Managing Your Credit Through Financial Hardship

If COVID-19 or a natural disaster has put an unanticipated burden on your finances, making a plan is a sensible, proactive approach to assist you navigate this tough time. During times of uncertainty, TransUnion is committed to assisting you in understanding how to preserve and maintain control of your credit health. This tutorial explains how to protect your credit, communicate to your lenders, and get a consumer statement on your credit report.

HOW CAN YOU KEEP YOUR CREDIT IN GOOD SHAPE?

You may be compelled to make some difficult financial decisions during times of difficulty. To avoid late payments on your credit report, we advise you to pay what you can. If you can't make minimal payments, we recommend contacting your lenders to see if they can help you. You may also manage and maintain control over your credit by doing the following:

Check your credit score on a regular basis

  • Your credit report tells your financial narrative to anyone who sees it. Even if you'll be calling your lenders to discuss your financial condition and accounts, it's critical to make sure the information that displays is correct. Through April 20, 2022, TransUnion is happy to provide you free weekly credit reports online.

To your credit report, include a consumer statement

  • Anybody who sees your report can see a consumer statement, which is a note you can use to explain your financial status. This note should be no more than 100 words long (200 or fewer in Maine). You can easily choose from pre-worded options or make your own consumer statement when adding it to your TransUnion report. To get started, go to transunion.com/disputes.

Take advantage of free tools

  • Using free tools can assist you keep track of any changes to your credit information and give you peace of mind. True Identity, a free credit protection product from TransUnion that includes TransUnion credit monitoring and notifications, as well as TransUnion Credit Lock, is available.

HOW TO CONFRONT YOUR LENDERS ABOUT YOUR FINANCIAL DIFFICULTIES?

Despite the fact that not all lenders provide hardship or forbearance plans, if you're having trouble making payments, contact your lender and explain your position. Their contact information might be found on your credit report or on your most recent bill. Additional advice and questions are provided below to assist you.

You can inquire about when your lender notifies credit reporting bureaus of late or missed payments. Late payments may be reported right away by some lenders, while others may take up to 30 days.

Consider asking your lender whether they provide hardship or forbearance plans to their customers. These are some questions that may assist you in your chat with them:

  • Is there a forbearance/hardship program offered by your company?
  • What are the criteria to apply for forbearance or hardship?
  • Is there a difference between forbearance, deferral or hardship?
  • How long does it take for a forbearance/hardship to take effect?
  • While I'm in forbearance/hardship, would fees (e.g., late, overdraft) be assessed?
  • While I'm in forbearance/hardship, how is interest calculated?
  • While I'm in forbearance/hardship, how is my account reported to the credit bureaus?

HOW LENDRRS MAY REPORT YOUR ACCOUNTS DURING FINANCIAL DISTRESS

After talking to your lenders about your situation, you may learn that they will place your accounts in forbearance/hardship or deferral. When your lender puts an account in forbearance, it usually implies that you can cease making payments on it for a set period of time. A delayed account is one in which the lender has agreed to allow you to defer payment for a set period of time. This will usually appear in the Remarks field of your credit report, with the notation "Payment Deferred."

Check out the VantageScore or FICO websites for more information on how an account in forbearance or deferral can affect your credit score. It's crucial to remember that a credit score is determined by a variety of indicators in your credit report, and different scoring models generate credit scores in different ways. You may see various scores when these are applied to your accounts since different credit scoring models treat plans and codes differently.

Organizing your credit information and staying in touch with your lenders are two methods to keep your credit in good shape during difficult times. Meanwhile, TransUnion is here to assist you. We'll keep providing tools and resources to help you stay on track with your credit.

You may use our interactive guide to help you read and understand your credit report, where we provide explanations for key sections.

Related Articles:

https://thephenixgroup.com/does-debt-consolidation-hurt-your-credit-score-2

https://thephenixgroup.com/who-are-the-three-credit-bureaus

https://thephenixgroup.com/ad-astra-recovery-services-what-you-should-know




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