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Will The COVID-19 Pandemic Affect My Credit Score?

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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.

Federal Mortgage Forbearance During COVID-19

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.

Student Loan Forgiveness Due To COVID-19

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!

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Will The COVID-19 Pandemic Affect My Credit Score?

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Will The COVID-19 Pandemic Affect My Credit Score?

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As the COVID-19 pandemic rages on, people are starting to get more concerned about their credit. Read more on will COVID-19 pandemic affect my credit score?

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Jason M. Kaplan, Esq.

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The Credit Pros

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Lexington Law vs. Other Credit Repair Companies What Sets Us Apart

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Healthy credit is an essential bargaining tool that many Americans live without. According to Money-zine.com, over 40 percent of the population’s credit scores dip below 700. When you are focused on finding reputable credit repair services, how do you know who to trust?

Good credit can open doors and save you money. Despite these basic facts, many people choose to adopt the “out of sight, out of mind” mentality when it comes to financial issues. Don’t join the group by waiting to get serious about credit repair. Improving your score could save you thousands in mortgage interest, car payments, credit card debt, and more. Consider Lexington Law as an advocate to help you navigate the road ahead. We aren’t your average credit repair law firm. During 20 years of service, we have helped over a half-million clients find better credit. Aside from our demonstrated results, client comfort and satisfaction is our top priority. We:

1. Invest in your confidence. You don’t have to pay up-front to see our credit repair services at work. We offer a free, no obligation consultation where our qualified staff will help you understand:
o The positives and negatives of your credit report
o The components of credit scoring
o The importance of good credit
o Ways to improve your score in everyday life
Moreover, clients engage our service for discrete monthly servicing periods and pay only for services previously (and completely) delivered. The bottom line: we want you to feel confident in your credit repair decisions. We want our skills to speak for themselves.

2. Design solutions to fit your needs. Different clients have different needs, and we work to fill them. Our three-tiered levels of service are designed to address your issues and suit your budget. Each level includes free support and anytime cancellation. Choose from:

o Lexington Regular—This option covers credit repair basics, including credit report consultation and credit bureau-directed investigations, challenges, and disputes as applicable.
o Concord Standard—Clients enrolled in this level enjoy everything provided in the Lexington Regular service but also benefit from the firm’s legal interventions directed to creditors and others who report information to the credit bureaus.
o Concord Premier—Lexington’s most popular and comprehensive level affords everything available in the Lexington Regular and Concord Standard services as well as TransUnion Credit Monitoring, monthly credit score improvement analyses, ReportWatch™ comparative alerts, and InquiryAssist™ for problematic credit report inquiries that can also damage your credit scores.

3. Don’t make empty promises. While other credit repair companies may offer guaranteed results, we follow the letter of the Credit Repair Organizations Act (CROA), which prohibits such claims. In the world of credit repair, there are no guarantees. What we can promise is exemplary service, legal and fair billing practices, and accurate representation. Our track record speaks for itself. Visit us at www.lexingtonlaw.com to learn more about our services.

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Five Free Credit Repair Tools

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Credit health is illusive without the proper tools. In addition to our services, there are several preemptive and free ways to get serious about financial improvement in the New Year. Begin by taking advantage of the following resources. They will help you on the path to stability.

  1. Credit reports. Thanks to the Fair Credit Reporting Act (FCRA), every person is entitled to free annual copies of their credit reports from the major bureaus—TransUnion, Experian and Equifax.

Credit repair fix: Review your reports carefully, highlighting any information that is incorrect, outdated or suspicious. Clean credit requires correct information, and identifying the errors is the first step.

  1. Education. The web is full of credit-related learning resources: The Consumer Financial Protection Bureau and Federal Trade Commission are government agencies tasked with protecting your credit rights and providing free education. Lexington Law’s blog is also filled with hundreds of articles aimed at teaching you everything from scoring factors to household budgeting.

Credit repair fix. Personal habits are the cornerstone of credit health, and it’s important to understand how yours affects scoring. Take advantage of free education and commit to learning more about credit. The result will help you adopt score-boosting behaviors.

  1. Online calculators. Big purchases like homes and cars require serious consideration. Learning about down-payments, hidden costs and monthly payments is essential.

Credit repair fix. Installment debt can make or break your score. Do the math by using a free loan calculator. Tangible numbers will help you determine whether to take the next step.

  1. Budgeting. Income isn’t a direct factor in credit scoring, but your bank account allows you to pay bills, save for emergencies and plan for the future, all of which do apply to credit health.

Credit repair fix: Make the most of your assets this year by creating a budget and sticking with it. Download our free template here. Financial management will help you maintain a low credit utilization ratio and debt-to-income ratio while also using your funds to open new accounts that can boost your credit score.

  1. Online deals. Why spend more when less is an option? The Internet is full of money-savings options, including discount sites like Groupon.com and LivingSocial.com, coupon sites like CouponCabin.com and RetailMeNot.com, and more recently, a rebate site, Ebates.com, which offers cash back on purchases made at hundreds of national retailers.

Credit repair fix. Debt reduction is a defining factor in credit scoring. If you are serious about improvement, don’t miss an opportunity to save. A few coupons could stand between you and much-needed credit score points.

