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Protecting your credit score during the pandemic

As the novel coronavirus pandemic continues to take its toll upon all aspects of our lives, our financial health needs particular attention as well.

Many consumers are still finding it difficult to navigate the Credit Reporting Act, which came into effect 2011.

Like it or not many companies and financial institutions are reporting your payment performance to credit reporting agencies, also known as Credit Bureaus. This includes mortgage companies, credit card companies, landlords, and even accounts in collections.

Your credit score is largely based on how you manage your finances, your payment history with creditors and the information in your credit report. This score, as well as the information on your credit report, are important for determining whether you’ll be able to get a mortgage, auto loan, credit card, and the interest rates you will pay. Therefore, it is very important that we maintain good credit reports.

For consumers having trouble paying their bills and worried about what will happen to their credit scores, use the information below to manage and protect your credit during the pandemic.

REACH OUT TO YOUR LENDERS AND CREDITORS

This is a very important first step, especially since many consumers have lost their jobs or had their incomes reduced significantly. It is vital to reach out to your lender or creditor, if you are having trouble paying your bills. Many lenders and creditors have proactive measures to help borrowers. The forbearance measures are sometimes referred to as “relief programmes” or “hardship”. These programmes are dependent on your individual circumstances, and may allow you to:

Make a partial payment

Defer or pause one or more payments

Modify the loan

Forbear (temporarily stop paying) any delinquent amounts

OTHER ASSISTANCE OR RELIEF

When reaching out to your lender, be mindful that most lenders are facing high call volumes due to the pandemic, so the wait time may be long. Don’t be easily discouraged. Check the lender’s website to see if they have information that can help you to communicate electronically or online applications for hardship programmes. Taking the proactive approach will give you the greatest advantage.

Now that you have decided to contact your lenders, make sure to have your account number and payment information available. Be prepared to discuss, in detail, your financial and employment situation, also how much you can afford to pay considering your income, expenses, etc. It is highly recommended to have a list of questions prepared in advance. You want to make sure you are completely comfortable before making any agreement.

KEY QUESTIONS TO ASK

It is important to ask relevant questions when seeking information from your lenders, to clearly understand how the relief options will work for you. Some questions you may find useful are listed below.

•If I can’t make my payment as a result of the pandemic, what are the hardship or relief programmes available?

•Will I have the option of deferring the repayment of any amounts owed to the end of my loan?

•How long does the forbearance period last and when will I need to start repaying?

•If my financial situation hasn’t changed once the relief period ends, what will be the options?

•How will this arrangement or forbearance be reported to the credit bureaus?

Like with other emergencies and natural disasters, creditors and lenders may be willing, and in some cases are required to provide forbearance, loan extensions, reduction in interest rates and other flexibilities for repayment. You must take the initiative to seek the necessary assistance.

After making an agreement for forbearance with your lender, you should check your credit report to make sure that the arrangement is accurately reflected. For example, if the lender agreed to let you pause one month’s payment, make sure that they didn’t report it as delinquent or as a missed payment. Although it could take a month or more for the changes from the lender to show up on the credit report, you should check regularly to see if the reports are accurate. Credit reports are an essential part of our lives and we have to take control of it during these challenging times.

Michael Diamond is the president of Consumers Intervention of Jamaica (CIJ) – Email: consumersinterventionjamaica@gmail.com