Protecting Your Credit during this Difficult Time
Millions of Floridians continue to be without work. According to recent statistics, almost 2 million Floridians have filed for unemployment since March 15, 2020 as a result of the coronavirus pandemic. Very few people have definite dates for returning to their jobs, provided their employers have not shut down for good.
With finances tight, people still need to make good decisions that protect their credit. Negative items can stay on credit reports for years, and this negative information can make it harder going forward to find jobs and apartments. For example, a future landlord could see that you went into default on a credit card and determine you are not a good risk.
At Nowack & Olson, we realize that bankruptcy is not the first choice for many people, often because they are afraid of what will happen to their credit. Below, we look at several steps consumers can take to preserve their credit.
Avoid Payday Loans
Payday loans are legal in Florida, as illustrated by a simple Google search. Type “Florida payday loan” into Google and watch your computer explode.
These loans are typically offered as a way to tide workers over until their next paycheck. However, they have exceedingly high fees—up to 10% of the amount of the loan. Someone who cannot make payment will quickly be in serious debt.
We encourage all Floridians to avoid these loans. These loans have a high rate of going into collections, which will impact your credit score.
If you need to borrow, ask a family member or friend. If you need a personal loan, visit a credit union or bank and check. They offer loans at much lower interest rates. Provided you are still working, you could ask an employer for a small advance. In short, try anything but taking out these loans.
Defer Credit Card Payments
Credit card debt is a burden even in the best of times. However, losing your job can make it that much harder to make your monthly payment.
The Consumer Finance Protection Bureau (CFPB) recommends that borrowers contact their credit card companies. Most of the big card issuers have announced that they will temporarily suspend payments or reduce interest rates for those struggling with the pandemic. Some credit card companies are also accepting partial payments.
Check Your Credit Reports
Americans are entitled to a free credit report each year. You should request a copy and scrutinize it for mistakes, which might be pulling down your credit score.
For example, if you have an agreement with a creditor to make a partial payment or some other accommodation, then the creditor should continue to report your account as current. They cannot report your account as in default so long as you were current when you reached the accommodation. If you were already in default at the time you reached an accommodation, then your account maintains that status.
Report any errors to the credit reporting agency that contains the inaccurate information. Fixing mistakes like these can substantially improve your credit score.
Sometimes it makes more sense to file for bankruptcy protection and eliminate debt, even if this action hurts your credit score. For help assessing your situation, contact the Plantation bankruptcy attorneys at Nowack & Olson, PLLC today. You can call 888-813-4737.