Smart Money Podcast: COVID Tests, and Reversing a Credit Score Drop

Sara Rathner
Sean Pyles
By Sean Pyles and  Sara Rathner 
Edited by Courtney Neidel

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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week’s episode starts with a discussion about how to get COVID-19 tests right now.

Then we pivot to this week’s money question from a listener’s voicemail. Here it is:

"I have a question. I took a personal loan for $3,000 and my credit score went down like 30 points, and I was surprised with this big drop. I was thinking maybe five points or seven points. So [my] question is: It's for a three-year term; if I pay off this loan, let's say next week, can I get back my 30 points on my credit score or no? Well, I appreciate your help. Thank you."

Also, we are running a sweepstakes ahead of our upcoming Book Club series, where listeners can enter for a chance to win Bola Sokunbi’s "Clever Girl Finance." To enter for a chance to win the book, send an email to [email protected] with the subject "Book Sweepstakes" during the sweepstakes period. Include the following information: your first and last name, email address, ZIP code and phone number. No purchase necessary. Void where prohibited. Open to legal U.S. residents 18 or older. Entries must be received by Feb. 9, 2022. For more information, please visit our official sweepstakes rules page.

Check out this episode on either of these platforms:

See how your score may change
Use NerdWallet's simulator to learn how money moves could affect your credit. Get a free score, too.

Our take

Finding COVID-19 tests right now is confusing, but some recent changes made getting them a little easier. The government recently announced a new website,, that lets you order four free tests per household. And if you have private insurance, you can get up to eight tests a month covered by your insurer. For tests you purchased before Jan. 15, think of using HSA or FSA funds to reimburse your expense. Also, if you are traveling internationally, know how to navigate testing.

When it comes to reversing a credit score drop, start by understanding what goes into your score. Applying for a loan will put a hard inquiry on your credit report. The effect of a hard inquiry will vary from one person to the next, but it should stop impacting your score in less than a year.

To maintain healthy credit, monitor your credit score regularly. This will help you become familiar with changes from one week to the next and may help you spot fraud. Also, think about using a credit simulator to see how an action like applying for a loan is likely to affect your score. And most importantly, pay all your accounts on time. A late payment can stay on your credit report for seven years.

Our tips

  • Know what helps — or hurts — your credit score. Hard inquiries from new credit applications can make your score drop, but you can take steps to restore it, like making on-time payments and limiting how often you apply for credit.

  • Track your credit score. Checking weekly can help you monitor changes. Use a credit simulator when you’re unsure how an action is likely to affect your score.

  • Make sure you pay on time. A late payment can stay on your credit report for seven years. The impact of other credit missteps, like an application you regret, doesn’t last nearly as long.

More about managing your credit score on NerdWallet:

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

Sean Pyles: Welcome to the NerdWallet Smart Money podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Sean Pyles.

Sara Rathner: And I'm Sara Rathner, filling in for Liz Weston. To send the Nerds your money questions, call or text us on the Nerd hotline at 901-730-6373; that's 901-730-N-E-R-D. Or email us at [email protected]. And don't forget to hit that subscribe button to get new episodes delivered to your devices every Monday. If you like what you hear, please leave us a review, and don't forget to tell a friend about us.

Sean: This episode, Sara and I answer a listener's question about how to reverse a credit score drop. But first, in our This Week in Your Money segment, we are talking about how to navigate getting COVID tests right now.

Sara: COVID tests are the hot item of the season that nobody ever asked for. Probably the least predictable stocking stuffer to ever get really popular in December.

Sean: Yeah.

Sara: Although I would've welcomed that; they don't come cheap either. So recent changes have been made that allow you to get reimbursed for them.

Sean: And like with everything to do with the pandemic right now, like masking guidance and quarantine guidance, this is a pretty confusing subject. So we wanted to sort out a few different ways folks can pay for, or get reimbursed, or get free COVID tests right now. And for the most part, we are referring to rapid COVID tests. Let's get into it. At a high level, because your insurance coverage determines your access to healthcare in this country, the type of insurance that you have will be your guide for how to get COVID tests covered, if you can at all. And the two words that sum up what we are about to discuss are "needlessly complicated."

