Karman Kua • Mar 26, 2020
The current situation might be making it difficult to pay your regular bills on time. However, this can be a big problem as payment history makes up 35% of your credit score. As a way to provide extra support during this time, some institutions, lenders and companies are offering payment deferrals.
Deferral programs allow you to delay your payment to a future date and are meant as a short-term measure if you are in financial stress. It’s important to understand that this doesn’t mean your account is ‘on hold’ or you’re getting ‘free money.’
In fact, depending on the program offered, it’s even possible that you could still be accruing interest. So even if payments are deferred, interest could be building and you could pay more down the line. It’s a good idea to ask what happens ‘after’ the deferral period ends so you understand of the ‘real’ cost.
If you haven’t already, start by getting your free credit report so you know where you stand. Next, create a budget and see if you can afford to keep up with your current schedule. Get help on how to do a short-term budget here.
Deferred payments should NOT affect your credit score. Due to COVID-19, Equifax is working with lenders to ensure deferred payments do not affect your credit profile. Specifically, if companies or lenders implement a payment deferral program, then Equifax has asked that they not incorrectly report missed payments that could negatively impact your credit score. This doesn’t mean that mistakes can’t or won’t happen, so it’s important to check your credit report regularly and make sure you don’t have any late payments.
Contact your lender and ask what they’re doing to help during COVID-19. By speaking with them directly, you can negotiate a plan that works for you. Whatever decision you make, be sure to be vigilant and monitor your credit report.
Borrowell® is a registered trademark of Borrowell Inc. All Rights Reserved. The Equifax credit score is based on Equifax’s proprietary model and may not be the same score used by third parties to determine your credit profile. The score provided to you for educational use is the Equifax Risk Score.
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