Related Articles:

When Will I See a Boost in My Credit Score?

What Laws Protect You From Credit Reporting and Collection Agencies?

Understanding Your Cumulative Credit Score

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Credit Building Tips for Students in 2021

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The past year has been one for the history books. Between a pandemic, an economic crash, and a new President of the United States, there hasn’t been a year like 2020 in a very long time.

With that said, 2021 isn’t quite yet back to normal. We still have a long way to go. In the meantime, though, there are still students like you who are trying to get their lives started during an unprecedented time in world history.

Part of starting your life is building up a credit history, and although banks aren’t as fast and loose with money as they were during the 2010s, there are still ways that students can get started with building their credit in 2021.

What Is Credit, And Where Does It Come From?

Credit doesn’t just refer to a 3 digit number, or a credit score. Instead, credit is just the ability to borrow money or use certain goods or services. The idea of an individual having credit dates back to antiquity, where some individuals were seen as more creditworthy than others based on their reputation and their status.

As we started to modernize and more people started to demand access to credit, there was a need for a standard way of judging creditworthiness. The first credit bureau, Retail Credit Company based in Atlanta, was the first company to collect information about people to give to lenders to help them make decisions on who to lend money to.

Over time, more opportunities for lending arose as the American people became more confident in the economy. Mortgage lending grew substantially with the establishment of Fannie Mae in 1938 and with help of the GI Bill in 1944. The GI Bill gave World War 2 veterans the ability to get a mortgage guaranteed by the federal government.

The first credit card was launched in 1950 as a charge card, and slowly the idea of a revolving credit card became much more mainstream. The Fair Credit Reporting Act of 1970 made it illegal to collect information on race, sexuality, and disability which had been used to discriminate against would-be lenders. More credit bureaus began to take form, including TransUnion, Equifax, and Experian (or the big 3 credit bureaus today).

Later, in 1989, the Fair Isaac Corporation (FICO) partnered with the Big 3 credit bureaus to create a 3-digit number to represent creditworthiness, now known as a FICO Score or a credit score.

Why Is Building Credit So Important For Students?

Building credit is important for anyone who wants to have the ability to borrow money to meet their financial goals. Good credit is highly beneficial, and people with good credit are able to get lower interest rates, larger borrowing amounts, and access to more goods and services provided by lenders and card issuers.

The biggest area where having good credit helps is for mortgages. If you want to own a home someday, chances are you’re going to have to take out a mortgage to buy it. A mortgage is debt borrowed in order to purchase a piece of real estate, most commonly used by consumers to purchase single-family homes. In order to get a mortgage, you need to demonstrate ability to pay (which is usually based on your debt-to-income ratio), solvency (based on your debt-to-equity ratio) and creditworthiness (which they check based on your credit history and your credit score).

As a student, you might have a significant amount of student debt. Building good credit can allow you to consolidate or refinance your student loans later, which can help you get lower interest rates and even lower payments. This could help you grow your savings, which can then be used for a down payment on a home after you’ve cleared out your student debt!

How Can A Student Build Credit?

Take advantage of student credit card deals and use your card responsibly.

Students are offered credit cards all the time, and banks use student credit card and banking deals to get new customers. Don’t take the first student credit card that shows up in the mail: do your research. Go to Google and find out which credit card offers provide you with the best terms.

More importantly, you want to use your credit card responsibly. Using a credit card responsibly entails doing the following:

  • Use your credit card to pay for things that you CAN afford, not things you CAN’T afford.
  • Don’t charge more than 30% of your available balance, if you can help it.
  • Don’t miss a payment. Ever. It’s better to pay the minimum payment than to pay nothing at all.
  • Pay off your balance in full every month. This allows you to avoid interest charges.

As a student, we highly recommend you avoid putting large purchases on your credit card.

Pay down your student debt while you’re in school.

Many students decide to work while they’re in school in order to help pay for textbooks, living expenses, and entertainment. However, one great way to build credit early is to start making payments toward your student debt while you’re still studying.

You don’t have to put a lot of money toward your debt while in school. Just pay what you can afford. These payments will lower your overall debt burden later in life and will help you build a good credit history even before you graduate.

Learn financial discipline habits early.

Financial discipline is one of those things that’s based not on laziness or morality, but on habit. People with good financial discipline have the habits necessary to keep themselves above water, even during difficult times. It’s their habits that allow them to withstand times of reduced income.

Good financial habits include:

  • Setting aside money for savings every month.
  • Keeping a living budget by keeping track of expenses as they compare to income.
  • Paying off credit cards in full each month.
  • Avoiding unnecessary consumer debt.
  • Keeping track of credit card transactions and spending.

If you don’t have an income, you won’t be able to pay off large credit card bills or save money. Instead, keep track of your spending and come up with ways to reduce it.

Learn more about good financial discipline habits!

Summary

Credit Building Tips for Students in 2021

Article Name

Credit Building Tips for Students in 2021

Description

There are still ways that students can get started with building their credit in 2021. Read more information on this new blog.

Author

Jason M. Kaplan, Esq.

Publisher Name

The Credit Pros

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