How to Protect Your Credit Score During COVID-19
The COVID-19 coronavirus pandemic has affected everyone all around the world. Extended isolation and sudden job losses have everyone thinking about their futures. Lots of people are concerned about losing a reliable income source during this time of crisis. Some have even been forced to shut their businesses. The global pandemic has turned many people’s financial lives upside down.
As you work on keeping your bills in good standing and your finances going strong, you should also pay attention to your credit score. Even if you’re delaying some major purchases like buying a car or a home or going on a trip, you still need to maintain good credit. You’ll eventually start spending again, and you’ll need a good credit score.
But how can you protect your credit score during COVID-19? Keep in mind that your credit scores and reports play a crucial role in your future financial opportunities. The following steps will be your handy guide in managing and protecting your credit score during this global pandemic.
Stay on Top of Your Credit Reports
Even on good days, make sure you regularly review your credit reports from the three credit bureaus. You can get free annual credit reports at AnnualCreditReport.com. Through April 2021, Experian, Equifax, and TransUnion are allowing consumers to access their credit reports for free weekly. Take advantage of this offer to make sure that any accommodations you request from lenders are appropriately reported and that your identity is safe and secure.
You can also sign up for the free Credit Report Card from Credit.com. With our report card, you’ll see your VantageScore 3.0 from Experian, as well as personalized information on what is affecting your credit score and how you can improve. If you want to dive deeper, sign up for ExtraCredit to see 28 of your FICO scores from all three credit bureaus.
Keep Up with Your Payments
Late payments can affect your credit history and credit reports for up to seven years. Prioritize paying your bills on time when you can, even during financially difficult times. You can do this by setting up reminders to alert you of payment deadlines. Also, you should make it a habit to make at least the minimum payment each month. Doing so will help you in keeping a good payment history record and prevents you from paying late fees.
Contact your lender whenever you can’t make payments on time. Lots of lenders have announced proactive measures to aid their borrowers affected by the global pandemic. Some are willing to provide loan extensions, interest rates reduction, forbearance, or repayment flexibilities. The best thing to do is to get in touch with your lender and explain your current situation. Don’t forget to ask for written confirmation if any agreements were made.
Be Aware of Your Protections
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has protections to help your credit score remain unaffected during the pandemic. This Act puts special requirements on some agencies and companies reporting your payment information to the credit reporting companies. The requirements are applicable if you’re affected by the COVID-19 pandemic and specifically covered by the Act.
If you request an accommodation under the CARES Act, your creditors will report your account to the credit reporting agencies based on the current standing of your credit when the agreement is made. The requirements set by the CARES Act are only applicable to agreements made between 31st of January 2020 and 120 days after the COVID-19 national emergency officially ends.
Get to Know What Impacts Your Score
If you’re currently unemployed and wondering if it will affect your credit score, the answer is no. Unemployment itself will not impact your score. Making late payments and missing payments are the things that most significantly affect your credit score. This is why we recommend getting in touch with your lender as soon as you suspect you may not be able to make a payment in full on time. Inform them of your current situation. This can also help you cope with your anxiety.
Hard inquiries, account mix, and credit age also impact your credit score, but to a lesser degree. Your major concern should be keeping your credit utilization low and paying bills on time.
Keep Yourself and Your identity Protected
Securing your personal information and identity is also crucial in protecting your credit score. Identity theft and scams are rampant during this coronavirus pandemic. Your personal information can unlock different financial resources. Hackers and cybercriminals can utilize all your personal information to impersonate you and open credit card accounts, make purchases, transfer funds, and borrow money. If left undetected, this activity can significantly damage your credit score.
Though the damage is reversible, the entire process will be costly. That’s precisely why prevention is always the best option. ExtraCredit from Credit.com, for example, offers $1 million in identity theft protection and dark web monitoring, among other features.
Make Budgeting and Planning a Habit
During this crisis, budgeting is essential for keeping your credit card debt low and your credit score high. Pay attention to how much money you make and the amount of money you spend. Identify expenses where you can cut the usual costs, at least temporarily.
Reworking your budget is necessary, especially if you’re currently unemployed or earning less money. You can consider the following money-saving ideas to maximize your savings:
- Put nonessential purchases such as online shopping and clothes on hold
- Temporarily suspend nonessential services such as cleaning and lawn care
- Cancel subscriptions on cable, music streaming, video streaming, etc.
- Search for affordable meal planning solutions
- Cancel fitness and gym memberships
- Cut back child-related extracurriculars such as tutoring, lessons, and sports
- Spend less on takeout
Although reducing costs is not fun, the result will reduce your financial stress and will allow you to better protect your credit.
You Can Protect Your Credit Score from COVID-19
All the things mentioned above have one thing in common: All require taking a proactive approach to your finances and credit. Follow the six credit-protection strategies mentioned above to maintain and protect your good credit even if you are facing a financial crisis.
About the Author
Lidia S. Hovhan is a part of Content and Marketing team at OmnicoreAgency. She contributes articles about how to integrate digital marketing strategy with traditional marketing to help business owners to meet their online goals. You can find really professional insights in her writings.
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