Covid-19 And Your Credit
The Coronavirus Aid, Relief, and Economic Security Act signed into law last month gives consumers some credit protections.
It dictates how companies that send data to the credit bureaus will report accounts for which consumers have payment accommodations in place.
But it won’t wipe the slate clean of preexisting negatives, according to credit expert John Ulzheimer: If the account had been delinquent, it will still be reported that way unless you bring it current or repair your own credit by downloading this: Credit Repair Kit.
Lenders and the national credit reporting companies have additional tools and resources in place to assist consumers in times of crisis such as COVID-19-related financial hardships. Here are a few options that may be available to you:
- Lenders may place your accounts in forbearance or deferment for a period of time, effectively suspending your payments until the crisis has passed
- The national credit reporting companies, including Experian, have special reporting processes for lenders to report accounts in forbearance or deferment during the Covid-19 crisis
WHY YOUR CREDIT MATTERS RIGHT NOW
In a financial crisis, access to credit is the next best thing to a fat emergency fund. If you protect your credit, you’ll have more or better options when you need them, such as being able to qualify for a low-interest loan.
The most important factor for protecting your credit is not missing a payment. A payment that’s more than 30 days late can cause your credit score to plummet, and the mark can stay on your reports for seven years.
Your score could also drop if you are using more of your credit limits, but that damage is more quickly fixed. Your score will rebound once you can pay balances down.
Lastly, if all fails and you find your credit scores to become impacted negatively during the Covid-19 crisis, your best option is to sign up with a company that offers FICO Professionals to clean your credit report or download a Credit Repair Kit that will result in higher credit scores.
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