How to Manage Your Credit Through Financial Hardship and Not Ruin Your Credit

While we all hope we’ll never be in a situation where it’s difficult to pay the bills, things happen. You might be furloughed due to circumstances beyond your control, like the hundreds of thousands of people out of work right now due to Covid-19. Or perhaps you or your spouse were laid off, let go or forced to take a sizable pay cut. Maybe an unforeseen expense is making things difficult. Even if your financial hardship is temporary, that doesn’t mean it’s easy. Things can become especially dicey if you rely on your credit card to make ends meet on your bills, a strategy that can greatly raise your debt and lower your credit score.


The good news is there are certain tips and tactics you can follow if you’ve fallen on tough times to help you navigate your way through things without killing your credit score. Here’s a look at how to manage your credit through financial hardship:


How to Keep Your Credit Score in Tough Times


  • Look into hardship plans with your credit card company: The credit card companies typically don’t publicize this benefit, so there’s a good chance that it’ll be up to you to initiate it. However, many companies do offer hardship plans to help people better manage their debt. Essentially, hardship plans are repayment plans specifically catered toward a particular consumer’s financial situation – and enrolling in such a plan has no direct impact on your credit. Be honest with your creditor about why you need to enroll in such a plan.
  • Stick to the necessities: You likely need to stay up on your car payments, mortgage payments, utilities and perhaps your phone bill. But your cable bill? Your Netflix, Hulu, Amazon Video and other streaming services? Eating out? Your daily morning Starbucks? Those are all things you can likely live without. Don’t be afraid to cancel or put a hold on these luxuries until you can get back on your feet. You’ll thank yourself in the long run.
  • Pick up a part-time job: If you’re out of work and your unemployment benefits aren’t cutting it, don’t be too prideful to get a part-time job to help you get through the tough times. Even just bringing in a few hundred dollars more per week can help you knock out some of the essential bills you’re on the hook for. Plus, you can always leave the part-time gig as soon as you secure full-time work in your desired field once again.
  • Minimally, always make on-time payments: Even if you can only pay the minimum payment on your credit card, make sure you do it. Credit scores are largely weighed on whether or not you make on-time payments. Skipping even once can cause your score to dip – and you don’t want to get docked for something so seemingly simple to avoid.



Most of all, if you’ve fallen on hard financial times – don’t panic. Come up with a strategy of how you’re going to address your situation, then act. It’s possible to manage your credit through financial hardship without sacrificing your credit score.

Can I Improve my Credit Score By Carrying a Balance?


It’s estimated that nearly 60 percent of all credit card holders – or about 110 million Americans – currently have some sort of a balance on their credit card. And we’re willing to bet that if you ask, a good portion of these credit card holders will tell you that carrying debt over month-to-month isn’t a bad thing. In fact, we’re willing to bet that many will tell you that you can improve your credit score by carrying a balance.


This is one of the most common credit score misconceptions – and while carrying over a balance won’t necessarily hurt your credit score depending on the amount, it certainly will not help it. What’s more is that carrying over a balance is likely to cost you much more money long-term when you consider interest rates. The average credit card interest rate today is more than 19 percent. Let’s take a closer look at this myth:


Why Carrying a Balance Won’t Help Your Credit Score

Like we said above, just because you’re carrying a balance on your credit card doesn’t mean your score will be negatively impacted. But it certainly won’t improve your credit score by carrying a balance. Good credit card management such as paying down your debt or paying your credit card off will help your score, however, because you’ll be freeing up more of your credit utilization, or improving your debt-to-credit ratio. If you’re unable to pay off your credit card balance in full each month, it’s recommended that your credit utilization is no greater than 30 percent to maintain a good credit score. This means that if your credit card maximum is $1,000, you’ll want to owe no more than $300. If your credit utilization ratio goes above 30 percent, then you’ll likely begin to see your score dip.


