Working to preserve and improve your credit score is one of the most proactive things you can do in the current U.S. climate.
Yet, according to a recent survey from Bankrate, one-third (33 percent) of U.S. credit cardholders have done at least one thing since the start of the coronavirus outbreak that could potentially hurt their credit score. Since March 2020, per Bankrate’s report:
- 17 percent of U.S. adults added to their debt
- 12 percent paid a bill late
- 8 percent carried a balance on their credit card with the intention of improving their credit score
- 6 percent did not pay a bill at all
- 3 percent canceled a card specifically to improve their credit score
Who’s potentially hurting their credit score, by generation
Baby boomer cardholders — those ages 56 to 74 — are the least likely group (24 percent) to have done something to potentially hurt their credit score compared to 43 percent of millennials (ages 24 to 39) and 39 percent of Gen Xers (ages 40 to 55).
In the same vein, a mere 14 percent of baby boomer cardholders report having added to their debt since March 2020 compared to 21 percent of millennials and 20 percent of Gen Xers. Only 9 percent of baby boomers say they paid a bill late compared to 14 percent of millennials and 17 percent of Gen Xers.
Misconceptions about credit scores
Despite cardholders admitting to these potentially harmful financial behaviors, only 13 percent report being worried their credit score would go down since COVID-19’s rapid spread throughout the United States. Additionally, less than one-third (28 percent) have checked their credit score.
This lack of concern surrounding credit scores may stem from a misunderstanding about how certain actions can positively or negatively impact one’s credit score.
Per the survey, more than 2 in 5 cardholders (44 percent) incorrectly believe that carrying a credit card balance can raise your credit score. Further:
- 22 percent don’t know what effect carrying a credit card balance can have
- 23 percent don’t know what effect canceling a credit card has
- 26 percent wrongly think that canceling a credit card cannot lower your credit score
- 28 percent wrongly think enrolling in a lender’s hardship program can lower your credit score
- 52 percent don’t know the impact of enrolling in a lender’s hardship program
How COVID-19 has affected credit scores (and mindsets)
When asked to what extent their credit score has gotten better or worse since the initial weeks of coronavirus outbreak, 12 percent of cardholders say their score has worsened, 16 percent don’t know, 19 percent say it’s better and 53 percent indicate it’s about the same.
Upon closer inspection, cardholders whose household income was negatively impacted by the virus are three times more likely to have concerns over their credit score (20 percent compared to 6 percent of those whose household income wasn’t negatively impacted by the virus).
A closer look: The coronavirus’ impact on household income
As for the virus’ impact on income, 49 percent of cardholders say that their household income was negatively impacted in some way (with 18 percent of this group indicating their credit score has worsened since the beginning of the U.S. outbreak.
Of that 49 percent, 47 percent potentially hurt their credit score since March 2020 compared to 20 percent of cardholders whose household income was not negatively impacted by the outbreak.
