We are currently at the beginning of a financial crisis. With many states issuing “shelter in place” orders, people are out of work and without income. We have no way of knowing how long it will last, but you need to make sure that you conserve the money you have right now to make it last through this crisis. You also need to take proactive steps to protect your credit. Having good credit may become incredibly important when you need to borrow money during or after this financial crisis.
If you miss payments during this time, your credit score will be negatively affected. You need to take steps to protect your credit now. Below are five steps to take now to begin conserving the money you have and protecting your credit for the future.
- Reach out
Reach out to your creditors – banks, mortgage companies, student loan servicers, etc. – and request and extension or deferment on your payments. This will help you to conserve the money you have right now. Do not make payments right now if you can defer them, especially if you can defer them without interest. Depending on the lender, interest may continue to accumulate during an extension or deferment period. It is important to ask your lender about whether the interest will continue to accumulate.
Also, do a little research before you ask for an extension or deferment. Go online and see if any of your creditors have already implemented a “coronavirus plan” or an exception to payments or interest due to the current crisis. Do the best you can to know what you can get from these institutions before you call.
Once you get on the phone with your lender, it is essential that you verify your next due date. Verify how much your payment will be when it is due. Verify that there will be no adverse credit reporting during the time when you are deferring your payments.
It is important to know who you are talking to on the phone. Ask for the name of the person you are talking to and ask for their ID or badge number. Write this information down as it may be important to know if you have a dispute later.
At the conclusion of the conversation with your creditor, make sure you get a document confirming the date of next payment, the amount of the payment, and that the extension or deferment will not be reported as late. This document could be in the form of an email, letter, or text message. It is important to save this document, whether online or in physical form.
If you are working with a creditor who cannot get you this documentation for any reason, make sure to get an address where you can send and email or confirmatory letter. The letter or email you send should include confirmation of the date of your next payment, the amount due, and that any extension or deferment will not be reported as late on your credit report. Make sure you keep a copy of the email or letter that you send.
Monitor your credit reports. If any of the creditors report you as late or missing payments, be ready to make the dispute with the credit reporting agency. To make the dispute you reach out to the credit reporting agency, explaining that you requested and received an extension or deferment, and provide them with the documentation that you collected during this process including the name and ID/badge number of the person you spoke with and the confirmation email/letter/text message that you received stating the date the next payment is due, the amount of the payment, and that it would not be reported.
It is important to start taking these steps now, at the beginning of this crisis, so that you can protect yourself long term and ensure that you and your credit come out of this unscathed.