NEW! Our Hero’s Journey tool can help you with your next step towards financial freedom - click here to try now.
Advertiser Disclosure

Rebuilding your credit score post pandemic

Rebuilding your credit score post pandemic
Image source: Getty Images

Post-pandemic financial management is likely to include an element of rebuilding. For many, this will mean rebuilding their credit score. Whether you’ve undergone a period of furlough or been laid off, the pandemic could well have left its mark on your finances.

Plot your path towards financial freedom with our Hero’s Journey tool!

MyWalletHero is here to help you learn about taking control of your money, whether that’s paying off debt, working towards a short-term money goal, or investing for your future.

This tool can help you understand the next steps on your journey – simply choose a goal that best describes your current interests to get started.

Let’s take a look at what you can to rebuild your score sooner than you think. 

Check your credit score

Checking your current credit score is an important first step. It will let you know where you stand and how much you need to do to rebuild it. Knowing your current score places you in a better position to negotiate interest rates or favourable financial contracts.

In the UK, there are three major credit reference agencies and they each have their own criteria regarding what a ‘good’ credit score is:

Revert back to full payments as soon as possible

If you’ve applied for reduced payments or a payment holiday during the pandemic, it may affect your credit score. While you may have agreed an arrangement with your credit provider, they still have to report the changes to the credit reference agencies as partial or missed payments.

It may not seem fair, but a dwindling credit score isn’t the only consideration here.

For property owners, making such an arrangement might affect their credit score, but it may also save their property. If you are in a position to begin making full payments again, contact your lender to make arrangements as soon as possible.

4 iron-clad rules for saving money on everything

Our Editor Sam Robson has been on a personal cost-cutting mission for years – and it’s time to share his wisdom.

Check out his choicest saving tips and tricks in this free report, “Sam’s 4 Iron-Clad Rules For Saving Money On Everything”.

Just enter your email below for instant access to your free copy.

By checking this box and submitting your email address, you agree to MyWalletHero sending you emails with money tips, along with details of products and services that we think might interest you. You can unsubscribe from future emails at any time. You also consent to us processing your personal data in line with our privacy policy, and our cookie statement. For more information, including how we collect, store, and handle personal data, please read our Privacy Statement and Terms & Conditions.

Bring credit balances down

If you’ve resorted to credit to carry you through the worst of the lockdown, it’s time to bring those balances down. Try to pay more than the minimum required payments to reduce the balance quicker. Credit scores are often affected when credit products are maxed out.

The rule of thumb on credit balances is that your utilisation shouldn’t be more than 20% to 30% of your credit limit. So if your limit is £1,000, aim to be using no more than £200 to £300.

Rebuild your credit score using a credit rebuilder card

If your credit score has dropped below a ‘good’ level, there are still options. Credit cards for bad credit are worth looking into. 

Credit cards for bad credit usually have low borrowing limits and high APRs to offset the risk for the lender. These cards are designed to help you rebuild your credit and over time. As you prove your reliability, the lender may reduce the APR or gradually increase your credit limit.

As soon as you’ve reached a satisfactory rating, however, it’s time to move on to a lower-cost product. 

Keep your credit provider in the loop

While there’s still a good chance that your credit score will dip as explained above, there are certain credit ‘sins’ that are worse than others. For instance, defaults and county court judgements (CCJs) are major no-nos that can take months or even years to resolve, depending on your ability to pay.

Keeping in contact with your credit provider and being honest about your financial situation may prevent them from taking more serious action. It’s important to stick to any new arrangements in order to rebuild trust.

Was this article helpful?

Reviewed and rated 4 stars out of 5 by MyWalletHero

Need a financial adviser? Get a free initial review lasting up to 1 hour, plus £50 off any follow-up advice.

MyWalletHero has sourced you a £50 discount off the cost of advice when you find an independent or whole-of-market financial adviser through*. All advisers are FCA-regulated, qualified and give fully unbiased advice. To find yourself an adviser fast and for free – use the Unbiased matching tool.

*This is an offer from one of our affiliate partners. For more information on why and how we work with partners, click here.

Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.