Protecting Your Credit During COVID-19

Have you been losing sleep over managing your finances in the face of the current pandemic? Well, you’re not alone. Media outlets such as BBC have reported 30 million people filing for unemployment in the United States alone. The International Monetary Fund (IMF) has projected global economic growth plummeting to a -3% in 2020, making the current economic environment the second worst since the Great Depression of 1930’s.

Increased unemployment, negative economic growth and a high stress environment make the ideal collection of circumstances that can make people vulnerable to credit downturn. Here is a list of things you should do to make sure your credit is protected during the COVID-19 pandemic.

Reach Out For Financial Relief

In response to millions of US citizens’ plea for financial support, Congress passed the CARES (Coronavirus Aid, Relief, and Economic Security) Act on March 27th, 2020 which provided about 2 trillion dollars worth of financial relief to American citizens, businesses and institutions.

The act requires lenders to accommodate borrowers’ needs and report accurate information, on the relief provided, to the credit bureaus.

The common types of reliefs provided by the credit card companies during the COVID crisis are:

  • Working out a new payment plan to pay off the balance
  • Forbearance of payments for a limited period
  • Reducing interest rates
  • Waiving late fees

For example, Bank of America is providing its customers with options like postponing payments and refunding late fees. While Barclays has set up a portal for its consumers to apply for payment relief.

You can also seek payment relief from various service providers to better cope up with financial burden during COVID. For example, U.S. Department Of Housing And Urban Development has allowed FHA issued mortgages to be paused for up to six months.

Unfortunately, according to a survey conducted by Credit Karma, as many as 62% of all unemployed Americans haven’t reached out for financial relief due to a lack of understanding of the eligibility of the various COVID-19 financial relief programs.

Know Your Consumer Rights

The Federal Trade Commission (FTC) looks after the enforcement of the Fair Debt Collection Practices Act which was passed on 20th September 1977. It provides legal protection to consumers against unfair and abusive practices of debt collectors.

Data suggests that violation of the Fair Debt Collection Act is the most common reason for complaints addressed to the Consumer Financial Protection Bureau.

Special provisions for consumer protection against debt collection during the pandemic have been enforced and are as follows:

  • If you have a federal student loan you don’t need to make monthly payments from March untill the end of September 2020. The Education Department has paused the collection of federal student loans.
  • Debt collectors can’t claim funds allocated to you by the Federal Government. Make sure you’re aware that all government support payment should came directly to you and not your debt collection.
  • State and local governments have temporarily paused all evictions and foreclosures.

Protect Your Information

2019 has surpassed 2015 in identity theft instances by more than 160,000 according to Insurance Information Institute, making 2019 the worst year in the history of identity theft. And these numbers are only expected to reach new heights in 2020 due to increased usage of online stores and services during the COVID-19 lockdown.

As more people spend time online, data and information breaches are increasing as well due to nefarious third parties trying to take advantage of unaware consumers.

Fortunately, the Fair Credit Reporting Act, passed in 1970, has provisions of extensive measures for protecting victims of identity theft.

The Federal Economic Growth, Regulatory Relief, and Consumer Protection Act, passed in 2018 has made it free to apply for credit card freezes. This will prevent any further damage being caused to your credit. This feature will also require you to enter a PIN before any new creditor receives your credit report. You can lift the freeze whenever you deem it convenient.

Track Your Finances

Anyone can become victim of financial fraud and paying close attention to all your financial activities might save you a lot of time and money in the future.

Forbes states that the newest account holders are the most prone to face huge financial blows from identity theft. Theft goes undetected for as long as 6 months in such cases.

You have the right to an annual free-of-cost credit report from Experian, Equifax, or TransUnion as per FTC guidelines.

To up your monitoring game you can also sign up for credit monitoring services. These services notify the cardholder whenever a data change occurs and detect any unusual behavior to alert the consumer of a possible breach.

There are several credit reporting agencies and services that can help you stay on top of your finances at minimal cost.

Dispute Errors

Monitoring your credit will help you identify any errors or activities that weren’t authorized by you. The FCRA arms consumers with the right to dispute any error in their credit reports. And, we insist you do so spontaneously online.

You will need to keep all supporting documents to support your claim. These can be scanned copies of your documents that you will need to upload online.

Credit reporting agencies usually take 45 days to rectify the errors. However, the CARES Act allows lenders and credit bureaus to take additional time to fix errors to make up for limited employees and resources during these unprecedented times.

Final Words

Your credit reports and scores play a major role in your financial future and making sure that you’re protecting your credit during the COVID-19 should be one of your biggest financial priorities.

 

 

 

 

 

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