Costly Balances

It’s recommended to only charge what you know you can pay off each month. However, we realize that this isn’t realistic for many Americans. But aside from the fact that you can’t improve your credit score by carrying a balance, it could also cost you big bucks in the long term. That’s because if you’re carrying a balance over from month-to-month, you’ll have to pay interest on this balance – and that can add up over time, especially if you get into a habit of only making the minimum payment and letting you balance balloon.


Credit Card Management Tips

So what are some of the best practices to keep your credit score high as it pertains to managing your credit card? Here’s a look:


  • Make your payments on time: If nothing else, you want to ensure you’re making at least the minimum payment by your due date. Payment history accounts for 35 percent of your FICO score.
  • Set alerts to keep your utilization ratio in check: Many credit card companies will allow you to set email or text message alerts for if your debt-to-credit ratio goes above 30 percent on your card.
  • Prioritize your credit card: Being that it likely has a much higher interest rate than your other debt, you should be prioritizing paying down debt on your credit card to save money in the long run. If you are able to make multiple payments each month to keep the balance low, consider doing so.
  • Be careful about closing other accounts: If you have multiple credit cards, keep in mind that the sum of them will factor into your overall limit and debt-to-credit ratio. So if you lose a certain amount of credit by closing one or more cards, you could inadvertently cause your utilization ratio to rise – and that will cause your credit score to drop.

How Costly Is Bad Credit? Many Don’t Know

Your credit score is a whole lot more than just a three-digit number – it’s essentially the lifeblood to financial opportunity. You likely are already well aware of how a good credit score can get your loan application approved fast, can get you low interest rates on auto and mortgage loans, and essentially save you money in the long term. But there’s also likely a lot that you don’t know about just how far-reaching your credit score is.

With that being said, do you really know just how costly bad credit is? You should. Here’s a closer look:

The Steep Costs of Poor Credit

If your credit isn’t in good standing, you should start enacting some credit repair strategies today. Here’s a look at some of the consequences of poor credit that you likely aren’t aware of:

  • Cell Phone: When you’re upgrading your cell phone or moving onto any sort of cellular plan, the cell provider is almost certain to conduct a credit check. If your score is poor, your options could be limited. After all, a credit score is essentially an indication of how reliable a consumer you are. If your credit report cites regular missed payments, what’s to say you’ll be making all of your cell payments?
  • Rent: Most everybody knows that you need a good credit score to get approved for a mortgage loan, but a poor credit score can also impact your renting options as well.
  • Utility Deposits: Many utility companies require some sort of an upfront deposit from consumers. If you have poor credit, you’re likely to have to put more money toward this deposit than someone with good credit would.
  • Car Insurance: Many car insurance companies are now considering your credit score when it comes to calculating your insurance premiums. While driver history and driving experience is an important consideration when it comes to car insurance premiums, many companies have found that an individual’s credit score can also help gauge reliability when it comes to driving as well.


As you can see, your credit score has a more far-reaching impact than just loan approval and interest rates, which is why you need to take the steps to repair your credit now if you’re among the 40 million Americans with a score of less than 600. Start by making on time payments on all of your bills, then work to manage your debt. Pay off high interest loans and credit cards first, and do your best to keep your credit utilization ratio at or below 30 percent. By committing to credit repair, it’s not unusual to see improvement within a matter of months.

Credit Repair 101: How to Improve a Bad Credit Score



  1. That’s your credit score. It’s not horrible, especially considering that the FICO score ranges from 300 to 850. But since it falls into the general “fair” category, it certainly isn’t prestigious as a score of 750, which is considered “excellent.” With this score, it wouldn’t be unusual to have to pay a higher interest rate than you would with a better score. Naturally, you want to repair credit, but how?

Here’s a look at some pointers on how to improve a bad credit score:

  • On-time bill payment: Pay your bills on time! Even bills that are a day or two late can have a big impact on your credit score. If you need to, set up reminders or automatic payments.
  • Check your report: Be sure to keep an eye on your credit report. Look out for errors – you’d be surprised at how often they occur. In fact, it’s estimated that up to 80 percent of all credit reports contain some type of error. If you find any errors, dispute them to help improve your score.
  • Reduce debts: Come up with a payment plan to pay down the debt on major accounts. Focus on paying off the high-interest accounts first. With credit cards, try to keep the balance within 30 percent of your overall credit limit. This is key to credit repair.
  • Credit cards: Don’t close unused cards and don’t open any new cards as a means of increasing your score or raising your credit limit, respectively.

