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How To Protect Your Credit Score During COVID-19
How To Protect Your Credit Score
Living in the time of the coronavirus pandemic has been challenging. In addition to the public health threat we’ve all been faced with, many of us are now unemployed and worried about how we’re going to make ends meet next month. Losing your job and failing to pay your bills can do lasting damage to your credit rating.
If you’re one of those people struggling to make ends meet during the COVID-19 crisis, make sure that you don’t damage your credit while you’re waiting out the virus. Here are five steps you should take right now to protect your credit score during the coronavirus pandemic.
Turn off Autopay
If you use an online billpaying service and are out of work, underemployed, or are dealing with an uncertain financial status due to the pandemic, one of the first things you should do is adjust how you pay your bills. Turn off all of your autopay functions and begin paying all of your bills manually instead throughout the coronavirus crisis. This will help ensure that you don’t inadvertently pay a bill that you cannot cover and damage your credit. Additionally, manually paying your bills when you have limited income will allow you to prioritize exactly what you spend your money on during this crisis as well.
Contact Your Lenders
If you have significant levels of credit card and other debt, you should definitely contact your creditors as soon as possible, especially if you’re worried about being able to make your payments.
In some cases, banks and other lenders may be willing to lower your monthly payments or take other measures to keep you from defaulting. Some banks may even be willing to provide relief to their customers during this crisis.
Bank of America, for example, is allowing customers to request deferrals on debt payments. Wells Fargo is also waiving some fees and offering payment deferrals as well. So, get in touch with your lender, and see if they have any programs available to help you protect your credit.
Research Coronavirus Relief Options
The Federal government has enacted laws and programs to provide financial relief to millions of Americans during the Coronavirus Pandemic. Some of the new laws and legislation may be able to help you stay afloat financially during this crisis and protect your credit as well.
For example, the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act contains provisions that allow you to request forbearance, or payment deferrals, on your mortgage for two six-month periods. If you’re out of work during this pandemic, implementing mortgage forbearance could leave you with additional cash on hand to pay critical bills and help keep your credit intact as well.
So, do your research on the CARES act and other programs available, and see if they will work for you.
Pay Your Bills on Time
Apart from approved mortgage forbearance and loan payment deferrals available through government programs and select lenders, make sure you pay your other bills on time to the best of your ability.
Even if you’re only making the minimum payments on your bills, this will help protect your credit throughout the pandemic. After all, payment history, or how well you pay your bills, is a critical part of your overall credit score.
Outside of the government programs and relief some lenders have offered, failing to pay your bills on time right now could still damage your credit.
Monitor Your Credit
As the coronavirus pandemic continues, you should definitely monitor your credit more closely than you usually do. If your bank doesn’t provide you a real-time dashboard to check your credit score, there are numerous free apps available for mobile devices that do so.
You can also request a free credit report every year for an in-depth review of your credit as well. If you keep your financial situational awareness throughout this crisis, you’ll know when you need to take decisive action to prevent your credit from declining precipitously.
Additionally, there has been a proliferation of scams and frauds since the onset of the COVID-19 pandemic, so monitoring your credit can protect you from hackers and other criminals that could do lasting damage to your finances as well.
Parting Thoughts – Keeping Your Credit Safe During COVID-19
Don’t let your credit become a casualty of the coronavirus pandemic. Instead, make sure you’re proactive and take the steps necessary to protect your credit throughout this unprecedented crisis.
The steps suggested here are a great start to keeping your credit intact over the next several months. Additionally, if you still have concerns about the coronavirus’s impact on your finances, you should reach out to a credit counselor or trusted financial advisor as soon as you can.
Arm yourself with the knowledge and resources you need, and you’ll be ready to weather these uncertain times.
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