Loan Officer | NMLS #1101811
Branch NMLS #1655086
Posted On May 06, 2020
As the coronavirus or Covid-19 outbreak has led to businesses closing across the nation, millions of Americans are out of work. According to a TransUnion survey of over 3,000 people, nearly 60% of Americans said their household income has been affected by the pandemic. While millions of Americans have lost income, many are struggling to pay their bills, thus threatening their credit scores. Here’s how you can protect your credit score during the coronavirus pandemic.
Get a Copy of Your Credit Report
As a consumer, you are entitled by law to one free credit report every year from each of the major credit bureaus: Experian, TransUnion, and Equifax. When reviewing your credit report, keep an eye out for any incorrect information or signs of identity theft. If you find an error on your report, contact your credit bureau immediately to have it fixed. The sooner you correct any false information, the smaller the toll on your credit history.
A Minimum Payment Is Better Than a Missed Payment
Of course, the best way to ensure good credit is to pay your balance in full every month. However, that may not always be feasible. If you’ve lost your job or have had your income reduced, you may not be able to pay the full amount that you owe each month. Even if you are unable to pay your balance in full, it is imperative to make whatever payments you can.
A late or missed payment will have a more negative impact on your credit score than a minimum or partial payment. In order to avoid missing payments, consider setting up recurring automatic payments as well as overdraft protection on your credit accounts.
Consider Adding a Consumer Statement to Your Credit Report
Just like lenders are able to add a natural disaster to their borrowers’ credit reports if they’ve been granted forbearance, consumers are able to add their own statements as well.
Adding a statement to explain that you have been impacted by the coronavirus pandemic will have neither a positive nor adverse effect on your credit score. Instead, this temporary statement will provide explanation in future credit checks. If you apply for a loan in the future, a lender may review this record when evaluating your credit report. In seeing this testimony on your report, they will be more likely to understand any possible negative marks on your credit report.
While it is always a good idea to protect your credit, your score does not need to be your top priority during a pandemic. Taking care of your family and heath should be your first concern, then focus on your credit. If you have any questions about how coronavirus may impact your home loan or how a refinance can lower your mortgage payments, let us know.