If global health pandemic was not enough to put a damper on 2020, then the recession declared in June sure got our attention. With so many changes to your life right now, it is understandable that keeping an eye on credit scores may feel less important. But, as rocky and uncertain as things may be today, paying bills on time and protecting your financial picture still matter for your future.
Why your credit score matters during a recession
In general, your credit score determines the interest rate on loans offered to you and the amount of those loans. The ideal borrower, with a high credit score, saves a ton on money (particularly on large purchases such as a home or car) with a low interest rate compared to someone deemed more risky who has to pay much higher interest on borrowed funds. Although you may not be thinking about buying a house at this moment, your actions now can have a long-term impact on your credit score and limit your future options. For example, big no-no credit events like missed/late payments or charged-off debt can sit on your credit report for years and soil your financial picture.
Your payment history accounts for about 35 percent of your FICO credit score, so missing payments can reduce your score and take a long time to recover from. FICO research notes that missing several bill cycles, for example, could lower a credit score by as much as 130 points.
Help! I’m already in trouble!
The experts at Scorewell are experienced in helping individuals repair even the messiest credit scenarios. Connect with us for a complimentary consultation to discuss your situation and determine how we can help you achieve your best credit score possible. Email us today!