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Maintaining credit health during this pandemic is key

When borrowers honor their obligations, there’s no reason to see credit in a bad light, especially as it helps the economy grow faster this way. But how do you manage credit in the middle of a pandemic?

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Keeping your physical and mental health in check during the COVID-19 pandemic is crucial, but global information and insights provider TransUnion emphasizes that financial health must not be set aside. For most people, this generally entails having a steady flow of income, looking after any savings, and maintaining bill payments and other financial commitments.

But with the severe economic impact of COVID-19 globally, this isn’t always possible and it is vital that consumers truly understand how certain aspects of finance work to find or even create opportunities amid these difficult times.

There is no standard measure of financial health as each person’s circumstances are unique, but there is one aspect to finance that is often misunderstood, and that is credit. Credit is an important part of the economy because it allows entities and consumers to engage in transactions now that may not be possible if they only rely on their current capacity.

Anyone who has a credit card, loan, bank overdraft, or other similar credit agreements has a credit report – a record of how they manage their credit obligations, collected and aggregated by credit agencies like TransUnion. When borrowers honor their obligations, there’s no reason to see credit in a bad light, especially as it helps the economy grow faster this way. But how do you manage credit in the middle of a pandemic?

“A healthy credit history can help determine a consumer’s ability to access financial products and their ability to get competitive deals. At TransUnion, we are working with financial institutions to help them better understand consumers so they can continue to provide them with the financial services they need. TransUnion’s data quality assurance team stringently reviews credit data contributions and ensures that consumers are being accurately represented so their access to financial services remain unhampered during the challenges presented by COVID-19,” said Pia Arellano, TransUnion Philippines president and CEO.

Regulatory and institutional safeguards notwithstanding, there are a number of habits that consumers can practice to maintain good credit health even amid a pandemic.

1. Pay bills on time

Make it a point to not miss any payment deadlines, even if you can only pay the minimum amount. Automate it if possible or set alarms if you must. The purpose of a credit report is to help lenders see whether or not you miss payments and predict a behavior pattern for the future.

There are grace periods accorded to consumers during the pandemic, so it’s best to be aware of the policies implemented by your bank or financial institution for your convenience. Depending on your case, you may need to contact them directly to arrive at a repayment plan that suits your needs at present. However, if you can pay as soon as the bills come in, do so and you’ll have less to worry about.

2.  Set a budget and stick to it

The economic impact of COVID-19 is likely to extend over many years and having the discipline to stick to a budget and not over spend now will benefit you in the long run. In addition, do not apply for several new accounts at a time. Having a lot of simultaneous inquiries on your credit report worries lenders as it is a sign that you might be using credit and loans to supplement your income because you are spending beyond what you can actually afford.

3. Maintain low balances

Credit cards are considered “maxed-out” when you have spent 90% or more of the credit limit. When you maintain lower balances, lenders view you as someone who uses their credit responsibly. To achieve this, you should be able to pay your bills in full, on time, every time.

4. Build a strong relationship with lenders by being a responsible borrower

Lenders recognize that with higher credit limits comes increased responsibility. Credit limits tend to be reflective of both your wider financial standing as well as historic account conduct. A high credit limit reflected in your credit report can signal to lenders that you are a trustworthy candidate for new lines of credit. Should an unprecedented event such as this pandemic arise, you know that you’re in a position to access financial products at competitive interest rates if you need to.

5.  Beware of phishing and other scams that proliferate even during crises

A recent TransUnion report found that fraudsters are decreasing their schemes against businesses but increasing COVID-19 focused scams against consumers online. With the rise in digital transactions in banking, make sure you do not fall victim to fraud activities like account takeover or unauthorized account opening schemes that can taint your credit report. As a general rule, steer clear of offers that sound too good to be true. Legitimate financial institutions can never provide miraculous results in the short-term.

