Credit score: Factors to keep in mind in post-Covid times

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There is always room for improvement when it comes to your credit score. Your current credit score isn’t great because you didn’t put in the effort to learn about the factors that go into it. In addition, it’s not complicated at all. As the pandemic progresses and we spend more time at home, now is an excellent time to prepare yourself to apply for a credit score in post-Covid times.

Let’s take a look:

Start with a clean slate

Paying your credit card bill is one way that can almost immediately enhance your credit score. If you’ve been paying only the minimum due, your credit card balance has likely accumulated to a significant amount.

If you want to improve your credit score, consider paying off as much of your outstanding debt as possible — not only will this help you avoid falling into a debt trap, but it will also help you earn valuable credit score points.

Regularly review your credit report

Nothing is more liberating than knowledge. Valuable information can aid in the development of your credit score plan. With your complete analysis report available for free, you have a unique opportunity to review all the critical factors that contribute to your credit score.

You can check how you’re doing in terms of factors, as your credit report will contain the most up-to-date information on everything from your repayment history to your credit usage.

Wait to apply for credit

Assume you have a credit score of 675 and are considering applying for a credit card immediately. While some banks may approve your application immediately, the majority of lenders may not believe you are creditworthy. Additionally, what is there? The higher your credit score, the more favourable offers you will receive.

If you find yourself in this scenario, it is recommended that you wait at least one month before asking for credit. In the interim, you can study your report and ensure that you’re doing everything possible to pay off your obligations.

Avoiding credit applications now will save you valuable points, as each time you apply for a credit card, personal loan, or home loan, banks conduct a hard inquiry on your profile, which impacts your credit score.

Keep your oldest credit card

While now is a perfect moment to analyse and make necessary personal finance decisions, you risk closing off old accounts that you no longer use. While this is ok for other transactions, it is not recommended when it comes to credit cards. Your first credit card adds years to your credit history, which lenders consider to be positive.

The larger your credit line, the more experienced you will appear to banks. That’s not all; because your credit line is the foundation of your credit score, cancelling your oldest card may result in you losing valuable points.