Covid - 19 Credit

Is COVID-19 Affecting Your Credit?

To say that the COVID-19 pandemic has been a challenge for all of us is, at this point, likely a bit of an understatement. But for millions of Americans, one of the biggest ways they’ve been impacted is also probably the one they least expected: their credit score.

With so many people experiencing financial hardship, late and even missed payments have become a “new normal” across the country. It’s also the type of downside that has the potential to stay around long after the Coronavirus has finally left us behind. But thankfully, there are certain steps you can take to help prevent these types of long-term consequences from occurring. You just need to keep a few key things in mind while you do it.

Protecting Your Credit Score During COVID-19: What You Need to Know

By far, one of the most important steps you can take to safeguard your credit score during COVID-19 involves taking to all lenders and creditors to see if any assistance options are available. Yes, it’s true that this avenue would have been limited under normal circumstances – but these are absolutely not normal times we’re living in. Most banks and other financial institutions understand that this has all been incredibly hard on people – especially those in certain industries like food service who may have been out of work for months.

At the very least, you should check to see if you can pause or even make reduced payments for the foreseeable future to avoid missing them altogether.

Along the same lines, even if financial assistance isn’t available, you should still try to pay what you can on all of your outstanding debt. If you can only make the minimum payment on your credit card, that’s okay – it’ll still prevent those late payments from showing up on your credit report, which will help preserve your score for as much as possible.

Finally, consider adding a consumer statement to your credit report that briefly explains your current situation and what you’ll be doing to remedy things moving forward. Equifax, for example, allows you to add a 100 word statement to your credit report that will allow you to verify that the missed payments or other issues that are showing up are COVID-19 related. Potential new creditors will be able to see this before making any type of decision in the future, improving the chances that even a decrease in your score won’t do as much damage as you had feared.

You can add a statement to Experian and TransUnion credit reports, too – you just have to contact them directly in order to do so. 

Finally, be sure you’re staying current with all credit-related activities by requesting a copy of your full credit report whenever you’re able to do so. Especially during COVID-19, you’ll want to quickly dispute any incorrect information that you can to mitigate risk from the ongoing financial uncertainty as much as possible. You can always get a free copy of your credit report once a year by going to 

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For the last 15 years I’ve made it my life’s mission to educate and guide anyone that wants to listen how to repair their credit. There are thousands of self-help blog tips and generic websites out there but I wanted to give something far better and more applicable. You know…”real life” 🙂

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The book has more than a few motivational nuggets in there. I know how hard this process is. I was my first client more than a decade ago and I know how demoralizing it can feel constantly being told “No” by banks and lenders and then not offered any real guidance on how to fix things. I know how hard it was when I was repairing my own credit dealing with the non-responses from the credit agencies and seeing my score plateau some months. It was very, very hard. I know how hard it is to deal with debt collectors and the ga-zillion sites out there all offering different credit scores. I know…I was you.

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Federal Reserve

Fed Survey Finds Credit Card Standards Tightened in Third Quarter

If you want to get an idea on how lenders are predicting the economic future, look no further than the most recent survey from the Federal Reserve. Specifically, the survey noted that banks and credit card companies got stingy when it came to consumers opening new lines of credit in the third quarter of this year, something that typically happens during times of economic uneasiness. In fact, according to the survey, the underwriting standards for credit card approval have increased to a point that hasn’t been seen since 2009, and we shouldn’t need to remind you of the fragile state of the economy a decade ago, at the cusp of this generation’s great economic recession.

So what does this Fed survey indicate, exactly? In layman’s terms, it means that if you want to open a new line of credit, your credit score had better be in really good standing. In fact, the Fed survey specifically indicated that it’s gotten a lot harder for consumers with credit scores under 620 to get approved for new lines of credit compared to what it was at the beginning of the year when there was much more confidence about the economic outlook. The bottom line is that if your credit isn’t in good standing, banks are going to worry about your ability to pay back any loans or lines of credit that you’ve opened now in uncertain times than they would in prosperous economic times. As a result, they’re going to be more stingy about what they approve. And while we always recommend taking the appropriate steps to make sure your credit is in good standing, it’s going to be arguably more important than ever in the near-term if banks continue to tighten the strings on the money they hand out. The good news is that if your credit score is in good shape or you work to ensure that it’s in good shape, you’re likely to benefit from reduced interest rates.

