Protecting Your Credit During the COVID-19 Pandemic
The COVID-19 pandemic has dramatically changed many aspects of our lives. During this extraordinary time, our country has witnessed an outpouring of generosity and kindness as people have come together to help their neighbors, communities, and customers. Unfortunately, we’ve also seen coronavirus-related scams that prey upon people’s fears to cheat them out of their hard-earned money or steal their personal information.
Add to that the millions who have lost their jobs, had their work hours reduced, or watched their income decrease dramatically, and it’s clear the financial impact of the coronavirus will be felt for quite some time. That’s why it’s more important than ever to take steps now to protect your credit—whether you’ve been financially affected by the virus or not.
Here are eight tips to help you get started.
1. Exercise Extra Caution
Be wary if someone reaches out to you and requests personal or financial information over the phone or via email. Unless they’re contacting you with concerns about possible fraud on your account, it’s rare for reputable businesses to reach out to you for sensitive account or personal information. If you have concerns or doubts about whether or not a phone call, email, or text is legitimate, contact the company directly, using the contact information from their website.
For more information about common scams, how you can avoid them, and what to do if you think you’ve been the victim of one, check out the FTC’s coronavirus scam page.
2. Consider Freezing Your Credit
Freezing your credit makes it nearly impossible for anyone—including you—to open a new account in your name. While it won’t prevent fraudsters from accessing your existing accounts and using them without authorization, it can help prevent unauthorized users from opening new accounts in your name. Freezing your credit is relatively simple and free to do. But you must submit a request to each of the three major credit bureaus because freezing it with just one credit bureau doesn’t freeze it with the other two bureaus.
If you want to apply for new credit after freezing your credit, you can always temporarily or permanently lift the freeze.
3. Monitor Your Accounts
If you have online access to your financial accounts, consider checking them more frequently for suspicious activity. If you find transactions you didn’t make, contact the company with whom you have the account immediately to prevent any additional fraudulent activity and begin the resolution process. If you don’t have online access to your accounts, make sure you review your monthly statements carefully when you receive them. And don’t forget to shred them before you put them in the trash to prevent any identity theft from dumpster diving.
4. Request a Free Copy of Your Credit Reports
Under the Fair Credit Reporting Act, you are entitled to a free copy of your credit reports from each of the three major credit bureaus every year. Consider requesting one from a different agency—Equifax®, Experian®, or Transunion®—every four months to have your thumb on the pulse of your credit all year long. Check to ensure the status and payment history of each account is accurate, and look for any accounts you don’t recall opening, which could be a sign of fraud or identity theft.
You can download free copies of your credit reports at annualcreditreport.com.
5. Dispute Any Inaccurate Information in Your Credit Reports
Some errors that might appear on your credit reports—like a misspelled name or inaccurate street address—probably won’t affect your credit. But others, such as inaccurate reporting of delinquent payments or charge-offs, could have a major impact on your credit score. If you find information that’s not correct in your credit reports, no matter how benign it may seem, it’s important to dispute the error and get it corrected as soon as possible. Check out this infographic on how to get started.
6. Make at Least the Minimum Payment Due
Credit scoring algorithms use several factors to calculate your credit score, but your account payment history is weighed more heavily than any other. That’s why it’s critical to make at least your minimum debt payments each month. If you’re having trouble making your minimum payments because you’ve experienced a reduction in income, a job loss, or a health crisis due to COVID-19, there may be some relief available. The best way to find out what, if any, relief your creditors are offering is to follow Tip #7.
7. Contact Your Individual Lenders if You Can’t Make Your Payments
Many lenders may be willing to work with you—especially given the environment created by the coronavirus pandemic—if you’re unable to make your payments. But it’s critical to get in touch with them as soon as possible to ask them about payment relief options if you think you won’t be able to make your payment.
In the wake of COVID-19, many lenders and insurers have implemented across-the-board payment relief policies that apply to all customers who need it. Others are working with customers on a case-by-case basis.
8. Consider Seeking Help from a Non-Profit Credit Counselor
Credit counselors are trained to help you evaluate your financial situation and develop a realistic plan based on your current circumstances. They can help with budgeting, money management, credit education, and more. They may also work with you and your creditors to create a debt management plan. Under a debt management plan, your credit counselor typically negotiates with your creditors to lower your interest rates or extend the amount of time you have to repay what you owe. You make a single payment each month to the credit counseling agency, and the agency then makes payments to each of your creditors.
If you decide that working with a credit counselor is a good choice for you, be sure you do your homework and choose one that’s reputable. Here’s a list to help you get started.
The suggestions in this article may seem like just another thing to add to your growing “to-do” list during an already overwhelming time. But being extra vigilant now could help prevent even bigger financial headaches and save you time down the road.