Sara: And how. Starting January 15th, private insurers have to cover the cost of up to eight rapid COVID tests per person per month. For now, it seems like you have to pay for the test yourself and then ask for a reimbursement. The Biden administration is trying to incentivize insurers to cover the cost upfront, but we are just not there yet. One other option is if you have a health savings account, or HSA, or a flexible spending account, otherwise known as an FSA, you can reimburse costs through these accounts. So if you paid for a COVID test before that January 15th date, before the time insurance companies were required to reimburse you for purchasing tests, you can still get them reimbursed through your HSA or FSA. It's also worth noting that these types of accounts can cover other things related to the pandemic, like masks and hand sanitizer.

Sean: And these things are really important to get so that you can take on what is called the Swiss cheese method of protection. Had you heard about this, Sara?

Sara: Yeah. It's kind of like different layers with holes in it. But if you layer a bunch of things with different hole configurations, you end up with a solid object.

Sean: Masking, testing, vaccines, they all have their holes, but when they're layered up, they offer greater protection than any single layer.

Sara: You know what, if anything that motivates us as we get tired of the pandemic, as we are all exhausted of it, it's just a good reminder that any amount of effort you can put into protecting yourself, protecting your family, protecting the people around you and your community is better than nothing.

Sean: Yeah.

Sara: So masking, hand sanitizing or washing your hands and, of course, getting vaccinated are all really great ways to combine, and hopefully we can get out of this thing sooner rather than later.

Sean: Yeah. It's hard when we're in ... We've been in this for almost two years. At this point, we are seeing signs that the Omicron wave may have peaked already. I've been following a lot of epidemiologists who have taught me so much about what we can learn from our sewage, which is something I never had hopes to ever learn about, but here we are. While it can be hard to maintain your diligence, let's just do what we can and look out for one another.

Anywho, continuing on the way that different insurance can help you get access to COVID tests, I wanted to touch on Medicare and Medicaid. Original Medicare does not cover at-home tests right now, so to get these tests covered, those with Medicare will have to get authorization from a healthcare provider. Medicare Advantage, however, may offer coverage and reimbursement for at-home tests, so those who have Medicare Advantage should check with their plans. And that said, HHS is offering up to 50 million at-home tests at community health centers and Medicare-certified health clinics at no cost. Medicaid, meanwhile, does cover the cost of at-home tests. And if you are uninsured, or even if you do have insurance, you can go to, the website that the federal government recently rolled out, to request up to four at-home tests per household for delivery for free.

Sara: And there are lots of hacks for finding tests that people have been using. Our particular health insurance app has a COVID-19 section that offers tests to be shipped to your house for every person you have on your insurance plan. There might be multiple insurance providers that have this availability so look into your insurance plan, ask your benefits person at work or download your insurance plan's app to see if that's an option for you. And then another thing is to look in more rural areas as well, if you're looking for testing. If you live closer to the center of a city, there's more demand for testing, but if it's not that long of a drive to a less-populated area, you might be able to find testing appointments there.

Sean: Let's also talk about testing while traveling abroad right now. NerdWallet travel writer Sally French recently wrote a piece about a family that ended up paying $1,000 for COVID tests to get into the U.S. and this family had a particularly unfortunate experience, but it does highlight the logistical and financial nightmare of traveling internationally when many countries require proof of a negative COVID test for you to enter. And Sally's article also lays out how to manage this process. It comes down to knowing which tests are accepted by your destinations and how to find tests while traveling, planning when to take the test and knowing how much tests cost — and the cost of tests can vary greatly. One person Sally mentioned in an article had to pay $100 per test, while another only had to pay $12. For more info on this, check out Sally's article. We have a link to it on our show notes post. You can find that

Sara: One thing to watch out for are scam tests and scam testing sites. A few weeks back news emerged about a company called The Center for COVID Control. Sounds legit.

Sean: Right.