Other precautions include doing a regular review of your bank accounts for any suspicious activity, never providing sensitive information such as PINs and One-Time Passwords, and keeping your information secure against phishing attacks. It’s worth looking into password managers and updating your passwords on your bank accounts every so often. If you need to communicate with your bank, stick to its official channels.

6. Contribute to a savings fund

Building an emergency fund is generally considered good practice in your overall budgeting and serves to keep your credit health in check as well. Having enough funds on hand will help cover credit obligations, keeping you in good credit standing until you recover and things stabilize again.

Navigating the road to economic recovery

Build and keep the above-mentioned habits and you’ll maintain a good credit standing and overall financial health. Now, what should you do if you still cannot pay your bills at this time due to sudden loss of income or other extreme circumstances?

Consumers should coordinate with their bank or financial institution to explain their situation. Generally, consumers can request a payment holiday, lowering of monthly payments until they have fully recovered, or restructuring of a loan or credit facility for a smaller payment amount and longer tenure. Needless to say, it helps if you are in good credit standing to begin with.

As a seasoned and trusted global data steward, TransUnion recognizes its unique position to help consumers as they pursue economic recovery by helping financial institutions address current uncertainties using the power of information. Building on its database of 25 million account points that features a more holistic and insightful view into consumer behavior, TransUnion has started harnessing trended data that looks at richer information from a longer period of time (24 months payment history) to determine a consumer’s current and likely future financial situation. This, in turn, gives businesses quality information to continue supporting customers even in uncertain times such as the pandemic. When done right, everyone contributes to helping the economy bounce back stronger.

“We’ve been called to do bayanihan to recover as one, which essentially recognizes the need for us to work together to fully address current financial challenges. Our mission at TransUnion is to use the data that we have to help businesses and consumers make smarter finance decisions, especially during difficult times like this pandemic. We hope to continue creating a virtuous cycle of empowered businesses that empower consumers to gain access to financial services which can uplift their lives and financial health, as we believe this contributes a great deal to their physical and mental well-being too,” said Arellano.

Strategies

4 Tips on doing business in a digital world

Doing business in a digital world requires end-to-end approach.

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By Lesley Salmon
Kellogg Company SVP, Global Chief Information Officer

It’s no secret that technological advances will continue to improve consumers’ experiences. While CIOs will always be responsible for keeping their organizations safe, secure, and sustained, successful businesses must harness the power of new digital solutions to drive better business decisions, and outcomes and ultimately grow the business.   

Depending on who you ask, doing business in a digital world can mean different things. To some, it means adopting consumer-facing digital offerings like e-commerce, mobile apps, and digital marketing; to others, it means digitizing operations and processes internally. To continuously evolve and adapt to forever-changing consumer expectations, CIOs must take an end-to-end approach to digital – focusing on four areas:  People, Process, Technology, and Data & Analytics. If you do this, you will realize the value it can add to your organization. 

1. Focus on your people.

For me, it’s all about people – having the right people delivering through great partnerships with the key stakeholders across the business, understanding their needs, pre-empting, and then responding to them. A recent Gartner poll stated that talent is a top challenge for CIOs in 2022. To attract and retain the right people, we need to satisfy their hunger to experiment, fail fast and learn.

When our Kellogg IT team told us they didn’t see enough growth opportunities, we knew we needed to take a new approach to learning and development. We built our Year of Development Always (YODA) initiative with a vision to cultivate our childhood curiosity and an eagerness to learn. We created several tracks in the program for technical training, career strategies, and shadow programs to help our colleagues learn and explore new facets of the overall IT function.  The program has seen great results, team engagement is at an all-time high.

2. Don’t frown on the word process; embrace it.

When we think of ‘process,’ many people immediately imagine a rigid and inflexible approach. I challenge this perspective – we sometimes have to slow down, to speed up. Processes can be flexible while still providing structure for business growth – they’re what drive progress every day!

Part of doing this is closely linked with People because Process can be about engaging business colleagues at the right time with the right solutions. Being a trusted partner means bringing the company along the digital journey with us, which is essential for our future success.