And most importantly of all, use common sense when trying to improve a bad credit score. Don’t move debt around – pay it off. Manage credit cards responsibly and know the basics about your credit score and what can make it go down and up. If you feel like you’re really in over your head, consider consulting with a credit counselor.

Bad Credit Home Loan

Good Credit Score – When it Comes to Real Estate

Your credit scoreis essentially the lifeblood of your borrowing ability. A low score will often be accompanied by high interest rates – that is, if your mortgage even gets approved at all – while a high score will be accompanied by low interest rates, saving you more long-term. But when it comes to real estate and mortgages, you might be wondering just what exactly constitutes as “good” credit, and whether or not your credit score is weighed differently when applying for a mortgage than when, say, applying for a car loan or when opening a new credit card. This post will take a look at that:

What is ‘Good’ Credit in Real Estate?

In the real estate world, most experts agree that if your FICO score is at least 740, you’ll be eligible for the best interest rates that are offered at the time. However, for every 20 points your credit score comes in below this 740 threshold, you’re likely to have add-ons to the interest rate – and you may not be eligible for certain programs. So say, for instance, that you have a 740 credit score and you lock in a 4.125 percent interest rate on your mortgage loan. If your score came in at 700, your rate might be 4.5 percent, at 660 it might be 5 percent and so on.

The experts also agree that too low a credit score will result in either very high interest rates or in complete denial of your mortgage application. Generally speaking, this low range where things can become somewhat sticky is between 600 and 620.

In saying all of this, it is worth noting that whether a mortgage application is approved or denied, as well as the interest rate, is largely dependent on the lender that you’re working with. For instance, some lenders may be more flexible with low credit scores than others.

What if I Have Poor Real Estate Credit?

If you’re in the 600-620 gray area and are either unsure of whether your mortgage application will be approved or if you can afford a higher interest rate if it is approved, your best option is to work to repair your credit to make you a more attractive consumer in the future. Here are some tips and suggestions in doing so:

  • Make sure you pay all of your bills on time. This is one of the largest weighed factors in determining your credit score.
  • Concentrate on paying down high-interest debt.
  • Check your credit report to ensure that it is error-free. (It’s estimated that the majority of credit reports have some sort of error on them.)
  • Ensure that your debts owed is at or less than 30 percent of your total credit allotment.
  • Only take out new lines of credit when necessary.

How much does a hard inquiry drop my credit score?

Your Credit Minute Show Notes:

  • 00:01                                   What’s up YouTubers, this is Nik Tsoukalis from Key Credit Repair. Today, I’m going to address something very serious. Something that, for many of you, has made you quite sad. Hard inquiries. Okay? Some of you think this is devastating, this is the end of the world, you know? First, let’s talk about what is a hard inquiry. A hard inquiry is not when you check your credit score online, it’s not when you’re going to Credit Karma, or Privacy Guard, or Smartcredit. com. Anytime you’re checking your credit score for the purpose of credit education, credit monitoring, it does not hurt your credit score. A hard inquiry is a record that’s placed against your credit report when you are checking your credit for the purpose of blending, for being extended credit. Okay?
  • 00:48                                   And the question I get all day long is how much is my credit score going to drop if I have my credit checked? How much, how much, how much, how much, how much? Is my credit going to be destroyed? Is my credit destroyed? I’ve already checked my credit a few times with a few banks, is it over? Am I never going to get approved for something again? And the short answer to that is you are insane. You are insane. Stop listening to this craziness that hard inquiries are destroying your credit. It’s just false, it’s wrong, it’s totally not true.
  • 01:25                                   So let’s elaborate a little bit on this. So I’m going to reference my boys over at myFICO. com. If you’re not sure or not aware who FICO is, it’s Fair Isaac Company. Do you know those guys that invented credit scores? They tell us how inquiries affect your credit score. So I’m going to share this article below in the comments, but in the credit education section of, you can actually search inquiries, and it’s the first question that’s up there, and I’m going to read it off to you guys. Okay? If your FICO scores change, they probably won’t drop much if you apply for several credit cards within a short period of time. Multiple inquiries will appear on your credit report. Looking for new credit can equate with high risk. Okay? But that’s not definitive.
  • 02:16                                   But most credit scores are not affected my multiple inquiries from auto, mortgage, or student loans lenders within a short period of time. The short period of time is not defined. Guys, I’ve been doing this for 15 years, looking at credit reports for a long, long time. I’ve probably looked at, I don’t know, a hundred thousand credit reports, a couple hundred thousand credit reports. It’s almost absurd at this point. I can read these things, I can use ESP to probably tell you what’s on your credit report. I’ve seen so many of these things. The short period of time, I’d probably say 60 to 90 days, okay? If you’re shopping around for something like a mortgage and you want to check out a few different banks and lenders, you want to do a little rate shopping, okay? Keep in mind, to get a proper quote, they need to check your credit score. Don’t be afraid of doing this. It’s not going to hurt your credit score.
  • 03:13                                   FICO has told us, not just in this article but in multiple articles, that rate shopping increase are okay. So those hard inquiries, although they will appear on your credit score or your credit report, they’re not going to drastically drop your credit score. In fact, you may see absolutely zero drop in your credit score. In my experience, I have yet to see a credit report have any adverse effect, or credit score have any adverse effect from a hard inquiry. Guys, over a hundred thousand credit reports easily with my eyes closed, and I have never, ever seen a credit score drop because of a rate shopping inquiry.
  • 03:53                                   Okay, you’re shopping around for a car. Go nuts, go do what you need to do. You’re an educated consumer. Mortgage, go nuts. Shop for five, six banks. You have to. You’re trying to get a good deal. Guys, if you’re getting a mortgage, you’re talking about a 30-year commitment, and you’re worried about your, the hard inquiry affecting your credit score? You’re talking about paying back a bank over 30 years. It could be millions of dollars in interest and you’re worried about the hard inquiry or maybe the 10 bucks you’re going to spend to check your credit report? It’s insane. Same thing with a car. You’re paying back that car loan over the course of 5, 6, 7, sometimes even 10 years, that’s a lot of interest, so you got to make sure you’re getting a good deal.
  • 04:33                                   Um, now, for the first part of this, this answer, um, keep in mind, erratic behavior on your credit report could have an adverse effect. So, um, let’s say you decided to check your credit report a couple times with a credit card company, a couple times with the student loans company, a couple of personal loans, a couple of car loans, five or six mortgages, a few personal loans, and you did this all in one day. Okay? The credit scoring formula is designed to assess risk, okay, to protect future banks and lenders from making a wrong decision in terms of extending you credit, okay? So rightfully so, you could see a drop in your credit score. That’s a red alert. You are now a red alert, okay, maybe you’re a flight risk, maybe you’re about to leave the country forever and ever.
  • 05:25                                   I’ll give you an example. You’re about to leave the country forever and ever, you’re never coming back, and you decide, hey, right before I head out of this place, I’m going to go nuts. I’m going to buy a bunch of stuff, I’m going to get a Macy’s card, a Target card, a Walmart card, a few personal loans, a few car loans. I don’t know what you’re going to do with a car loan. A few lines of credit, and you’re going to go crazy. You could be considered a flight risk, and that’s the only case where you could see a drop in your credit score. And I have to tell you, that is extremely rare. I’ve never seen it before, but that’s what we’ve been told by FICO on numerous occasions.
  • 06:03                                   So guys, hard inquiries, if you’re doing it for the right reasons, don’t be scared of it. Do it, trust your lender. They know what they’re talking about guys, and they’re not going to drop your credit score. Okay? Um, and I’m going to squash one more misconception or one more myth, okay? Or make you guys aware of something. If you’re monitoring your credit score online, you’re on a Credit Karma, you’re on a Privacy Guard, you’re on a ScoreSense, you’re on any of these websites, keep in mind, most of these websites are not using the Fair Isaac Company Scoring method that banks and lenders use, which is typically a, kind of an older version, which is like FICO 4 or FICO 5, okay? These are 20-year-old scoring formulas. They’re using things like VantageScores, um, Credit Plus scores, those scoring formulas are not used by banks or for educational purposes only, but they’re also for marketing purposes.
  • 06:54                                   So they have an incentive to tell you that the world, um, is going to be over because you just had an inquiry. And the incentive they have is when they send you an email saying you just had an inquiry, red alert, login to the website, check the app. They’re going to offer you something. You’re going to login to the app, that’s the bait to get you to login to their app, and when you login to their app, what’s there? There’s a banner for a credit card, there’s a banner for some sort of marketing affiliation they have, there’s a banner for something, and they’re making money on those offers. Because most of these credit reporting companies, what are they? They’re marketing companies, they’re marketing platforms. You get your credit report and score for free, you login, every time you login, they’re marketing something to you. They get your data, they’re reselling it to companies, all this jazz, okay?
  • 07:44                                   So they really, uh, have been pushing this inquiry myth in a big, big way, to get people to login to their websites. Red alert, you’ve had an inquiry, the world is over. Um, new world order is taking over because of inquiries. Login quick, we will save your life. It’s false, it’s a lie, it’s garbage, okay? So guys, in terms of inquiries, that little frown, let’s turn it upside-down. Why don’t we do this together. Okay? Let’s smile. Do your job, do your rate shopping. Guys, this is Nik Tsoukalis with Key Credit Repair. Thank you for checking out our Credit Minute. Subscribe up here, down here, depending if you’re on Facebook or YouTube. Check us out for a free consultation, our staff is standing by, and have an amazing day. See you guys.