Sara: The company has hundreds of testing sites across the country, but the only issue is that many people are alleging that the company is a total scam. According to news reports, some folks were given their test results before they were even tested. That's not cool. In one testing site in Florida, there was a tip jar with a sign that said, "Tips for Tony." The kicker — I kind of love this to be totally honest — Tony is not somebody who works there; Tony is a dog. So I guess they were just raising money for a dog, OK?

Sean: Absolutely bonkers.

Sara: Yeah. Don't know what that has to do with COVID testing.

Sean: Yeah.

Sara: I don't know if dogs are really having a big COVID outbreak, but whatever. And one last note on testing: Access to testing is an equity issue. Studies have shown that low-income communities and communities of color are both more likely to contract COVID and less likely to have access to COVID tests. And one thing that you can do to help counter this in a small way is to donate some of the tests you might get over the coming weeks to a local shelter that helps people without homes and other vulnerable communities. Sean, I know this is something that you are planning on doing.

Sean: Yeah. I mean, I work from home. I travel rarely. So my exposure risk is relatively low, but I want to ensure that those in my community who are not as privileged can have access to these tests. So I'm planning on donating half of the tests that I receive over the coming weeks. I'm going to get as many as I can. I'm planning on giving them to a local shelter in my community that one of our friends works for. So I would encourage people to do the same if they are in a similar position.

Sara: Yeah. If you have any neighbors who are elderly or immunocompromised, it's tough for them to go out to a store, run errands, wait on long testing lines, be exposed to a lot of other people, send them a text, knock on their door, give them a call, find out if you can round up some tests for them; leave it at their front door for them. It would be really helpful if you've got anybody in your life, in your community, who really struggles to gain access to these things.

Sean: OK. Well, I think that is about enough about COVID testing for one episode, but we do have one more thing to get into before we move on to this episode's money question. As you may have noticed, we are working extra hard to put out great podcast content for you, our beloved listeners.

And next month, we are launching our first episode of the new Nerdy Book Club series, where our very own personal finance Nerd, Kim Palmer, interviews authors of personal finance books. In our first book club episode, Kim interviews Bola Sokunbi, author of the book "Clever Girl Finance." And we are running a sweepstakes on the podcast where you have the chance to win a free copy of Bola Sokunbi's book. To enter for a chance to win all you have to do is email [email protected] with the subject "Book Sweepstakes" during the sweepstakes period. Include the following information as well: your first and last name, email address, ZIP code and phone number.

And here is a brief disclosure about the sweepstakes, courtesy of the great minds on the NerdWallet legal team: The Smart Money podcast book sweepstakes is sponsored by NerdWallet. No purchase necessary. Void where prohibited. Must be a legal U.S. resident, 18 years or older, to enter. Entries must be received by February 9th. Visit for details.

Now we can get on to this episode's money question. This episode's money question comes from a listener's voicemail. Here it is.

Listener: I have a question. I took a personal loan for $3,000 and my credit score went down like 30 points, and I was surprised with this big drop. I was thinking maybe five points or seven points. So [my] question is: It's for a three-year term; if I pay off this loan, let's say next week, can I get back my 30 points on my credit score or no? Well, I appreciate your help. Thank you.

Sara: To help us answer this listener's question, we're joined by credit Nerd, Bev O'Shea.

Sean: Welcome back to the podcast, Bev.

Bev O'Shea: Thanks Sean. It's good to be back.

Sean: Let's go through what happened in our listener's case. Why would a personal loan lead to a credit score drop like this?

Bev: You know, it probably was not the personal loan by itself.

Sean: Mmm hmm.

Bev: I can't ask our listener any questions, but one of the things that I would ask if I could is if they applied for any other credit recently. Multiple credit applications can hurt your score. And were the scores the same version and from the same credit bureau? That can be different too.

Sean: So you want to make sure you're doing an apples-to-apples comparison, checking the same score week to week so you can monitor any changes, because different bureaus calculate your score slightly differently.

