Per the American Bankruptcy Institute: As COVID-19 persists in the U.S., one-third of Americans have admitted to making at least one financial decision in the last four months of the pandemic that is likely to hurt their credit score, a new Bankrate study has revealed and Fox News Business reported. Particularly, the main financial decisions Americans have made that can adversely affect their credit score include adding more debt, paying at least one bill late, carrying a balance, ignoring a bill due date, or canceling a credit card. Of those who increased their debt, 22% of respondents said that their household income was negatively impacted by the pandemic, while 11% said their household income was not negatively impacted.
Meanwhile, for the people who reported paying a bill late, only 18% had their household income negatively impacted while seven percent did not. When it comes down to the people who kept a balance on their credit card, 44% incorrectly believe that carrying a balance would increase their credit score. This finding may suggest that around two in five cardholders may not be aware that credit utilization can make up 30% of a person’s credit score, according to Experian.
Although one survey showed that some Americans have dabbled in financial behaviors that aren’t the best for a healthy credit score, only 13% of cardholders said they are concerned about shrinking credit reports. However, households with challenged finances are reportedly more than three times as likely to have money concerns versus their financially stable counterparts at 20% versus 6%, respectively.
Before you make any financial decision that could hurt your credit or your budget, first talk with a bankruptcy attorney near you for objective, solid advice on how to move forward.