Don't let your unemployment situation wreck your credit. Do these things instead.
Millions of Americans have lost their jobs in the course of the coronavirus pandemic. That's problematic not just from an income perspective, but from a credit score standpoint as well.
Unemployment benefits generally won't replace your former paycheck in full. So, if you've lost your job, you may find you struggle to pay your bills. But unfortunately, the easiest way to wreck your credit is to fall behind on financial obligations, so take these steps to protect it.
1. Put your mortgage into forbearance
Falling behind on your mortgage could cause your credit score to plummet. But if you're out of work, you may not be able to keep up with your regular payments. The solution? Ask your lender to put your loan into forbearance, which will allow you to pause your payments without being marked as delinquent.
During the pandemic, you can request up to 360 days of mortgage forbearance. Once that period is over, though, you will need to start making good on the payments you paused. So try to put some money into your mortgage even after forbearance is granted. That way, you'll have an easier time catching up.
2. Reach out to your credit card issuers
If you can't make your minimum payments on your credit cards, reach out to your issuers and ask for some leeway. A lot of credit card companies are working with customers who are experiencing financial hardships right now, so chances are, you'll get some flexibility. You can avoid becoming delinquent by reaching an agreement, and that way, you won't be reported as being late with payments on your credit report.
3. Ask for more leeway on existing loans
If you are worried about payments on an existing home equity or personal loan, ask your lender for assistance. If you're out of work, you may be able to defer some payments, or rework your payment terms to temporarily reduce your monthly bills.
4. Keep reviewing your credit report
You may get a fair amount of leeway with your bills while you're out of work during the pandemic. But sometimes, mistakes happen. And you never know when you might accidentally get reported as delinquent. It's for this reason that it's so important to keep checking your credit report during a period of unemployment.
Right now, all three credit bureaus -- Experian, Equifax, and TransUnion -- are making credit reports available for free on a weekly basis, so it's easier than ever to keep tabs on your credit record. If you do spot a mistake on one of your reports -- say, a delinquency for a bill you were given more time on -- you'll be in a good position to have the error corrected right away.
The higher your credit score, the easier it will be to borrow money if you need to. And if you're unemployed, that need may arise sooner than you'd like. Use these tips to preserve your credit at a time when your financial world is turned upside. And remember, there's help available, so don't hesitate to see what relief you're entitled to.
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