RICHMOND, Va. (WRIC) — 2020 is a year that has many people asking, where is 2021?
With everything going on as a result of the coronavirus pandemic, one of the first effects most Virginians felt was the financial strain. But one of the last things Virginians probably thought about was their credit score.
Right now there are many real estate deals like historic low home interest rates and refinancing options. But without a good credit score, your chances of taking advantage of those deals are slim.
Gabrielle Brownson, a Richmond resident, said she took time during the pandemic to focus on what many people did — herself.
“COVID puts a spin on things and helps you realize how financially sound you should be, in case something were to happen such as a global emergency,” she said. “Fixing my credit has been something I’ve been doing the last five years, but I didn’t really focus on it until this year when things are more serious than what they have been.”
Brownson said she wants to buy the house of her dreams, so fixing her credit during such a troubling time was a priority for her.
But why does a credit score even matter?
People’s credit score is the only thing that financial institutions and lenders have to go off when serving clients. Having good credit can help individuals in the process of purchasing property, buying a car and even gaining lower interest rates on credit cards.
JB Bryan, President & Chief Investment Officer of JB Bryan Financial Group, Inc, has been helping residents of Central Virginia meet their financial goals since 1995.
Byran said while the stress of improving credit scores can make people want to rush the process, research has to be done.
“It’s important for consumers to focus on the purchase price and not just the interest rate offer or low payment offer,” Bryan said. “Be very careful when going into debt and read the contract completely.”
Bryan said she doesn’t recommend anyone accumulating debt during uncertain times like a global pandemic, but she said first things first — always prioritize.
“We are now heading out of COVID-19, and it is time to focus on your long-term financial goals,” she said. “Consider finding a trusted financial advisor to assist you in reaching your individual financial goals.”
According to a new report from Experian, after almost a decade of steady growth, overall credit card debt in the U.S. decreased in 2020. Even with the economic impact of COVID-19, this is the first time in seven years that any major consumer debt category declined.
Prior to 2020, consumer credit card debt increased for eight consecutive years, reaching a record high of $829 million in 2019, according to Experian. In the past year, this balance fell by 9 percent, bringing total U.S. outstanding credit card debt to $756 billion, the lowest point since 2017.
Kadija Ariyibi said she’s been taking the steps to improve her credit for a few years now. Ariyibi said the pandemic gave her more time and money to put into her credit journey.
Ariyibi said she will continue taking full advantage of deals being offered because she worked hard to improve her credit score.
“In the near future I want to buy property, whether it’s a home or commercial property for a business,” she said. “You have to take advantage of the opportunities presented to you when you work hard.”
Bryan also shared some quick tips on how to improve credit scores:
- Always pay on time
- Keep balance below 20% of the available credit line
- Avoid unnecessary debts (e.g. Multiple individual store credit cards)
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