Could credit scores be affected?

A woman checks her credit score on her phone

According to a November 2019 report from Financial Health Network, before the coronavirus hit, 70% of Americans reported that they grapple with at least one aspect of financial stability, while about 1 in 5 middle-class workers spends more than they earn. Now, with a possible recession or depression on the horizon, it’s projected that people’s finances could get worse.

If you’re facing difficulties keeping up with your bills, you might be worried about your credit score, since you know it can affect your ability to gain access to a higher credit line, score a mortgage or get a loan.

Here are some essential coronavirus credit score tips you need to know, along with ways in which you can ensure your score isn’t damaged even during this time.

The impact of missing payments

A couple reviews their credit card payment history

While the federal and state governments stepped up and provided some relief to small businesses and U.S. citizens, it also rejected a bill to protect consumers’ credit scores during the COVID-19 crisis. Essentially, the credit card companies can still report you to the credit reporting bureaus for things like late and missed payments. Additionally, they can charge you late fees and other finance charges, according to the Federal Trade Commission. You’ll have to read the fine print of your credit card offer to see precisely what it says regarding missing payments.

Which businesses report your late payment?

A man reviews his credit report on his computer with a serious expression on his face

You know that credit card companies will likely report a late payment to the credit reporting bureau. But what about other places, like the utility company, your health insurance or your internet provider?

If you provide your Social Security number to a company, they can report your late payment and even send you to collections if you continue to be delinquent. If you are sent to collections, not only will that have a dramatic negative impact on your credit score, but it could stop you from getting a mortgage, loan or credit card in the future since it can stay on your credit report for seven years, according to the FTC.

How to protect your credit score

A man speaks with his creditor on the phone

Since you have up to 30 days after your due date to make a payment, try to at least pay the minimum during this time. If you get a late fee, you can always ask to have that fee waived. Many companies will do this, especially if you’re not a repeat offender.

If you know in advance that you are going to be late on your payment, you can contact the company to work out some sort of payment plan.

Along with paying on time, you can look into how to raise your credit score. According to Experian, some quick tips to boost your credit score include keeping your credit utilization low (30% or less) and not opening up unnecessary credit cards, not applying for too many cards and closing unused cards.

Additionally, you should look up your credit report and dispute any inaccurate information. These strategies could also help you perform a credit score recovery after a late payment, just in case it happens anyway.

How banks, creditors and other businesses are helping customers

A woman concerned about her credit score talks on the phone while looking at her laptop computer while sitting on the floor.

If you’re concerned about how your credit score could be affected during the coronavirus, there are solutions specific to this time. The government, businesses, banks and creditors are providing some relief or forgiveness plans right now.

For instance, the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act put a moratorium on foreclosures if you’re unable to pay your mortgage right now. And if your loan is through Fannie Mae or Freddie Mac, your late payments will not be reported, according to the Consumer Financial Protection Bureau.

Banks and credit card issuers have a number of programs in place that could protect your credit score during the coronavirus pandemic. Citi is waiving late fees and deferring minimum payments for two months, while Wells Fargo is offering payment deferrals and fee waivers as well. Log onto your bank or credit card company’s website to see exactly what they are doing, and then make sure to get up to speed on payments as soon as the deferment period is over.

In terms of your utility and internet bills, some providers are not shutting off services for customers if they are late on their payments, and some are even offering breaks on bills. Call up your service providers to see how they can work with you if you can’t afford a payment. The same goes for your healthcare provider or any other companies to which you make regular payments.

Getting back on your feet

A man sits at an outdoor cafe with his coffee in one hand and his phone in the other.

Your credit score is important. It can be a powerful tool when you need credit to buy a big-ticket item and are looking for the lowest interest rate possible. However, during the coronavirus crisis, many people are trying to keep a roof over their heads and food on the table, and their credit score is not high on their list of things to worry about.

This crisis will pass, however, and you don’t want to come out on the other side with your credit damaged. By being proactive and reaching out for help, you can ensure you and your credit score weathers this storm during this challenging time.

Kylie Ora Lobell is a freelance copywriter, editor, marketer, and publicist who writes for MoneyGeek.

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