How to Protect Your Credit During COVID-19

Published February 2021

The COVID-19 pandemic has put an unprecedented strain on the global economy. All over the world, businesses have suffered as a result of the lockdown measures. Millions of people have found themselves out of a job unexpectedly.

Some have lost their income and are now unable to pay their bills. Are you one of those people? If so, take heart. There are things you can do to protect your credit during this difficult time.

COVID Debt Relief through the Consolidated Appropriations Act (CAA)

The first type of COVID debt relief to explore comes from the Consolidated Appropriations Act, 2021, which offers enhanced unemployment benefits, direct help in the form of cash payments, and even relief to businesses. Be sure to leverage all the benefits to which you are entitled at the federal, state, and local levels.

Protect Your Credit Score During COVID-19

What should you do if the COVID debt relief from the CAA, state, or local options are not enough to help you make ends meet? If you cannot pay all of your bills, keep in mind two main goals:  (1) pay for essentials and prioritize wisely and (2) try to protect your credit score as much as possible.

How should you prioritize your bills? Here's a general rule:

  • Pay for food and shelter first.
  • Your secured debts should take precedence over your unsecured debts. 
  • Make your utility and car payments next. 
  • Everything else, like your unsecured credit card debt, is low-priority.

If you are having trouble paying your rent and are facing eviction, check with state authorities to ensure your rights under the law. Some states have put a moratorium on evictions in the wake of COVID-19, and it is possible that your state may be one of them. If you are facing eviction, seek out rental assistance programs or local shelters that might be able to help.

If you are having trouble paying your mortgage, check with your mortgage provider to see what provisions are in place to help those impacted by COVID-19. Offer to make partial payments if possible to forestall any foreclosure proceedings.

If you are in need of food, check with local food banks, community centers, or churches that might be able to offer assistance. 

What about credit card debts? ​Even if you cannot afford to pay what you once paid every month on your credit card bills, make it a priority to pay at least the minimum payment, if possible. If you fail to make the minimum payment just once, it can hurt your credit score. According to FICO, one payment that is 30 days late can cost someone with a credit score of 780 anywhere from 90 to 110 points. As if that were not enough, the incident can stay on your credit report for seven years. 

But what if you simply cannot make even the minimum payment? Then, it's time to look at COVID debt relief options that are available to you.

COVID Debt Relief Options Offered by Creditors

Many lenders have instituted measures to help their borrowers who are suffering from the consequences of the pandemic.

Known as relief or hardship programs, such measures can help you: 

  • Make partial payments 
  • Put some payments on hold or defer them 
  • Stop making payments temporarily (forbearance) 
  • Amend contracts and modify the terms of loans 
  • Suspend the payment of federal student loans 
  • Obtain other forms of assistance/relief 

Keep in mind, most programs offered by creditors are temporary and, in most cases, interest is still going to accrue. ClearOne Advantage is here to help. We can provide an assessment of your current financial situation and whether you should consider a debt relief program. You can get a free savings estimate from ClearOne Advantage that can tell you what the monthly payment would be to get you free from debt in as little as 24 to 60 months.

Monitoring Your Credit Report

Normally, you have limited opportunities to check your credit report for free. Given the special circumstances, however, all US credit bureaus have made free weekly credit reports available to consumers.To get your free reports, go to AnnualCreditReport.com. The credit reporting agencies are making these reports free until April 2021.

Dispute information in your credit report if you think it may be faulty. To do that, send a letter to the credit bureau that generated the report with the error and explain clearly what the error is. The credit bureau will investigate, and within about 45 days, you should get a response or see a change on your credit report.

Credit report

How to Get Credit Card Relief

Credit card debt is expensive and more toxic than other forms of debt, such as your mortgage or auto loan. Now is not the time to let it spin out of control.

Contact a ClearOne Certified Debt specialist now at 866-481-1597 to learn how to eliminate your debt via debt settlement. To see how much you can save through such a program, get a free savings estimate today.

Get a free savings estimate 

Topics: Covid Debt Relief