With record unemployment numbers, tens of millions of workers are now without regular access to a paycheck. As some states struggle to process unemployment claims and bills pile up, concerns grow about the impact of the COVID-19 pandemic on individual credit scores. How can you protect the credit record that you've worked hard to develop? Will employers view credit issues with a balanced perspective?
Negotiate Before Missing Payments
Individuals struggling to make their payment obligations aren't alone—many others are trying to cope with the same financial burdens. With widespread disruption to routines, right now nearly all lenders, from banks to credit card issuers, will work with their customers to make alternative arrangements.
Contact your lender and let them know that the situation has made it challenging for you to pay your bills. Ask about the options that you may have. Some lenders may allow for partial payments, while others may offer a temporary pause or forbearance. Each solution provides temporary relief.
Know Your Rights Under the CARES Act
The legislation passed to a coordinate coronavirus response includes language that protects borrowers from actions that could hurt their credit scores. For example, if you agree to alter your usual payment plan, your lender must tell the credit bureaus that you are fully up-to-date so long as you continue to comply. If you arrange to bring a delinquent account current, they must report your status as "current."
If your lender does not follow through, report them to the Consumer Financial Protection Bureau.
Pull Your Free Credit Report and Know Your Status
Following up to see how all these changes impact your credit rating requires pulling your credit report. All individuals may request a free report once each from the three major tracking bureaus, but your bank or financial institution may also provide a simple method for checking your score. Take advantage of these tools to track changes and act if your score declines when you know it should not.
What Should Businesses Consider?
The personal financial impact of the COVID-19 pandemic is something that should factor into hiring decisions made by all kinds of businesses. Companies reliant on credit checks such as those offered by backgroundchecks.com may notice an uptick in concerning reports.
Even when they must ensure suitability for positions involving money or sensitive personal information, viewing recent dings through the lens of the COVID-19 pandemic is a wise and fair decision for employers. Business should consider starting a discussion with an applicant to better learn about the reasons behind any adverse reports.
With long-lasting effects likely to unfold over years rather than months, the fallout from COVID-19 will impact many lives. From taking steps to stay in control of credit as a consumer to making appropriate considerations as an employer, there are many challenges ahead, but with the right perspective and a plan, you can meet them.