Many are experiencing financial stress during this current crisis due to job loss, salary reduction, being furloughed, or a dual-income household now down to a single income household.
For those struggling to pay the bills – especially debt payments – there are numerous options that offer short-term relief until our economy gets moving again.
The first step is to just take a deep breath and know that you have options and remember what’s truly important right now, taking care of yourself and your family. Many of us have worked so hard to improve our finances and credit picture and it’s easy to now feel stuck and overwhelmed.
The truth is you can preserve your good credit and get some extra time to get back on your feet. So if you are struggling financially, the first step to prevent feeling overwhelmed is to understand what you can do right now to preserve cash for the basics.
Rushing into relief programs can lead to future stress if you’re not clear on all the parameters of the relief you are signing up for. So, to de-mystify what’s available and help you prevent future financial strain, we went to the experts at FICO and Experian to get answers to the questions I hear most often from concerned Americans.
Most importantly, if you cannot pay your bills, call your lenders and let them know that you’re adversely affected by the COVID-19 crisis and cannot make payments. Discuss all the options with them. Ask them how your account would be reported to the credit bureaus. According to Rod Griffin, Senior Director of Consumer Education and Advocacy at Experian, a credit reporting agency, an alert placed on your credit report can help preserve your credit during this time.
Lenders can offer forbearance or deferment options that can give you more time to make payments. These are not ‘forgiveness,’ you will have to ultimately make the payments so make sure you understand all the options and consider them carefully.
You can request to be placed in a temporary deferred payment plan or in forbearance, along with being reported as “account status ‘current’ instead of as ‘delinquent’ [which] will permanently ensure that a borrower’s FICO(r) Score won’t be impacted by late payments related to the effects of the COVID-19 outbreak,” advises Ethan Dornhelm, VP of Scores and Analytics at FICO.
It’s important to make arrangements with your lenders before your payments become late. And if you can make payments, do so, it will free you up to focus on the many other parts of your life that matter so much right now.
Ultimately, I love Rod’s advice, he says, “don’t stress about credit scores, take care of your family, remember what’s important and if you have to, use your credit cards.”
Be well and stay safe my friends!