Protect Your Financial Health & Credit During COVID-19 ...
Take These Steps Now
Your physical health and mental well-being must always be an important focus. The grave challenges posed by the current COVID-19 crisis, make that even more true ...
But it's not only your physical and mental health that should remain of concern. Your financial health is important as well.
COVID-19 has delivered some severe financial health challenges to many Americans' doorsteps. Those include loss of employment, job furloughs, layoffs, diminished wages (and more) that have taken a real toll.
No amount of handwashing or wearing of masks protects your financial health. That has to be accomplished in other ways.
So what steps can you take to protect yourself or get back on the road to good health when it comes to your credit, credit scores, and finances?
First, assess your financial position and health head-on.
Pull your credit report so you're knowledgable regarding your current financial reality. It's important to know the facts. It's also important to know your Credit Report is accurate and accounts are reported to correctly.
But checking just once is not enough ...
Continue to monitor your credit on a consistent basis. Make sure to monitor for identity theft during this time, as this type of scam has been on the rise during this crisis.
When it comes to credit health and credit scores, there is a "pecking order" of importance when it comes to payment of debt. That importance rests upon whether a debt is a secured or unsecured debt. Secured obligations should be addressed first.
If you have a mortgage (secured debt) and you know you will not be able to make your monthly mortgage payment(s), contact your mortgage lender immediately. Act proactively regarding your mortgage payments.
It's important to know:
- You should NOT wait until you have already missed payment(s) to communicate with your Lender
- That you are NOT absolved from debt responsibilities via the actions you take
- Good news exists. It's possible that mortgage solutions or accommodations exist/may be available that will be of assistance to you during this difficult time
- The sooner you take action, the better. (Read my article, "The Who, What, When, Where & How of Mortgage Forbearance" for additional insight and guidance regarding available options).
It's important to know ...
The recently passed CARES Act requires that Lenders/Creditors report accounts that have payment accommodation applied to them as "current" to the credit bureaus ... but the account must have been current when the accommodation was put into place.
So I stress this point again ... do not wait to take action in this regard.
The same advice applies to auto loans, also a secured debt. Reach out to your auto loan provider immediately to see what options are available to you as an option for monthly auto payment/financial relief.
It should be noted: The CARES Act also provides some relief options to those with Federal Student Loans. Much depends on your Student Loan servicer, so reach out to them ASAP to find what relief or aid might be available to you.
Communications with (unsecured) service providers, such as gas and electricity providers, cable, cell, etc., is paramount should you know that you will not be able to pay your monthly bills/obligations. Some providers offer financial relief measures, others do not.
Don't hesitate to ask if:
- Your payment can be lowered
- Flexible payment plans exist
- Other payment options are available to you
Providers are far more likely to work something out if you have taken action proactively.
Your payment history remains vitally important in the status/building of your credit scores during this time, as FICO Scores rely heavily on them. While you may sustain some damage to your score while facing COVID-19 challenges, the damage may be limited or reduced, should you take action to protect it.
Currently, aid and relief options made possible by the CARES Act are available for a limited amount of time. Staying educated as to possible changes and opportunities are readily available via the Consumers Financial Protection Bureau (CFPB) coronavirus/COVID-19 information.
It cannot be stressed enough: If you wish to limit the potential financial/credit impact you face as a result of current COVID -19 challenges, take action proactively to do so. That is how you may provide yourself the most relief and financial protection ... and the method through which your credit scores will be affected least.
Communicate early. Stay in touch with your lender and all service providers throughout the financial challenges you face.
Your financial health, both in the short and long term, will be much better for it ...
* Are you dreaming of buying or refinancing a home or Investment Property in New Lenox - Will County - Chicago - Chicagoland - IL/WI?
Contact me today! I'll put my 40 years of mortgage experience and expertise to work on your behalf.
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