To say that the COVID-19 pandemic has been a challenge for all of us is probably an understatement at this point. But for millions of Americans, one of the biggest effects they have on them is likely the ones they least expected: their creditworthiness.
With so many people struggling financially, late and even missed payments have become a “new normal” across the country. It’s also the kind of downside that has the potential to last long after the coronavirus leaves us for good. Fortunately, however, there are certain steps you can take to prevent such long-term consequences from occurring. There are just a few important things you need to keep in mind while you are doing it.
Protecting Your Credit Score During COVID-19: What You Need To Know
By far one of the most important steps you can take to ensure your creditworthiness during COVID-19 is to consult with all lenders and creditors to see if support options are available. Yes, it is true that under normal circumstances this path would have been limited – but these are absolutely not normal times that we live in. Most banks and other financial institutions understand that all of this has been incredibly difficult for people – especially in certain industries like food service, which may have been unemployed for months.
At the very least, you should check to see if you can take a break for the foreseeable future or even make reduced payments to avoid missing out on them altogether.
Even if financial assistance is not available, you should still try to pay what you can for all of your outstanding debts. If you can only make the minimum payment on your credit card, that’s fine. This will further prevent late payments from showing up on your credit report, which will keep your score as close as possible.
Finally, consider adding a consumer statement to your credit report that briefly explains your current situation and what you can do to address future issues. For example, Equifax allows you to add a 100-word statement to your credit report This will help you check if the missing payments or other issues that are occurring are related to COVID-19. Potential new creditors can see this before making a decision in the future. This increases the chances that even lowering your score won’t do as much damage as you feared.
You can also add an explanation to Experian and TransUnion credit reports – all you have to do is contact them directly to do so.
Finally, make sure you are up to date on all credit-related activities by requesting a copy of your full credit report whenever you are able. Especially during COVID-19, you want to quickly dispute any incorrect information in order to keep the risk from the ongoing financial uncertainty as low as possible. You can get a free copy of your credit report anytime once a year by going to annualcreditreport.com.