A new poll from Bankrate shows that a third of credit card holders did something to ding their credit score during the pandemic. But very few cardholders are stressing about their scores.
The coronavirus has had a negative impact on many people’s financial lives.
A new survey from Bankrate conducted in early July revealed that a third (33%) of credit card holders did at least one thing that could hurt their credit score since March 2020.
Of those surveyed, 17% added to their debt, 12% paid a bill late, 8% carried a balance thinking it would help their score, 6% didn’t pay a bill at all and 3% canceled a card specifically to improve their credit score.
But only 13% of cardholders said they were stressed about their credit score and only a third checked their score during this time.
The survey also showed nearly half (49%) of cardholders said their household income was negatively impacted in some way by the COVID-19 outbreak.
And nearly half of them (47%) did something to potentially hurt their credit score since March 2020, compared with only 20% of cardholders whose household income was not negatively impacted.
“While the delinquency rates for credit cards and other financial products remain very low by historical standards, there are warning signs on the horizon,” said Ted Rossman, credit card analyst at Bankrate.com and CreditCards.com.
Rossman noted that the coronavirus-related government stimulus programs were helpful, but temporary.
With the virus surging in many parts of the country and leading to more fears and restrictions, there’s reason to believe that delinquencies and defaults may have been delayed, not avoided.
Rossman added that many who are currently out of work seem confident they will soon return.
Breakdown shows boomers least likely to have hurt scores
The survey broke down groups of people most and least likely to have done something to ding their scores:
- Only 24% of baby boomer cardholders said they did something to hurt their credit score, compared to 43% of millennials and 39% of Gen Xers.
- Just 14% of boomer cardholders said they added to their debt since March 2020, compared to 21% of millennials and 20% of Gen Xers.
- And 9% of baby boomer cardholders said they paid a bill late, compared to 14% of millennials and 17% of Gen Xers.
- Twelve percent of cardholders said their credit score went down since the start of the outbreak, 19% said it went up, 53% said it remained the same and 16% said they didn’t know if their score had gone up or down.
- Of those who say their household income has been negatively impacted in some way by the outbreak, 18% said their credit score suffered.
See related: How your stimulus check can help you improve your credit score
People aren’t that worried about credit scores right now
Only 13% of cardholders said they worried about their credit score going down during the pandemic, but those whose household incomes were negatively impacted were more than three times as likely to worry than those whose household incomes weren’t impacted (20% vs. 6%).
Millennial cardholders (20%) were also more likely to stress over credit scores than Gen Xers (13%) and boomers (7%).
Misconceptions about credit loom large
The Bankrate survey also found that many people still have mistaken beliefs regarding credit.
More than 2 in 5 cardholders (44%) erroneously believe that carrying a credit card balance can raise your credit score and 22% said they didn’t know how carrying a credit card balance can affect credit scores.
And 28% mistakenly thought that enrolling in a lender’s hardship program can lower your credit score, while more than half (52%) said they didn’t know if there was an impact regarding enrolling in a program.
Twenty-six percent believe canceling a credit card won’t lower your score and 23% said they don’t know.
“There’s a lot of confusion surrounding credit scores,” Rossman said.
Rossman advised that you try not to carry balances, that you keep old cards open and that you ask your lenders for help if you’re struggling.
In general, he said, you want to show a long history of making on-time payments and keeping your debts low relative to your credit limits.
“Staying well below your limits is one of the best ways to improve your credit score quickly,” Rossman said.
Bankrate.com commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,891 credit cardholders. Fieldwork was undertaken on July 1-6, 2020. The survey was carried out online and meets rigorous quality standards.