How You Can Protect Your Credit Score During The Coronavirus Pandemic
April 22, 2020
If you’re already facing financial uncertainty, reach out to your credit card issuer to request assistance; many issuers have personalized solutions for cardholders facing hardship due to the coronavirus outbreak. And if you’re in a position where you’re able to prepare, put your extra funds to good use now to set yourself up for security over the next several months.
Here are some ways you can begin to safeguard your credit and deal with the unique challenges of this pandemic’s impact going forward:
Free weekly credit reports
On April 20, 2020, the three major credit bureaus (Equifax, Experian and TransUnion) made a joint decision to offer Americans free weekly credit reports for the next year to help those facing financial hardship due to effects of the pandemic.
“To help play our part and reduce some of that anxiety, we are uniting as an industry to help people know the facts about their financial data,” the credit bureau CEOs said in a joint statement. “We are making credit reports more accessible more often so people can better manage their finances and take necessary steps to protect their credit standing.”
By viewing your credit report regularly, you can ensure all the information is accurate and up-to-date. Developing familiarity with the payments and accounts found on your report can also help you determine which credit scoring factors you can improve upon to boost your credit score.
You can access your credit reports through AnnualCreditReport.com.
Credit score risks
Two of the most influential factors that make up your FICO Score are payment history (35 percent) and amounts owed (30 percent).
These factors help lenders determine whether you’re able to make payments on time and in full, and you haven’t overextended yourself by taking on large balances you’re unable to pay off. They are indicators of your default risk on payments.
Missing payments and using a majority of your available credit tell potential lenders that you may be at a higher risk of default, decreasing your score.
Even when facing economic hardship, doing what you can to make minimum payments on time and avoiding racking up large amounts of debt on your cards can go a long way in keeping your credit score healthy.
“As you work to manage your finances during these hard times, prioritizing on-time payments and keeping credit card balances low to help limit the impact to your credit score,” says Amy Thomann, head of consumer credit education at TransUnion. “Again, it’s better for your credit score to make minimum payments instead of no payments at all.”
A history of missed payments can have long-term effects. “If you’re only a few days or a couple of weeks late on the payment, and you make the full late payment before 30 days is up, lenders and creditors may not report it to the credit bureaus as a late payment,” says Beverly Anderson, president of global consumer solutions at Equifax.
And if you miss a payment by 30 days or more but you can pay it before your next due date, your lender should report your account as current. However, she says, the already-reported late payment will remain on your credit report for the standard seven years.
If you’re worried about missing payments or taking on debts, reach out to your issuer for assistance sooner rather than later, so you can avoid negative information appearing on your credit score altogether.https://www.bankrate.com/finance/credit-cards/protect-credit-score-economic-uncertainty-coronavirus/