial profile.
Negotiate your bill payments/loan repayments
It’s really important not to miss a bill payment if at all possible. So talk to your energy, telco, lender and other providers if you’re finding it hard to pay your bills or meet your loan repayments.
Most of the major providers will give you more time to pay your bills if you. If you’re experiencing financial hardship, they should have a range of other options to help you through tough times. For instance, you might be eligible for low income rebates if you qualify for government income support.
Another option is to apply for bill smoothing from your energy provider. This allows you to make smaller bill payments over the course of a year, rather than having to pay a larger quarterly bill. Contact your provider as soon as possible to explore your options.
Don’t apply for too many new loans
Every time you apply for a loan or credit card, this is recorded on your credit report. This information will be visible to other lenders, and they’ll consider it when you apply for credit.
If you apply for too many loans in a short time, lenders might view you as a risk and either decline your application or offer you a higher interest rate.
So try to avoid applying for multiple credit cards or loans if you’re financially stressed. Instead, get in touch with your lender and tell them about your financial situation. Follow thisto find out more about the help your lender can offer at the moment.
Take control of your finances
If you find yourself with more time on your hands, now’s the time to get serious about your financial position. This starts with creating a realistic budget that reflects your current situation.
Take a look at your bank account and make a spreadsheet of all your expenses. Many banks and financial institutions have an online budgeting tool you can use to help you with this. Take a look at where you can cut down your expenses and make some changes to put more money in your pocket to help you improve your financial position. If you have a mortgage, now might be the time to.
Then, assess how much money you have coming in. You may be eligible for government incentives, such as the $550 a fortnight coronavirus supplement the federal government is offering to people who qualify for income support.
Try to make sure you don’t have more money going out than you have coming in. You can also access financial counselling services if you’re worried about your financial situation. Above all, be sure to explore every avenue you can in order to put you on a firm financial footing.
Don’t forget to check your credit score and report for free on- it’s the first step to taking control of your finances.