As the COVID-19 pandemic rages on, people are starting to get more concerned about their credit. Many people are out of work and reliant on government assistance to make ends meet. Debts have been postponed and you might be concerned that not paying them is hurting your credit. Read out this blog to know covid-19 affect on credit score.
We want to go over how the COVID-19 pandemic, and situations resulting from it, can affect your credit score.
One Very Important Notice: Free Credit Report
This pandemic has been scary for everyone, and the credit bureaus have agreed to help. By going to https://annualcreditreport.com, you can access your credit report from any of the three bureaus at any time. They’ve lifted the “once per year” restriction just for 2020. Get your credit report and see what’s on it!
How The COVID-19 Pandemic Affects Your Credit Score
Mortgage Forbearance
Federally backed mortgages are in forbearance until at least December 31, 2020. For this reason, people who are unable to pay their mortgages are allowed to do so without their mortgage going into default.
If you pay down your mortgage during this forbearance, this will improve your credit score. However, if you’re not paying your mortgage, your credit score will be affected slightly. Your loan won’t go into default and your home won’t be foreclosed upon, but your mortgage balance will go up due to the fact that interest continues to accrue.
We highly recommend that homeowners who are able to pay their mortgage during their period continue to do so, as this will put them in a much better financial position going forward. Keep reading this blog on know covid-19 impact on credit score.
Student Loan Forgiveness
If you aren’t paying your federal student loans due to the student loan forgiveness announced in the CARES act, then your credit score will not be affected. No interest is accruing, so your balance is not increasing. No payments are required, either, so this can’t affect your score either.
Private student loans, however, have their own requirements for forgiveness, and if you haven’t asked for forgiveness, it has not been automatically granted. What you can do is ask to put your loans in forbearance or deferment, depending on your situation. Not paying your loans while they’re in forbearance will not affect your credit score, unless interest is accruing. In that case, your credit score may be slightly affected due to your balance going up. Keep reading this blog on know covid-19 impact on credit score.
Credit Card Payments
Credit card payments have not been forgiven during the COVID-19 pandemic. People are still required to pay what they’re owed, and they’re still being charged interest on the cards.
You may be able to negotiate lower payments with your credit card issuer, however it’s still highly recommended to pay the minimum payments. Otherwise, your credit score will likely be affected.
Unemployment Assistance & Stimulus Benefits
For some reason, there have been people who are concerned that having to take on unemployment assistance might hurt their credit score. This is completely false! Taking unemployment assistance, no matter when you take it, does not and cannot affect your credit score.
Not only that, cashing your stimulus check will not hurt your credit score, either.
With that being said, you may be asked to pay back some of your stimulus or unemployment benefits if the government finds that it was awarded to you in error. If you do not pay these back on time (and with the interest charged to you), your credit score can be affected.
If you are not asked to pay back unemployment benefits, though, taking them will not hurt your credit score!
