Keeping Your Credit Healthy
March 31, 2020
As the COVID-19 outbreak sweeps the globe and headlines in the media, it has become clear that this is not just a physical health virus, but also can cause financial hardships within the home.
We all want to pay our bills on time without worry, but for many people the ramifications of COVID-19 may have thrown a wrench into the mix. While things like loss of income may be out of your control, making a financial action plan to work through this trying time is the best thing you can do to keep your credit at peak health. Here are some key points to help you plan or stay on track or if you find yourself experiencing a hardship.
Know where you stand
Check out your credit report (no, not just the score you might get from your credit card company or a third party website). If you haven’t requested a free annual credit report in the last 12 months, this would be a great place to get a baseline and see where you stand and make sure there are no discrepancies. This report compiles your information from the “big three” credit bureaus, which you can use to see how you rank and ensure accuracy in your report. Your annual credit report can be requested at https://www.annualcreditreport.com once every 12 months (*some states and situations allow for additional reports in the 12-month timeframe. See below for more information.)
Your home can help you
If you currently own a home or property, now may be the time to consider refinancing. With rates dropping to all-time low figures and many properties maintaining or increasing in value, it could be a good opportunity to tap into some of the equity you’ve built up, or simply to lower your rate, term or payment. Start off with our online application available 24/7 and team up with one of our licensed Loan Originators to answer your questions and you can see if a refinance is right for you.
Pick up the phone
Social media has been bustling lately with posts about how homeowners “don’t have to pay their mortgage” due to COVID-19. We’re here to remind you to not believe everything you see on the internet.
If you don’t think you’ll be able to make your minimum monthly credit card or mortgage payments because of recent events, contact your servicer or creditor as soon as possible. Please do not assume that any payments will automatically be waived unless the creditor has contacted you directly, otherwise you may face credit, interest and late fee related repercussions.
We’re all in this together, so before you miss a payment, be sure to communicate with your creditors or loan servicer to go over your options. Most companies will gladly work with you to figure out temporary payment solutions that fit your needs that can rid you of late fees and negative marks on your credit report to help keep you on track.
Don’t close that door
When some people assess their finances in times like these, the knee jerk reaction can sometimes be to “get rid of anything you don’t need”. When it comes to credit, many think that an old, open line of credit (i.e. a credit card from 2001 but has no balance) hurts their score, but the truth is just the opposite. Even if you currently have no balance on the account, it is recommended to keep that line of credit open and even try to use it for something small to keep it active, so the creditor doesn’t close the account.
The point in doing so is because as long as you have had a good payment/balance/debt history with that credit account the payment history will follow you and can positively influence your score as long as the account remains open.
*According to Equifax.com, the following factors and/or state residents could allow for additional free credit reports within a 12-month period. Considered factors may be if:
- You have been denied credit within the past 60 days based on information in your credit reports
- You are unemployed and plan to seek employment within 60 days
- You receive public assistance
- You have placed a fraud alert on your credit reports because you believe you are or could be the victim of fraud or identity theft
- Your state offers a free or reduced-price credit report
Residents of the following states are eligible to get an additional free credit report every 12 months: Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, and Wisconsin.