How to Keep Your Credit Score Healthy Through a Crisis

Whether you’re a small business owner, a freelancer, a gig worker or even a full-time employee with a ‘side hustle’, one thing is for sure: you’ve been 100% focused on staying afloat financially as the effects of Covid-19 sweep across the world. Amidst the stress and mayhem, it’s vital that you find ways to protect your credit score. In fact, keeping a good credit rating is more important now than ever before. 

TransUnion’s research into how South Africa’s SMME sector has been impacted by the pandemic shows nine out of ten SMMEs are struggling, or have had to temporarily close. Nearly 8 out of 10 have seen significant revenue decreases, and only 1 in 5 are confident they will survive.

What this tells us is that if you’re worried about your finances because of Covid-19, you’re not alone. There are lots of business people facing uncertain and difficult times.

Here are steps you can take to help maintain your credit score – and your financial stability - during the pandemic.

Be strict with credit

TransUnion’s research shows that the SMMEs that are surviving are far less likely to offer payment holidays and discounts to other suppliers. While we’re all in this together, it’s important that you do what is necessary to ensure your own financial survival first. Only then are you able to help others.

Pay accounts and credit cards on time

One of the biggest influences on your credit score is your account payment history: how you manage accounts, and whether you pay your accounts on time. While the ideal way to manage your credit card is to pay your full balance each month, this may not be an option when money is tight. Try to pay at least the minimum balance each month. You will pay more in interest but keep your credit score – and ability to access credit – open.

Keep talking to your lenders and creditors

If you’re battling to keep up with your financial obligations, talk to your lenders and ask them for help. Many creditors and service providers are sympathetic at this time, and will help you find the best options to get through this time and protect your credit. But it’s important that you talk to them before major trouble strikes. Pick up the phone.

Stay on top of your credit reports

Even when times are good, it’s advisable to review your credit reports and credit history. During times of crisis, it’s critical. Review your credit information regularly – both your business and personal credit reports - to get a snapshot of your financial health, and to ensure there are no errors that could affect your ability to get credit in the future. Get your TransUnion credit report here.

Take a non-emotive approach when considering business continuity or closure

If your small business or one-man show’s financial situation is dire, apply for business rescue sooner rather than later, and continue following sound business practices. Organisations like Cobra - https://www.cobra.org.za/ - will do everything they can to help SMMEs at this time.

Most small business owners and self-employed people know what it’s like to hustle. Right now, we’ve got to hustle like never before if we’re going to make it through this. Be safe out there.