6 Ways Not to Reset the Clock on Old Debt


Everyone makes mistakes, but when mistakes are committed pertaining to financial decisions, the consequences have a tendency to be more far reaching. For instance, things like foreclosure, bankruptcy and old debt can stay on your credit report and impact your credit score for many years before it is essentially erased from your record. While it’s possible to enact credit repair strategies while you wait for the clock to expire on these negatives, your score likely won’t see the boost that you’re looking for until time expires on the debt. It’s important for consumers to be aware of the statute of limitations pertaining to debt in their particular state – but it’s also just as important for consumers to be aware of a variety of no-no’s that could potentially restart the clock on old debt, keeping it on your record for many more years. This post will take a look at several of these things to stay away from so you don’t restart the clock on old debt that is soon to expire.

How Not to Reset the Clock on Old Debt

  1. Watch the Clock: There are two “clocks” you need to be aware of – the statute of limitations clock and the credit report clock. The former varies by state, is usually anywhere from three to six years and basically sets a timeframe for how long collections may be forced on a debt. The credit report clock dictates how long old debt can stay on your record, which is seven years.
  2. Know the Default Date: Seven years after you’ve defaulted on a debt, it must come off your credit report. Be sure you know this date and build good credit, as your score will likely progress the closer you get to the seven year mark. Judgments are the exception, as they can stay on your report up to seven years from the filing date.
  3. Be Careful with Collectors: A debt collector’s job is to get you to settle or make payments on a debt. Some try to accomplish this by any means necessary. Be careful what you say if you choose to speak with them, as just an admittance that the debt is yours can essentially tick the clock back to the start.
  4. Tell Collectors to Stop: If you’re being pestered by debt collectors, it’s your right to tell them to stop. This can be an ideal way to avoid a possible slip up – just be sure not to admit the debt is yours when you contact them.
  5. Be Wary of Payment Options: Many collectors will offer the option of paying off a debt for a lesser amount than what you actually owe. Be wary of paying off debt and always be sure you have confirmation that it was paid in full if you proceed with such an option.
  6. Hire a Lawyer: If you ever believe you’re in the wrong, seek legal representation.