Bev: That's true. And also when you apply for credit, usually they don't check all three bureaus. They do if you're applying for a mortgage, but in most cases, applying for a personal loan or a credit card, they're only going to check one or maybe two. I think what our listener is concerned about is wanting to know: Can I get my points back?

Sean: Well, I want to talk about that a little bit as well. So do you have any thoughts as to why the drop for our listener's credit score was 30 points instead of what they were expecting, which was around seven or five points?

Bev: One is that they may not have compared the same score, but another is just credit scores have so many moving parts. Your score can drop because your balance was higher than normal. Putting a car repair on a card could cause a drop if it causes what's called your credit utilization to go up. If you're using a significantly higher percentage of your available credit on a credit card, that can take some points off. You can lose points when you pay off a loan. You can lose points if you close a credit card.

Sean: Quick aside, can you explain why you would lose points if you pay off a loan, because people experience this all the time and it can be a great source of frustration.

Bev: Oh, sure it can. Yeah. It's counterintuitive.

Sean: Right.

Bev: People will figure if I paid off a loan, I have proved that I'm a really good credit risk; and what credit scores actually see is you have one fewer line of credit from which they can make a determination about how likely you are to repay a loan. That can be extremely frustrating. Credit cards in particular can cause a problem because you lose some of your available credit, then your credit utilization will go up. Even paying off a car loan can hurt your credit, especially if you don't have another installment loan. Installment loans are loans that have level payments where you pay the same amount every month.

Sean: I'm at a place where my student loans and my auto loan are on track to be paid off within the same year, and I'm guessing that's not going to be great for my credit report and my credit score.

Sara: No, but it'll probably help you sleep at night a lot better.

Sean: Yeah. My bank account and my savings account will be very happy when I have all that money to put into them instead of the loans I'm paying off, that's for sure.

Bev: Would you still have an installment loan?

Sean: Yeah, I guess it won't be all bad news for me because I'll still have my mortgage, and I'll have it for several years — decades to come. But I will have two out of three of my installment lines off my credit report at that point.

Bev: Oh, I don't think it'll hurt much if it does.

Sara: And, Sean, I figure you probably have one or more credit cards, so you'll still have that mix of credit, and that could potentially be good for your credit score over time as well.

Bev: Yeah. Credit scoring formulas love mortgages.

Sara: That's good to know as somebody also with a mortgage. Why is that?

Bev: Oh, because you've gone through so much to get your mortgage to show that you are creditworthy, and they can see on your credit report that you're paying your mortgage on time.

Sara: That's true. If you've never gone through the mortgage underwriting process before, basically, it’s just begging somebody to love you for several months. It's like, here are all my bank accounts, here's an explanation for everything. Here are all of my assets. Here are my other debts, please love me. Please lend me a lot of money.

Sean: Yeah. That also opens the question of what the effect can be of applying for different kinds of loans, like an auto loan, mortgage, credit card. Can you talk about what sort of drop people can expect if they apply for a personal loan versus a mortgage [or] credit card?

Bev: Generally, a credit inquiry is a credit inquiry for the most part. Sometimes some loans — and they would be personal loans that are given to people in distressed situations — sometimes that can hurt more, but in general, an inquiry is an inquiry.

Sean: OK.

Bev: It doesn't matter what you applied for.

Sean: So even though a mortgage appears to be better on your credit report than an auto loan or another kind of person loan, the actual inquiry itself doesn't really matter from one to the next?

Bev: No, and it doesn't matter whether you get the loan or whether you're turned down for the loan.

Sara: That's important to know. So no matter what, even if your application is turned down, you still take the hit to your credit score temporarily?

Bev: Or, if you're in a situation like this listener where the loan is approved and you're seeing the effects of it and you're wanting to undo them, it's not going to do you any good to pay back the loan, as far as your credit is concerned. I totally understand where the listener is coming from. I remember when we were finishing our basement, I thought what a great idea it would be for me to get a 0% intro credit card that I could put these materials and stuff that I was buying on the credit card and I would have 12 months to pay it back. So I applied for one and I got it, and it was the first $1,000 credit limit I have ever gotten. And I was so frustrated because a $1,000 limit was not going to help me a whole lot ...

