Health and safety are top concerns during the coronavirus pandemic, but aside from COVID-19, economic and financial issues are also taking center stage. Financial hardship is impacting millions of Americans. Protecting your credit is important for your financial future. Missing payments will lower your credit score, which can affect your eligibility for a new credit card or a loan in the future.
If you have lost income, been laid off, or are facing other financial difficulties, there are ways to protect your credit. Here is how you can avoid credit problems during this challenging time:
Routinely Check Your Credit Reports
Mistakes and fraudulent activity can affect your credit. That is why it’s important to check your credit reports regularly. The three credit reporting agencies, Experian, Equifax, and TransUnion, all compile reports and you can access for free, once a year, at AnnualCreditReport.com. Once you access your free annual credit reports, you can dispute any errors or inaccuracies. You can dispute any issues directly with each credit agency.
Discuss the Impact of COVID-19 with Your Lender
If you are struggling to make on-time payments, contact your lender. The CARES Act prevents lenders from reporting late payments to credit reporting companies during the COVID-19 crisis. The new law has put various other requirements into effect that allow for more flexible agreements with your creditors. Lenders may offer solutions such as forbearance or reduced interest rates. Borrowers can also receive loan extensions to ease their repayment obligations.
Discussing your situation with your lender or creditor is the best solution as a variety of options may be available.
Pay What You Can
Even if you can only pay the minimum amount, make sure to avoid late payments on your credit report. If you’ve made arrangements with your lender or creditor, stick to the agreement and pay what you’ve agreed upon. You can also try the same approach with utilities, cable, cell phones, and other service providers. Flexible payment options may be offered. If better planning would help, create a budget, or work with a credit counselor to create a debt management plan.
Add a Consumer Statement to Your Credit Report
Adding a brief statement to your credit report informs each creditor of your situation. You can add 100 words, free of charge, explaining your dispute if it was not resolved after an investigation. A consumer statement goes on your credit file. It can be mailed in writing or submitted online via Equifax.
CARES Act Impacts Credit Reporting
Under the CARES Act, you can make an agreement with your lender to skip a payment, make a partial payment, or set up some other arrangement and be considered current, so long as you meet the terms of the agreement. If an agreement is made and an account is already delinquent, that status will be lifted once your account or loan is made current. If you bring your account current, the creditor must report you as such. These requirements apply to agreements made between January 31, 2020, and 120 days following March 27, 2020, or 120 days after the national emergency ends.
Additional information is available from the Consumer Data Industries Association.
Consult with OakTree Law for Financial Help
We know consumers are experiencing financial hardship during the pandemic. We can offer foreclosure, loan modification, and bankruptcy help. If you’re having financial difficulties and trouble making payments, we are open and holding new consultations by phone. Call 562-219-2979 to speak with a representative today.