How to Improve Your Credit Score

Even if your credit score isn’t below the 620 mark that we indicated above, it always behooves you as a consumer to take the necessary steps to improve it. Here’s a look at how you can get improvement fast so that you’re not on the outside looking in if you need to take out a loan or line of credit down the road:

  • Keep balances low on existing credit cards: Keeping balances low on any revolving credit that you have (i.e., credit cards) can help improve your score. Generally, expect your score to be highest if you’re at or below about 30 percent of your credit utilization rate. For instance, if your credit card has a limit of $1,000, you want to carry a balance of no more than $300 for the best possible credit score.
  • Ask for an increase in your credit limit: To piggyback off the above point, if you’re eligible for a credit limit increase that can help out your credit utilization ratio and thereby improve your score, consider taking it.
  • Check your credit report: This gives you an idea of where you stand and what needs improvement so you can come up with a plan of attack. It can also help you identify and dispute any inaccuracies that may be present on your report.
  • Negotiate away: Have outstanding balances or debt that’s gone to collections? That can really hurt a credit score. Try negotiating with the lender to settle any debts so that they appear more favorable on your credit report.
How Social Media Could Affect Your Credit

How Social Media Could Affect Your Credit

How Social Media Could Affect Your Credit

If you’re a fan of the show Black Mirror, then surely you’ve seen the episode titled “Nosedive.” It stars Bryce Dallas Howard in a world where a social media rating dictates everything — what type of car you can drive, what type of home you can live in, your status in society, etc. In case you haven’t seen the episode, Howard’s character starts out with a strong social media rating that gradually decreases over the course of the 60-minute episode. As her rating plummets, so does her societal status.

We know what you’re thinking. It’s Black Mirror, it’s not real life. And while the episode surely takes social media use and its societal effect to the extreme, you may not realize that social media is believed to already play a role to a certain extent in one key aspect of your life: your credit score.

Yes, when lenders are weighing whether or not to give you a loan, they’re typically looking at your three-digit FICO score to help dictate how trustworthy of a consumer you are. The higher your credit score, the more trustworthy of a consumer you’re likely to be — and vice versa. But now credit bureaus and other firms are collecting more information than just your financial history to determine how good of a consumer you are. They’re turning to algorithms and artificial intelligence to help weigh your worthiness, and one of the things that they’re increasingly believed to be taking a look at is your social media profiles — and it could be hurting your credit score without you even knowing it. There’s a ton of debate over whether doing so is ethical or not, and that’s something that will likely be debated extensively moving forward, but the bottom line is that things like this are believed to already be happening — and you can never be too careful on social media. This is especially true if you’re applying for that big mortgage loan or auto loan and want to get the best possible interest rate. If your social media profiles make it seem like you’re not trustworthy, you could end up paying more in the long run.

Social Media Tips

Like we said, AI, algorithms and social media are believed to already be used by lenders to weigh consumer trustworthiness in some way. So if you’re worried that what you post might come back to bite you, here’s a look at some tips that you should follow:

  • Don’t bellyache about money: We get how the likes of Facebook and Twitter can serve as a sounding off platform for some people, but we’d strongly advise you from complaining about money. Don’t bemoan how you can’t make rent, how you’re in credit card debt or how you’re too broke to go out with your friends. That’s not going to look good.
  • Connect with the right people: You’re likely to be weighed more favorably if you’re connected with better people than you are if you’re connected with people that aren’t perceived to be the “right type.” Like we said, this system of weighing consumers is very controversial. In reality, it shouldn’t matter one bit who you’re connected with. But it could.
  • Professional conversation: If you’re posting derogatory language, curse words or about other controversial topics, you could be punished when it comes to your credit score. Fair or not, this type of behavior on social media could come back to bite you.

How would you check out on social media if a lender were to peek in on your accounts? Do you think your score would go up, go down or stay the same?

Need help improving your credit?  click here.