Sean: No.

Bev: ... with basement expenses. And plus if I even charged them, I was going to have this huge credit utilization on that credit card. So I wished I had not applied.

Sean: Did you call and ask for a higher credit limit?

Bev: I did. And they gave me $1,100. It made me so ...

Sean: A hundred more dollars. Great.

Bev: It was frustrating because they told me it was a result of looking at what it appeared I was going to be able to pay back. And I was like, but why does this one have to be the lowest credit limit I've ever had?

Sean: Yeah.

Bev: And I still don't understand, but my temptation was to just cut up the credit card. That really doesn't do me any good because I've still got that credit inquiry.

Sara: So that's important, looking forward for this listener and anybody else who's making similar decisions. It sounds as if, once you apply, the hit to your credit is done and your behaviors going forward are not going to erase that initial credit inquiry, but they could help you in the long term, if you do things like paying your bills on time and things like that. So how can you bounce back from this in the future and how long does it take?

Bev: It's going to depend on why this person's score went down. In the best-case scenario for recovering immediately, it would be because there was a big charge on a credit card that caused credit utilization to go through the roof. Once that is paid down and reported to the credit bureaus, the damage is undone. If it's their error, if your file has been mixed up with somebody else's, if somebody has reported you late when you were not, those are the sort of errors — big errors that were not your fault — that when you get them corrected, you get your points back immediately. A hard inquiry or several of them will not hurt your credit score for any more than a year.

Sean: We talk a lot about the importance of on-time payments and how that can help you build your score, but also if you miss a payment, how much that can drag down your score. If our listener makes on-time payments each month, how long do you think it would take for them to rebuild their score and get back to where they were before they got this loan?

Bev: Sean, it's really hard to say because getting that loan is probably not the sole reason that the points come off. Do you follow your score every month?

Sean: Every week.

Bev: Have you ever seen a point change that you couldn't explain?

Sean: Yes. And often when I dig into it a little more, I think it tends to come down to my utilization. From one week to the next I've been seeing my score fluctuate about seven points and this has happened over the past few weeks, I think because I've been spending more around the holidays, traveling more, things like that. So I think I have the explanation for it, but I don't know for certain; but that's the only difference that I'm seeing with what I've been doing credit-wise.

Bev: And you follow yours really closely.

Sean: And it's still a little hard to pinpoint exactly what's going on.

Sara: Yeah. I myself have seen fluctuations in my score from week to week. Sometimes there's an obvious explanation, maybe I recently applied for a credit card so my score goes down. I also use the NerdWallet app to track it, so I do get an alert when that happens. So it doesn't surprise me. You know, some fluctuation is normal. If you see something big and there's no obvious explanation, it's worth exploring just to make sure there's no mistakes being made or anything like that.

Bev: Sure. Yeah. It can be identity theft, too, which is something you would want to address really quickly.

Sean: We kind of touched on this earlier, but will paying off the loan early make a difference for our listener?

Bev: Paying off the loan early may make a difference, but not the difference that the listener is hoping for. It can actually cause your score to go down. If he is paying just a ridiculously high interest rate, I would do it anyway. It's just not going to help his credit score.

Sean: Yeah, and it won't erase the loan application or credit inquiry.

Bev: No.

Sara: And how common are prepayment penalties on loans? You know, sometimes you get dinged financially for paying off your loan earlier than the expected timeframe.

Bev: They are not common, but it's worth checking.

Sean: Let's go into some ways to rebuild credit, because that's what our listener and a lot of folks out there are interested in doing. What do you think is a good place for people to start, Bev?

Bev: Making payments on time, every time sounds boring, but it is crucial. If you make a mistake there and you have a payment that is more than 30 days late, it will almost certainly be reported to the credit bureaus. And if your score is high, you can lose more than a hundred points. Scores go down quickly, and they recover slowly.

Sean: And that's important because the mark of the late payment will remain on your credit report for up to seven years. Correct?

