How to Protect Your Loan While the Coronavirus Is Out
As the coronavirus pandemic continues to unfold, you may be concerned about the long-term impact that any change in your finances could have on your credit history. Urgent checks and deadlines for deferred payments are helpful, but could they ultimately hurt your credit score or history?
I spoke with Rod Griffin, senior director of public education and credit protection at Experian , about factors to consider when managing your finances during these confusing times.
Find out who to call if you need help
First things first: you need to know where you have accounts and how much you owe.
If you haven’t received a free credit report for a long time, getting one now can give you a basis for your bills and balances as you enter a difficult financial period.
The best place to get a free credit report is still Annualcreditreport.com , which allows you to get one report from each of the three credit bureaus per year.
Griffin shared another benefit of getting your report: it usually shows you contact information for all of your credit accounts. “Make sure you have everything in front of you before moving forward,” Griffin said.
Don’t worry about your account
Griffin said that if you are negotiating to defer or defer the repayment of your credit bills, make sure you understand the terms of the agreement, as each lender has its own policy. Make sure you understand how long the agreement lasts, whether it can be renewed, and whether interest will continue to accrue on your account.
One thing you don’t need to worry about is whether your score will go down if you take advantage of any of the terms your lenders are offering.
The CARES Act, passed in March, states that your credit history cannot be adversely affected by any coronavirus assistance programs provided by your lender or lender, as long as your account was valid before you applied for help. This means you can defer payments, make installments, or change a loan without noticing a drop in your rating.
In addition, any benefit you receive, whether from a stimulus check or extended unemployment benefits, will not be reported to the credit bureaus. “Use the help available if you need it,” Griffin said.
Use a loan if you need
There are several factors that can lead to a drop in your credit rating, but if you need to use credit to get by right now, the drop shouldn’t come as a surprise.
If you pause payments in your account but still have to use credit to pay bills and buy basic necessities, your credit utilization is likely to increase, which could lower your bill by a few points. Griffin stressed the importance of planning to pay off debts and reduce account balances in the aftermath of the pandemic. “Your score will go up again. Don’t panic about this, ”he said. “Do not abuse credit, but if you do, make sure that it is needed for real needs.”
If you do not plan to apply for a new loan in the next few months, your score does not matter. Just focus on following the plan you made with your card issuer or lender and keep track of your bills.
Beware of Identity Thieves
Just because credit card companies are helping right now doesn’t mean you can let your guard down.
“People get weird phone calls, emails and even text messages,” claiming their credit card issuer or bank came in, Griffin said. “If something is wrong, don’t open it.” If you receive a message about a financial account, do not click on the links or disclose the account or personal information. Instead, look on your statement of account or on the back of your card for the customer service number and call to inquire about the message you received. If it’s legal, they’ll be able to tell you about the offer or placement.
You can also help protect your identity by seeking information from trusted sources. Experian has a list of links to coronavirus customer support services for financial institutions, and TransUnion offers a directory of additional services you may be looking for at the moment.
If you are applying for unemployment benefits, make sure you have access to the legal unemployment claim for your state by going through Benefits.gov , which has a state guide.