Good credit is among the greatest assets that you have currently. It helps you qualify for loans and credit cards with lower interest rates. It can be your saving grace during a financial emergency, too. That is, of course, if you can pay back what you’ve spent on time.
If you’re experiencing the effects of job loss, a lengthy illness, or an unexpected car or house repair that you can’t bounce back from quickly, it’s imperative that you do everything you can to protect your credit in the meantime. Doing so benefits you long into the future as you’re trying to rebuild your life after some emergency.
Some suggestions we have for protecting your credit during times of financial uncertainty are listed below for your consideration. Each option helps you overcome challenges that have the potential of ruining your credit.
When times get tough, as they often do, you’ll be prepared to weather the storm with your credit unscathed. That means that when you’re able to pick yourself back up financially, you won’t spend months repairing your tarnished credit score.
Tap Into Your Emergency Fund and Pay Cash for Everything
Experts state that six months of savings can see you through an emergency. If you could save more, you can put the theory to the test by using the money you put away to pay your bills. If you eliminate the need for credit in your life when you can’t afford to pay it back, you won’t slip further into debt. Pay all of your living expenses first, and then see what other bills you can pay off in the meantime.
File for Unemployment or Disability If You Qualify for It
If an illness or injury has made it, so you lost your job, you’ll want to take action right away. Filing for disability ensures that you’re able to get a hearing as quickly as possible. The same goes for unemployment. If your job was to lay you off, filing with the state for benefits helps keep income in your pocket and your savings in the bank.
Cut Back on Unnecessary Spending Right Away
Stop buying anything you don’t need. If it’s not essential, cut it out for now. You’ll be able to lower your household costs dramatically by reducing your consumption. If you don’t do it now, you may need to do it in the future. It’s better to cut back when you can, not when you have no other choice.
Lock Your Credit Accounts So You Can’t Access Them
Some companies allow you to voluntarily lock your credit card accounts for a specific length of time. If your lender provides you with that option, take advantage of it right away. That way, you’re never in a bind when it comes time to repay what you’ve borrowed. Instead, you’ve maintained your creditworthiness while keeping up with your day-to-day expenses without credit.
Survive Any Financial Emergency Unscathed and With Your Credit Untouched
Emergencies occur without notice. They can wipe out your finances quickly, too, if you don’t prepare for them. Knowing what to do in the face of financial uncertainty is imperative. It gives you a fighting chance to come out on top and be a wiser, more capable saver in the process.