Bev: That is correct. I mean, there are things that you can do to rebuild credit and one is get a secured credit card or get somebody who has a good score and a good payment record to add you to a credit card, if they're willing to do that.

Sean: Having them add you as an authorized user, right?

Bev: They don't even actually have to give you the physical credit card or the credit card number. Just the fact that you have been added can help your credit score.

Sara: If you're ever in a situation where you're somebody's authorized user and they are perhaps not using their credit cards as responsibly as you would like, can you get yourself removed?

Bev: Yes, you can. You call the number on the back of the card and ask to be removed.

Sean: What about for folks who are not really in this pickle, but they still want to know how to manage their credit responsibly? What advice do you have for them?

Bev: The best advice is to pay on time, every time, [and] to watch credit utilization. You may want to pay your bill a little bit early to keep your credit utilization low. You want it to be under 30%, and under 10% is even better.

Sean: For folks who aren't familiar with the term credit utilization, that's basically how much of your available credit you are using. And there's an interesting breakdown between your total credit utilization, which means how much credit you have access to across all of your loans and cards, and your utilization per card. Because as you alluded to earlier with your credit card that had the paltry $1,100 limit on it, if you use all of that, that would affect you more greatly than if you'd spread out those costs across other different cards.

Bev: I believe that's right, Sean, but there are always exceptions. So I always, I hate to say that this happens every single time.

Sean: It's good to hedge. Well, that's one reason why we recommend folks play around with the credit simulator that we have at NerdWallet. You can put in different factors and see how maybe applying for a loan or paying off a loan might affect your credit scores. Any other advice for folks who are looking to learn more about managing their credit?

Bev: One would be to keep credit cards open unless you have a compelling reason to close them. Some people, particularly when they have vanquished a credit card debt, would love to never see that credit card again. But you don't need to close the account to never see it again. And closing the account could hurt your score.

Sara: Something that comes to mind is that if you have an old credit card that is sitting idle in a dresser drawer somewhere and you don't use it ever, eventually the issuer might close it due to inactivity. If you have one of those cards, you might want to put a couple of small charges on it every year, pay those off entirely and that way the card remains active and you don't take the hit to your credit score as a result.

Bev: Usually something like Netflix, you can put it on autopay.

Sara: That's what I do with one of my cards. My oldest credit card has my Netflix on it.

Bev: That's the way to do it.

Sean: Another thing I wanted to touch on is that I think it's important for people to put their credit scores in perspective because yes, scores will change from week to week. If your score’s already in good shape and you don't anticipate the need to apply for more lines of credit soon, I think that folks maybe shouldn't worry about it too much. Yes, I check my score weekly. I think it's important to monitor your score regularly, but don't worry about it too much. It's not worth losing sleep over for sure. I think people can focus on what they can control, make on-time payments as you mentioned before, Bev, and try to keep balances low and apply for credit sparingly.

Bev:I agree with that, Sean. And I want to say that a credit score is not a character judgment. Some people feel like it is. It's not. There's not really a good reason that I know to get an 850. It doesn't get you anything that a 750 won't. Bragging rights is all.

Sean: Well, Bev, thank you so much for talking with us.

Bev: It's always a pleasure, Sean.

Sean: All right. And with that, let's get on to our takeaway tips, and I'll start us off. First up, know what helps or hampers your credit score. Hard inquiries from new credit applications can make your score drop, but you can take steps to restore it, like making on-time payments.

Sara: Next, track your credit score. Checking weekly can help you monitor changes; and use a credit simulator when you're unsure how an action is likely to affect your credit score.

Sean: Lastly, make sure you pay on time. A late payment can stay on your credit report for seven years. The impact of other credit missteps, like an application you regret, doesn't last nearly as long.

And that is all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373; that's 901-730-N-E-R-D. You can also email us at [email protected] and visit for more info on this episode. And remember to subscribe, rate and review us wherever you're getting this podcast.

Sara: And here's our brief disclaimer, thoughtfully crafted by NerdWallet's legal team: Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstances.

Sean: And with that said, until next time, turn to the Nerds.