Is Covid-19 Impacting Your Credit Score

Being late on credit card bills can not only lead to late fees, it could also negatively affect your credit score. If you foresee not being able to afford your minimum payment for a few months, your lenders may be willing to work with you. Contact your lenders on what payment relief programs they offer, be sure to ask about eligibility, relief period, and interest accrual to help you make the decision.

If it looks like your financial challenge is temporary, consider deactivating any autopays you have set up, so you can customize your payment amount, or re-setting your autopay amount to the minimum payment amount. You can often do this through your bank’s mobile app. If the day you receive your paycheck has changed, you may want to consider changing your payment due date. Just remember that the requested change can take up to 2 months to take effect for Capital One accounts.

Being late on a payment may have a material and lasting impact on your credit score, so be sure to take action as soon as possible to figure out a solution. Use the CreditWise Simulator which lets you see the potential impact of financial decisions on your credit score before you make them. The Simulator can also project the potential impact from any missed payments.

To help you get back on track, we recommend you start by reviewing your income and expenses. This can help you find possible ways to reduce your monthly expenses. Start prioritizing your bills and adding up the necessities, including food, housing, and medical coverage. Consider temporarily canceling non-necessities and luxuries. See how you can cut back on phone and internet bills so you’re only paying for what you need. Some utility companies and rental managers may offer payment relief programs too. Be sure to check out their public announcements or reach out to their service representatives to understand what options you may have. You can also learn how the government is responding to the crisis with relief options that may be available to you.

It depends on the change that you plan to make. Re-negotiating an APR, taking out a small cash advance, or entering into a payment relief program (forbearance, deferment, etc.) on an existing account typically shouldn’t drastically impact your short-term credit score. However, any cash advance or interest deferment will add to your account balance. Using up a lot of your available credit can cause your score to dip, so make a plan to pay down your balances as best you can. Keeping your credit utilization at or below 30% can be a sign that you’re managing your credit responsibly and not overspending. Check out the CreditWise Simulator to see how financial decisions may impact your score before you make them. And remember, a late payment can negatively affect your credit score.

The actions you take could impact your score in different ways. For example, applying for a new credit card or other loans, or refinancing an existing loan, can cause your credit score to drop temporarily. This is because new applications typically trigger a new credit bureau inquiry. Also, using up a lot of your available credit will cause your score to dip, so be cautious of spending beyond the most essential needs. Have a plan to pay down your balances as best you can, and explore the potential impact of increasing or paying down balances on your credit score by checking out the CreditWise Simulator. If you’re delinquent on any payments, it could show up negatively on your credit report.

While the way credit scores are calculated hasn’t changed, you may see some differences in the way banks and other lenders are reporting accounts impacted by the COVID-19 pandemic to the credit bureaus. In some cases, a lender may report the account as having made an on-time payment because the borrower was given the option to skip or defer a payment as part of a special accommodation program. In other cases, a lender may choose to pause reporting on the account because the borrower was experiencing a COVID-19 pandemic-related hardship. Check the status of each of your accounts in the TransUnion® Credit Report in CreditWise to ensure reporting from your lenders is consistent with your understanding of their accommodations.

Typically, the more of your balance you pay down, the less you’ll pay in interest over time. If you’re in a difficult spot, you may want to consider options to consolidate or refinance your debt at a lower rate—but be sure to consider whether this will increase the length of time to repay. It might also be helpful for you to track and manage your finances with a single monthly payment. If you have a mortgage, auto loan, or student loan, check to see if refinancing is an option to lower your monthly payment.

Adding an authorized user means giving another person access to your existing credit card account and allowing them to make purchases. They’ll get their own card, but you are responsible for making payments. Simply adding an authorized user shouldn’t impact your score. However, if your authorized user runs up a balance, and you don’t pay it down right away, it could decrease your amount of available credit and lower your score. Keep in mind, any negative actions, like missed payments, could affect both your credit score and your authorized user’s credit score.

Co-signing could affect your score in a number of ways. A lot depends on your financial situation and the type of loan involved. As a co-signer, you’re just as responsible for payments as the person you are co-signing for. If the person you’re helping out is unable to pay, then the payment responsibility is automatically transferred to you. If you can’t pay, that could negatively impact your credit score. Taking on the debt obligations as a co-signer could impact your ability to secure additional credit or loans of your own.

A cash advance lets you borrow cash with your credit card, up to a certain amount, either from an ATM or with checks sent to you by your credit card company. Think of it as a short-term loan. While a small cash advance probably won’t impact your credit score, larger or frequent withdrawals might hurt your credit score by increasing your balance. And be aware that cash advances may come with a higher interest rate than a credit card purchase, as well as a transaction fee.

Scammers have become increasingly clever, but there are still ways to stay vigilant and protect yourself. One common way fraudsters may target your personal information is through phishing. Phishing occurs when a fraudster contacts you by phone or email posing as a trustworthy source, like your bank, and uses already known information to build your trust and ask for additional personal information. So being overly cautious is a good thing; never click on a link in emails or text messages from sources you’ve not seen before, and don’t disclose sensitive personal information over email. You can also check CreditWise regularly to monitor your credit information and view your alerts. It’ll track your SSN, scan the dark web, and will report if there are meaningful changes on your TransUnion® and Experian® credit reports.