3. Integrate technologies that delight consumers and drive better business outcomes.

We know that building scale and leveraging our platforms will deliver value for the business, but what about delighting our consumers?

In 2020 a team member attended an event and learned that more than 2 million people in the UK live with sight loss and cannot simply read the information on packaging. It sparked an idea to add NaviLens technology to our packaging, allowing visually impaired people to access all of the information on our packaging via their smartphones – either by having it played aloud or by using accessibility tools.

We partnered with our Packaging and Design team and launched a successful pilot making Kellogg the first ‘food’ company in the world to include NaviLens technology on our packaging.

Our company’s purpose is for everyone to have a place at the table, and we want all consumers to be able to access important information about the foods we sell.

4. Making better business decisions with data and insights.

Data has always been available but never in the abundance that it is today. While CIOs may not manage every corporate data program, the IT function is critical in ensuring commercial and functional teams understand what data is available and use it to fuel insight-driven actions.  

At Kellogg, we’ve re-imagined our data & analytics approach and focus on data ownership, quality, ethics, and governance. This is the recipe for making better business decisions.  

The real magic happens when you join forces with other business areas, like Marketing, to combine our insights and analytics capabilities with innovation, e-commerce, and more. This has allowed us to create a rich omnichannel experience that ensures we have the right foods, attractive pricing, and tailoring the right message to our diverse consumers.  

Freeing data from silos is critical to meet consumer needs and preparing for the future consumer experience. We recently commissioned research that looks at what consumer shopping trends we can anticipate by 2035; we are making investments to prepare for those consumer expectations.

For example, in 2035 and beyond, the retail environment will fit the needs of each shopper. Shoppers will see the personalization of products and shopper journeys as a baseline expectation to fit their unique attitudes and needs. Traditional online and offline environments will become increasingly integrated, supplemented with AI and innovative technologies to offer data-driven capabilities. 

Final thought…

Digital is the driving force behind any business, and IT is in the driver’s seat. Commercial business leaders can and should partner with their IT teams to help prepare for digital shifts to create more personalized experiences that create brand affinity.

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Strategies

Tips on how to avoid a debt trap

Here are some practical tips to help better manage, stabilize, and avoid a debt trap.

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According to CNBC, an average American has over $90,000 in debt. Accumulating debt is not only a financial burden – it can be mentally and emotionally taxing as a borrower finds themselves trapped in debt because the high-interest charges keep piling on. 

Steve Sexton, financial consultant and CEO of Sexton Advisory Group, shares some practical tips to help better manage, stabilize, and avoid a debt trap.

  • An emergency fund is essential. “Aside from budgeting and living within your means, having an emergency fund for unexpected expenses is one of the best ways to avoid going into debt in the first place,” says Sexton. “Plan to have at least 6 months’ worth of expenses saved in this fund, which can help you financially weather a temporary crisis and keep things running until the situation stabilizes.”
  • Consolidate various loans under a single one. “Taking on multiple loans at different interest rates beyond one’s capacity to repay can be resolved by taking on a single loan,” adds Sexton. “By doing so, the borrower can simplify their finances and no longer need to worry about remembering multiple repayment dates. This step can help the borrower better emerge from a debt trap.”
  • Leverage cash flow to prepay high-cost debt. “An important factor to streamline your repayments and avoid debt traps is to use a temporary inflow of funds to prepay debt with high-interest rates,” says Sexton. “These include annual bonuses or capital gains on share sales which can be used to prepay personal, credit card, or auto loans. When loans with high-interest rates are repaid, you are effectively saving the extra amount that would otherwise have gone towards the higher interest charges.”

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Strategies

3 Tips to include in a business crisis plan

To better protect businesses and their people, emergency preparedness experts from Rentokil North America and their family brands, Steritech and Ambius, shared three elements to incorporate into a weather-related hazard mitigation plan.

