Protecting Your Credit Rating During a Recession

The past couple of years have been tough on almost everyone. With the dramatic downturn in the economy, the housing market, the stock market bubble bursting, and the resulting widespread job losses, many people like you are finding it difficult to make ends meet. Often the first thing affected when finances get tight is the timely payment of bills.

Should you find yourself in the position of having to choose which bills to pay and which to let slide, first ensure you have checked that you indeed cannot make at least the minimum payment on each – if you definitely cannot, first, prioritize the order in which you should address each. To protect your credit rating, the following are your most important expenses which you can’t ignore:

• Mortgage
• Bank loans
• Credit cards
• Department store cards
• Car loans/leases

Make sure you make your full payment if it is required or at least the minimum available to you.
Next on the list are utilities that often hold a monopoly which may be less than sympathetic to your financial situation given they have no competition and no interest in keeping you happy as a customer – you having no choice in the matter:

• Power
• Gas
• Water

In many areas there is some competition available for above services, so alter the list based on your situation. These utilities should at least receive a partial payment to show that you aren’t ignoring them. Definitely call those you are not able to pay in full and explain your situation. If you think life is rough now without much money – it can certainly get worse if your power or heat get cut off due to non-payment!

If you have any funds left over (after taking care of the above and essentials like food), divide them up evenly and devote them to the remainder of your monthly expenses:

• Cell phone
• Internet
• Cable
• Internet provider
• Any other monthly service you may pay for

While the last two lists are certainly important and ultimately can’t be ignored, they won’t have nearly the immediate negative effect on your credit rating that the items in the first list would have should you choose not to make a payment. So, given funds are limited, spend them wisely to preserve your hard won credit rating.

Manage Your Credit

Transunion and Equifax are both credit agencies that for a low cost, will provide you with online reports on exactly what your credit profile is and will definitely help you manage your credit. Check them out today!