COVID-19: 10 Ways to Protect Credit Health During This Economic Downturn
People in America are staying at home now to avoid the coronavirus outbreak. Not only all Americans, but people all over the world are also going through the lockdown phase to prevent the deadly virus from spreading. Now, people are jobless in our country, they are home locked and have no work to do. This situation has created uncertainty about their financial future and credit health.
This long lockdown all over the country has created economical distress as well. People are living through unprecedented times due to the COVID-19 (Novel Coronavirus) pandemic.
People are worried about their job, earnings, savings, and credit health.
It is true that these long-standing financial ramifications will stay for longer, even after the pandemic goes away.
Since a credit score means a lot, people are worried about it and want to know how they can protect their credit score in the months to come.
Here’s how you can protect your credit health on your own.
Use your credit card wisely
During this economic downturn, you need to use your credit card wisely to maintain your credit health. Try to buy things that you need with your credit cards. Make sure you pay the bill within time. Remember, to make the bill on time, you have to use your credit cards within your means.
This can create a negative impact. Use credit cards responsively and when you know you can pay the bill.
Avoid late payments
You shouldn’t miss a single credit card payment instead you should try to solve your financial problem wisely. If you are running out of money, then make at least the minimum payment. You should also do this to other accounts like mortgage, car payment, and utility.
Contact your creditor or lenders
If the pandemic situation has created a financial hardship for you and due to this, then you should contact your lenders and creditors. Let them know that you are going through financial hardship and ask for help. They might offer you an extended payment policy or other offers.
Avoid falling into new debt during the COVID-19 pandemic
Since there is a disruption in your earnings, you may fall into debt. However, you should try your best to avoid falling into new debts because this can affect your credit score negatively.
Thus, you have to manage money or savings that you have right now very carefully. By doing this, you can make payments on your current student loan debt, credit card payments, monthly utility bills, and medical insurance.
Follow an emergency budget to manage your money properly
Budgeting is very necessary this time to keep credit card debt down and to keep yourself current on every monthly bill. Take a look at how much money you have right now including the monthly salary (if any) and what you’re spending. Cut down all the unnecessary expenses to save room in your budget. This way you can manage every monthly bill along with household costs without taking out short-term loans.
Negotiate for a lower interest rate
If you think that you can’t make the payment on your student loan debt, this time, you should talk to your lenders and let them know about your financial condition. You can request a lower interest rate or defer payments.
The Department of Education has said that borrowers can avoid making student loan payments for at least 60 days because of the financial disaster caused by COVID-19. Visit StudentAid.gov/coronavirus and ed.gov/coronavirus for more information.
Don’t ignore your credit card debt payments
added interest payments can create more debt trouble. least the minimum payment. Remember, not making a payment at all can further impact your credit score.
Review your credit health report regularly
You can get a free copy of your credit report every 12 months from each of the three credit bureaus. So, check your credit report from each of the three bureaus and make sure there are no errors listed
Look for Government grants and relief programs
Keeping this COVID-19 pandemic and prolong lockdown situation in mind, many lenders and creditors have decided to provide relief programs to help the consumers. The government has also announced many grants and relief programs. So you should be aware of them.
mortgage servicers to create a moratorium on foreclosures and evictions for borrowers who are highly affected by this pandemic and financial downturn.
According to this program, consumers who are going through financial hardship can report their financial downturn situation to their lenders to get the relief program. You can visit FannieMae.com and FreddieMac.com for more information about the relief program.
Remember that one late or missed payment can negatively affect your credit score. Sadly, this will stay on your credit report for seven years.
If you’re jobless and are not drawing a salary from your job due to the pandemic, then you should contact your lenders and creditors to let them know about your situation. Try to arrange any accommodations or relief programs from them.
Lenders and creditors may have special assistance available to their consumers to reduce the risk of impacting their credit health.
Your creditors or lenders can waive late fees or offer short-term loans, reduced payments, interest-only payments, or no payments, forbearance. So, don’t panic. Remember, there are numerous people suffering like you. So, accept this situation, stay safe and handle your money wisely. This situation will surely pass.
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