Tips for Protecting Your Credit Score While Enduring COVID-19

In the wake of the COVID-19 pandemic, millions of Americans are struggling to pay their bills, take care of their health, and make ends meet. An added complication to the COVID-19 crisis is credit. In March, Congress passed the Coronavirus Aid, Relief, and Economic Security Act with the goal of providing essential protections to Americans. Aimed at providing financial relief, the bill allows Americans to postpone payments on federally backed mortgages for up to a year and suspends payments on federal student loans through September 30.

In normal times, delaying loan payments negatively impacts your credit score. When lawmakers designed the relief bill, they included protections specific to credit scores. In theory, any American should be able to take advantage of the accommodations in the relief bill and not see a drop in their credit score. However, across the country, Americans are reporting that after accepting or inquiring about coronavirus-related financial relief, their credit scores dropped.

If you are currently taking advantage of government aid, it is important to pay close attention to your credit score. Consulting with a credit lawyer is the best way to stay on top of your credit history and ensure you are protected. Here are some tips for protecting your credit score during COVID-19.

Why You Want to Pay Attention to Your Credit Score

In a time when many people are struggling to put food on the table, you may wonder why your credit score merits your attention. Credit scores are numerical grades assigned to you based on information from your past credit history; they determine your worthiness for credit in the future. Building a good credit score takes time, but with a couple of missed payments, your score can quickly crumble. Once your score is in the dirt, it can take years to rebuild. Credit report blemishes can influence your ability to rent an apartment, get a job, and apply for a mortgage.

Economists and financial experts attribute the inability to access credit as one of the reasons Americans struggled to recover from the financial crisis in 2008. In the wake of COVID-19, lenders have tightened credit by lowering credit limits and slowing the processing of applications to refinance mortgages. The good news is that as a result of the pandemic, you have expanded access to monitor your credit reports. Taking preventative measures towards your credit will ensure you are protected.

Contact Your Lenders in a Timely Manner

Before checking your credit reports, it is important to contact your lenders. The best way to keep your credit history clean is to prevent potentially harmful information from landing on your lender’s desk. In addition to protecting your student loan and mortgage debt, the credit protection of the coronavirus relief package extends to additional lines of credit such as auto loans. This means that if you have a deal with your lender to postpone payments for your car loan debt, your credit shouldn’t be blemished. In fact, the government has encouraged lenders to participate in these types of deals with borrowers.

Deals with your lenders come with one caveat: you must reach out. If you’re late on paying your bills, but don’t have an agreed-upon accommodation with your lender, your credit score is going to drop. Even a single payment that’s a month overdue could reduce your credit score by 100 points in some cases.

Get Your Credit Reports

After contacting your lenders, the next step is to get your credit reports. In response to the pandemic, the three major credit bureaus—TransUnion, Equifax, and Experian—are letting people check their credit reports weekly for free. In just 15 minutes, you can download your credit report. If you’ve been able to keep your job and are financially stable, checking your credit report on a weekly basis is probably overkill. Conversely, if as a result of COVID-19 you’ve struggled to pay your bills, you should be checking your reports often.

Analyze Your Reports for Errors

Even in normal times, credit report mistakes are common. The Federal Trade Commission estimates that 1 in 5 credit reports contain an error. When credit report errors are left unidentified, they can make it challenging to increase your credit line or get loans that require a high score.  Some specific errors to keep an eye out for include:

  • Outdated information: If you close a credit card account, make sure it isn’t listed as open on your report.
  • An inaccurate status: If your lenders agreed to let you suspend your payments, your credit status should freeze. If you are taking advantage of coronavirus relief, be sure your status is accurate.
  • Inaccurately reporting payments in forbearance: If you are on a forbearance program with your lender, your payments should not be reported as missed during the months of your forbearance.

Consult a Skilled Debt Settlement Lawyer

COVID-19 has caused Americans to face unprecedented challenges. In the wake of the novel coronavirus, it can be challenging to ensure your credit score remains intact and your debt doesn’t accumulate. If you are in financial turmoil, it is best to consult with a skilled credit reporting or debt settlement lawyer. At McCarthy Law, we work tirelessly to ensure our clients can resolve their debts and maintain an accurate credit report. To schedule a consultation with a knowledgeable and experienced debt settlement paralegal, call our office at (855) 976-5777 or fill out an online contact form today.

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Jacob Hippensteel

Jacob Hippensteel

Jacob Hippensteel focuses his practice on consumer protection and business litigation. Jacob regularly assists clients by ensuring that their rights as consumers are protected under Federal and State consumer protection laws. Jacob regularly advises clients on a wide variety of issues, as well as protecting those client’s interests in federal and state courts.