Sadly, a side effect of the Coronavirus will be lower credit scores for many consumers.
While the virus itself will not cause any credit pain, for many, the economic side effects of the virus will. These economic side effects cannot be cured by hand sanitizers, masks or quarantines.
Many consumers are going to face some financial challenges due to this pandemic. For some, it may be fewer customers resulting in fewer tips, taking unpaid leave to stay at home with the kids, hours cut at work or even being displaced from a job. Regardless of the why, how and where, it is and will continue to happen to many. If you are facing a decline in your income, the following tips that can help you prevent, or at least minimize, any damage to your credit score.
- Eliminate any unnecessary spending so that you can better weather any financial challenges.
- Do your best to make at least the minimum payments on all of your financial obligations.
- If you must use your credit cards to get by, try to use them sparingly.
- If needed, call your loan servicer on any Federal Student Loans to see what payment options may be available to you. You may qualify for a forbearance, deferment or an income based repayment option.
For those that experience a 30 day or more late payment, you should expect to take a meaningful hit to your credit score. Late payments remain on your credit reports for 7 years. If you have increased use of your revolving credit, you should expect your credit score to take a hit. Fortunately, you should expect your score to improve once you are able to get your revolving credit paid down or off.
Ideally you will not be impacted by this virus. I hope it is short lived and we can all get on with our lives.
If your credit needs some help, take action. There are a lot of resources available on steps to improve your credit. You can get free information from the FTC or contact a professional company like CureMyScore.com for help. By taking action to improve your credit, you may qualify for the home of your dreams or a new auto while paying less in interest charges.