1. Late credit card payments
The problem: The most important thing you can do for your credit score is to make on-time payments to your lenders, utilities and credit card companies. Your payment history is the most important credit-score factor. Late payments can stay on your credit reports for seven years and do serious damage to your score in the first two.
What to do: If you can’t afford to make a payment, it’s crucial you communicate with your credit card companies and lenders. They may be able to reduce your payments or let you miss a few without reporting that you became delinquent. Tell them you’re having trouble paying because of coronavirus, and be prepared to provide documentation.
Depending on your financial situation, you may need to keep asking.
2. You can't pay your mortgage or student loans
The problem: This might not have hurt your credit during the coronavirus crisis, but you need to check on this!
If you have a federally backed mortgage (backed by FHA, VA, USDA, Fannie Mae or Freddie Mac), you can ask for a forbearance of up to 180 days, thanks to the Coronavirus Aid, Relief and Economic Security (CARES) Act. If you need additional relief, you’re allowed another 180-day extension.
If you can’t pay your federal student loans, the CARES Act also aims to prevent any negative credit reporting that could damage your credit.
What to do: It’s on you to double-check and make sure your paused mortgage and student loan payments are being properly reported.
One good way to keep tabs on this is through a free website like Credit Sesame, which will help you monitor your credit. Credit Sesame shows you your credit score, examines your credit reports and keeps you updated on any changes.
3. You're using up all your credit
The problem: If you’re in financial dire straits, you may be using up all of your available credit — or at least a lot of it. The overall amount of your credit that you’re using is called your “credit utilization ratio,” and it can have a major impact on your credit rating. It counts for about 30% of your score.
What to do: Do what you can. Normally we’d be fussing at you to use less of your available credit. But, depending on your financial circumstances, that may not be a realistic option for you right now.
Your credit score will take a hit if you start using significantly more of your credit. But in these trying times, you may be forced to run up your credit card balance or miss payments to pay for necessities like food, shelter or medication.
When things eventually go back to normal — and they will someday — you should see your credit score bounce back pretty quickly if you pay down your credit card balances.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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