A great credit score is not always easy to come by. Student loans, credit card bills, missed payments, and now COVID-19, can all affect one’s credit score. During these uncertain times, many have faced unexpected financial burdens that will have long-term effects.
Kareem McMurrin, owner of Bar Financials, has more than seven years of experience helping individuals plan financially for their futures. Featured on outlets such as Fox Soul, McMurrin has identified sound practices that can help people plan, build, or re-build financially even through volatile circumstances.
BlackEnterprise.com talked to McMurrin about how to protect credit, recession-proof credit scores, and what not do financially during a pandemic.
What should Americans who received a stimulus payment know about the payment?
According to reports in December 2019, 69% of Americans have less than $1,000 in case of any emergency. From the very beginning of this COVID-19 pandemic, we’ve most importantly been made aware of what it actually takes to even prepare for or survive through such [an event]. Using your stimulus check to start an emergency fund would be a great idea that would help relieve stress and help prepare for uncertainties.
How can people protect their credit during the COVID-19 Pandemic?
The single biggest thing anyone can do is pay all your bills on time if possible. Do your best to make your payments on time, even if you’re only meeting your creditors’ minimum requirements.
During times of crisis, you will see an increase in fraudulent activity. Monitor your debit and credit card usage by setting transaction alerts and view your statements. Be aware of spam emails acting as known companies baiting you to click on links. Do not provide anyone your credit card information or Social Security card information over the phone unless it is a trusted source that you know.
Is there a way to recession-proof your credit score?
Contact your lenders for help if you know you can’t make your required monthly payment. When you contact your lenders ask about hardship options that are available and do this as soon as possible. You don’t want to wait until you’ve already missed a payment. Due to the continuation of COVID-19, many lenders are putting policies in place to help everyday consumers pay their bills.
There are many options available. Lenders may, for a short, temporary time, be able to lower your interest rate or payment or put a hold on your payments for a disclosed period of time. Lenders may also be able to place your loans in deferment or forbearance. You don’t have to make loan payments when a loan is in deferment or forbearance. Making contact could be very beneficial due to the fact the lender will not report late payments to the credit bureaus.
What are three things we should not do financially during an economic downturn?
- You’ll want to avoid becoming a cosigner on a loan, taking out an adjustable-rate mortgage, and taking on new debt—all of which can increase your financial risk.
- If you’re a business owner or an employee, avoid new or extra expenses. Do not take on new debt until the economy has shown a complete recovery at a considerable rate.
- Think about the long term. Acknowledge your emergency savings situation and develop a plan to prioritize your expenses.