How Your Credit Score Affects Your Relationship


Per The Federal Reserve study, which analyzed close to 50,000 couples over a 15-year period, those who started relationships with a gap of 66 points or more between their FICO scores are found to be about 25 percent more likely to call it quits in two to four years compared with those who share similar credit scores when they begin dating. In fact, the study indicated that people tend to prefer dating people that they have similar credit scores with, though we don’t imagine that asking a man or woman for their FICO score upon meeting is the most appealing pickup line.

The good news is that if you do date someone with a different credit score than yours, sticking things out with them has proven to be beneficial. In fact, The Federal Reserve study found that those who are together for more than four years tend to work toward more similar credit scores over time.

Planning a Valentine’s Day With Poor Credit

So say your credit stinks, but you really don’t want to screw things up with the person you’ve been dating for a few weeks. The good news is that you can see notable improvements in your credit score within six months should you enact some credit repair tactics, such as paying down balances so that your credit utilization ratio is at or less than 30 percent, making on-time payments and disputing any errors you find on your report.

In the meantime, it’s still perfectly feasible to have a fun, romantic Valentine’s Day. Here’s a look at some ways to do it without having it take a negative toll on your credit repair strategy:

  • Have a romantic night in: You don’t have to go out to a fancy restaurant to have a fun, memorable Valentine’s Day. Instead, cook or order in for a candlelight dinner at your house. Later, you can rent a movie to watch while you cuddle up together on the sofa.
  • Use that gift card you’ve been waiting to spend: Remember that gift card you received to the nicest restaurant in town for Christmas? If you can’t bear staying in on the most romantic night of the year, Valentine’s Day could be a perfect time to use it. This way, you can have that fun meal out without spending a lot of – or any of – your own money.
  • Set some ground rules: If you’ve been dating for a while, explain your situation to your significant other and set some ground rules. Perhaps you two decide to forego gifts and just go to dinner. Whatever you decide, doing Valentine’s Day on a budget is a good habit to get into, especially when you’re trying to get out of debt and repair your credit score. Your significant other will likely admire your newfound financial responsibility.


Though The Federal Reserve study doesn’t overwhelmingly spell breakup or divorce if your credit scores significantly vary, it should serve as another motivator to whip your credit score into shape. Not only can a high credit score save you lots of money via low interest rates, but it can also potentially help your relationship.


Credit Tip Of The Week: Credit Score Breakdown



Credit scores range from 300 to 850, with 850 being the best possible credit score. According to FICO, five different categories of information are used to calculate your credit score: Payment history, credit utilization, length of credit history, mix of credit and new credit.

Payment History

Your payment history is based on the payments you have made to credit accounts in the past. It is the single most important factor used in determining your credit score and accounts for 35 percent of the overall result. Account types considered in this part of the calculation include mortgages, auto loans, retail accounts and credit accounts. This part of the calculation also includes judgments, foreclosures, bankruptcies and other serious financial issues.

Credit Utilization

“Credit utilization” refers to the percentage of your available credit that is currently in use. The higher this percentage is, the more your credit score will drop. Using a large percentage of your available credit is considered poor debt management, and potential lenders see it as a warning sign that you may have trouble making payments if they extend you more credit. Credit utilization accounts for approximately 30 percent of your credit score.

Length of Credit History

The length of your credit history shows lenders how long you have been using credit. This part of the calculation considers the age of each of your accounts individually, as well as the average age of all accounts. The longer your credit history, the higher your score will be. Length of credit history accounts for 15 percent of your credit score.

Mix of Credit

In general, it’s best to have a variety of credit types, along with some accounts that are not currently in use. Different types of credit considered include installment loans, mortgage loans, finance accounts, retail store accounts and credit cards. Your mix of credit accounts for 10 percent of your credit score.

New Credit

FICO reports that opening several new accounts in a short period of time indicates a higher credit risk. Thus, if you open multiple new credit accounts quickly, your score may fall. New credit accounts for the remaining 10 percent of your overall score.