Coronavirus Ruin Your Credit Score? 6 Steps You Can Take to Rebuild It

Coronavirus Ruin Your Credit Score? 6 Steps You Can  Take to Rebuild It

The coronavirus pandemic had a huge impact on the U.S. economy. If you’re like many Americans, your finances may have taken a hit due to a layoff or unexpected bills. Even if you’re back at work, you might still be struggling to pay down the debt accumulated over the last year. Unfortunately, debt can negatively impact your credit score, making it difficult to get approved for a loan or credit card.

The good news is, there are steps you can take to rebuild your credit. From using a secured credit card to negotiating a lower interest rate, you can start making changes to positively impact your score today. While it’ll take work and patience, the steps below will help you see an improvement:

1. Make Your Payments on Time

According to a WalletHub survey, 47 million Americans expect to miss a credit card payment in 2021. From job loss to healthcare bills, there are several reasons why people might struggle to make on-time payments this year. The reality is, however, if you don’t pay your bills on time, your credit will suffer.

If you’re trying to rebuild your credit, it’s important to make on-time payments. Even if you’re just a day late, some creditors will charge a penalty fee. If you’re 30 days late, that late payment will show on your credit report and could stay there for up to seven years. The later you are, the more it’ll hurt your score.

Late payments typically have the greatest impact, which is why you should do your utmost to avoid them. If you’re unable to pay the full monthly amount on your bills, contact your creditor to discuss a hardship plan. Depending on the situation, they could lower or suspend your payments until you’re in a better financial situation.

2. Consider a Secured Credit Card

A secured credit card is a great option for people trying to build their credit from nothing or rebuild their credit. Unlike traditional credit cards, it’s easier to get approved for a secured card — even if you have a low credit score.


Another benefit of secured credit cards is that they make it harder to rack up debt. To use a secured card, you have to first pay a refundable security deposit. The deposit is usually equivalent to the card’s credit limit. For example, if your security deposit is $150, your credit limit will also be $150.


If you forget to make a payment, your deposit will be used to pay down your debt. On the other hand, if you make your payments on time every month, your deposit will eventually be refunded. The card issuer may even allow you to graduate to an unsecured card.


Your activity with a secured credit card is reported to credit bureaus. If you pay your bill on time each month, using a secured card can actually improve your credit.

3. Avoid Additional Debt

According to a Pew Charitable Trusts study, 80% of Americans carry some debt. The average American has $90,460 in consumer debt, including everything from mortgages to credit card balances. There’s a common misconception that debt primarily exists in the younger generation. But Baby Boomers actually have the highest average personal loan balance at $19,253, while Gen Z has $4,526.


As you can see, consumer debt impacts every generation. One reason is that many people struggle to live within their means. Are you already wrestling with debt? If so, the last thing you want is to take on more. Until your finances improve, avoid using your credit card unless you can afford what you’re purchasing.


That might sound easy, but credit cards can be tempting. Let’s face it, being able to pay for something over time makes spending seem like a good option. But if the coronavirus pandemic ruined your credit score, your focus should be on rebuilding, not digging a deeper hole.


Avoid opening up new credit lines — unless you’re considering a debt consolidation loan. This type of loan requires you to open a new account and then combine all your debts into that one account. A debt consolidation loan can sometimes lower your interest rates and make it easier to manage your finances.

4. Become an Authorized User

Becoming an authorized user means you’re an additional cardholder on someone else’s account. While you’ll have a credit card with your name on it, the main account holder will be legally responsible for payment.


If the account holder makes their payments on time, that will help your credit score. Keep in mind, however, that the opposite is also true. If the account holder accumulates excessive debt or doesn’t pay their bills in a timely manner, that will hurt your credit score.


Provided you join forces with a responsible cardholder, becoming an authorized user can help rebuild your credit score. This approach won’t have a major credit-building impact, as the account holder remains responsible for any debt. Still, when it comes to boosting your credit score, every little bit helps!

5. Negotiate a Lower Interest Rate

Credit card rates fluctuate for a variety of reasons. If your credit card issuer reviews your account and sees behavior it doesn’t like, it could adjust your rate upward. If the Federal Reserve’s benchmark prime rate rises, your credit card APR will likely also increase.


If most of your monthly payments are going toward interest, you should try to lower your rate. Call your creditor, explain your financial situation, and see whether they’re willing to negotiate. Of course, they might not agree. Recently, however, credit issuers have shown more grace amid Covid-19.


When negotiating, make sure you start with the credit card you’ve used the longest. You’ll have better luck lowering your rate if you’re a long-term customer with a previously good credit history.

6. Talk to a Professional

Rebuilding your credit score isn’t an easy feat, which is why you should consider talking to a professional. Credit counseling services will help you gain a better understanding of your finances. You’ll learn how to budget, the best ways to pay down your debt, and means of improving your credit score. Sometimes the right guidance is all you need to begin changing your credit for the better.


Rebuilding your credit score is one thing; maintaining it is something else entirely. Even after you’ve put in the work to improve your score, you still have to be mindful. As noted above, even one late credit card payment could drastically lower your score. If you struggle to remember your due date, consider setting up automatic payments. Rebuilding your credit score is hard, but it’s not impossible as long as you maintain good financial habits.


Alex huge

I am Professional Blogger and Writer