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Across the world, natural disaster events are on the rise. Climbing temperatures pave the way for an increase in droughts, wildfires, floods and other weather emergencies. In 2021, United States natural disasters created more than $145 billion in economic damage, three times the amount originally estimated by the National Oceanic and Atmospheric Administration.

The Federal Emergency Management Association estimates that about 25 percent of businesses do not reopen after experiencing a weather-related disaster. Without a plan in place, one weather emergency leading to a power outage, flood or property damage may be all it takes to force a company or business to close its doors permanently.

To better protect businesses and their people, emergency preparedness experts from Rentokil North America and their family brands, Steritech and Ambius, shared three elements to incorporate into a weather-related hazard mitigation plan. Business owners and operators can use these tips to establish a plan and better protect their employees, customers and business.

Tip One: Prepare for Power Outages

Power outages can happen anytime, anywhere. A nearby accident can take out power lines resulting in a local outage. Heavy rain, high winds or extreme temperatures from severe storms can also lead to a regional or widespread outage. Business owners may not be able to prevent a power outage from happening, but planning ahead and incorporating step-by-step instructions for the business’s unique needs can help prevent the loss of temperature-controlled products.

Conduct an extensive walkthrough of the facility and make note of any temperature-controlled products or power-reliant vulnerabilities. Include clear instructions for handling these products in the case of a power outage and ensure resources are readily and easily available. 

Consider having a paper log on hand in order to manually monitor and document product and food temperatures as long as it is safe to remain in the building or if the power outage is confirmed to be brief. Avoid opening reach-in and walk-in cooler doors as much as possible to keep items cold. A freezer in good condition may maintain its temperature for up to 24 hours if unopened.

“When a power outage impacts temperature-controlled products, discard any foods that may have been in the cooling or warming process,” advised Paula Herald, Technical Consultant at Steritech. “Don’t take chances trying to cool down hot foods; discard in the interest of food safety.”

Tip Two: Address Air Quality Concerns

Flash floods and wildfires continue to sweep across the United States releasing toxins, bacteria, smoke and other harmful pathogens into the air. These contaminants infect the air and seep into floors, walls and furniture, linger long after the flood or fire subsides. Exposure to these pollutants can be highly dangerous to people and can lead to heart and lung problems, eye and skin irritation and a number of other health-related issues.

Do not enter a space that has been impacted by a flood or fire without first receiving approval from health and safety officials. Once the area is deemed safe to enter, assess all structural damage, look for signs of smoke damage or mold and dispose of anything that can not be washed, rinsed and disinfected such as furniture and carpet. Air decontamination units can be used to help remove any remaining airborne toxins, gases and pollutants.

“The increased frequency of natural disasters is having a significant impact on air quality,” said Matt Hayas, Director of Product and Innovation at Ambius. “Business owners can address indoor air quality concerns by investing in specialized air decontamination units designed to effectively remove 99.9999% of air pollutants before, during and after severe weather situations.”

Tip Three: Remove Destruction and Debris

Natural disasters can leave behind damaged roofs, broken windows, fallen trees and other destruction and debris. Structural damage and piled-up debris are not only safety hazards, they can also create the perfect harborage for rodents, insects, birds and other pests looking to build a new home.

Once the weather emergency has passed, it’s important to conduct an extensive walk-through of the property. Identify any open access points and move any fallen trees and debris as far away from the building as possible.

“A minimum distance of 25 feet is recommended to keep pests from entering the building,” said Nancy Troyano at Rentokil. “Rodents can fit through holes as small as one-fourth an inch so it’s critical to conduct a thorough inspection of the building, before and after a storm hits.”

Dealing with the aftermath of a weather-related disaster can be overwhelming and costly. A pre-established hazard mitigation plan can save businesses up to $13 dollars per $1 dollar invested (National Institute of Building Sciences). As climate change continues to advance, the threat of weather emergencies may soon be a reality for many across the country. Be proactive and establish a plan before a disaster strikes. Incorporate these tips into a crisis plan to better protect businesses, properties and the people they serve.

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