credit score

NBC 5 Responds: Protecting Your Credit Score During a Pandemic

How to keep your numbers on track even if your savings are under attack

NBCUniversal, Inc.
Daniel Acker/Bloomberg via Getty Images

The coronavirus has our world in its grip. With every component of consumers’ lives affected, credit scores are no exception.

A new survey from Wallethub shows around 44 percent of Americans anticipate going into more debt during the pandemic, while an estimated 87 million consumers say they are worried about credit score damage.

Their worry is well-founded. Credit lines provide a crucial safety net, but running up your card balance can of course also lower your score. It's a tricky dance to know just how much available credit to use.

“People feel like they need to use their credit cards to pay some of their bills so make sure that they pay the minimum due at least on time every single month. And the reason is because 35 percent of your credit score is tied to on time payments,” according to April Lewis Parks from Consolidated Credit Counseling.

“So the worst thing a consumer could do is go ahead and pay bills on top of the credit card, and then turn around and miss the payment with a credit card or pay the credit card late, that would be very detrimental to the credit score over time, if that becomes a pattern,” Lewis Parks said.

Before using your credit card to pay other bills, pick up the phone. Tell the utility, your auto lender or other service provider you are going thru financial hardship.
They have to listen, because Congress has ordered them to.

Inside the coronavirus aid, relief and economic security- or "CARES" Act, there is language specific to protecting consumer credit, changing the way creditors report information to credit bureaus.

Here's how:
* You ask a creditor for an "accommodation." That includes options like: making a “partial payment”, or putting a loan in “forbearance.” As long as your account was "current" when you asked for the plan, creditors must continue to report you as "current" while that accommodation is in place.

“If you've talked to your lenders and they are reporting your accounts in forbearance, or deferment, or are working with you on other plans, it won't have a negative effect.” Rod Griffin from Experian explained.

The new protections included in the CARES Act will eventually expire, but likely not until the pandemic has clearly ended.

To help keep on top of your score, the major credit bureaus are now allowing consumers one free credit report every week during the pandemic. Underscoring the importance of watching the accuracy of data reported about you.

Credit reporting agencies tell consumers not to stress out too much over credit scores. Their stance: things will eventually bounce back.

“Your credit is a financial tool. It's there to be used so you can get through difficult times,” Griffin said. “Balances on credit cards for example might go up, that will affect your credit scores a little bit during this time. But once we're through this and we're back on our feet you start to pay down those balances again, your scores will come back up.”

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