Page 4 - ARUBA BANK OCT 24 2020

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business Saturday 24 OctOber 2020
Keeping your credit profile healthy during a pandemic

By SARAH SKIDMORE SELL
AP Personal Finance Writer
Credit may not be top of
mind for many consumers
these days. But as the pan-
demic and its associated
economic woes drag on,
they may want to give it
some attention.
COVID AND CREDIT
The good news is that
consumers, by and large,
improved their credit pro-
file during the pandemic,
despite record unemploy-
ment and massive business
shutdowns.
The support programs that
were put in place worked.
Helped by federal stimu-
lus payments, expanded
unemployment benefits,
lender relief agreements
and a shift in habits, Ameri-
cans used less credit, paid
down debt, made fewer
late payments and im-
proved their credit scores.
The average FICO credit
score was 711 in July, up 5
points from a year earlier, A woman walks past a personal finance loan office Thursday, Oct. 1, 2020, in Franklin, Tenn.
according to Fair Isaac, Associated Press
the company behind the
score. A FICO score runs the recession officially end- in mind that the decisions However, if you do not strike activity. A COVID-related
from 300-850 and is one of ed, wrote Ethan Dornhelm, they make to survive these a relief agreement of some job loss or illness could help
the most widely used met- vice president of FICO tough times will impact form, any late payments or explain a period of late
rics to determine a con- Scores and Predictive Ana- their financial future. other negative steps will still payments.
sumer's credit worthiness. lytics, in a blog Monday. In For one thing, checking a be reflected on your credit EXIT PLAN
"It definitely feels like many the case of the COVID-19 credit report has gotten report. Any assistance you get will
consumers have taken a pandemic, it could be a easier. As part of a mas- If you are in a relief agree- not last forever.
cautionary step in terms of significant lag because of sive relief package passed ment but feel it has been Stabilize your household's
saving and spending," said the extraordinary steps tak- by Congress, known as reported improperly, reach finances as much as possi-
Matt Komos, Vice President en to help consumers. the CARES Act, consumers out to your lender and the ble with relief opportunities
of Research and Consult- TransUnion said it is seeing can check their credit re- credit agencies. and then reassess to come
ing at credit reporting a slight increase in 30-day port from the three credit KEEPING CREDIT HEALTHY up with a longer-term plan.
agency TransUnion. "I think late payments, potentially reporting agencies weekly Consumers who are strug- If you have run out the
there is a general cautious- an early indication that bor- for free online at annual- gling should seek help from clock on a relief agree-
ness among the American rowers are under financial creditreport.com. This ex- their lender as soon as pos- ment, seek an extension if
consumer." duress and could default. panded access is available sible. needed. If you need further
The bad news is consum- This measure increased through April 2021. TransUnion estimates about help, consider talking to a
ers' financial health could modestly in August for the Additionally, consumers 10% of consumers are using nonprofit credit counselor.
be heading for a downturn two largest payments most who reached some sort of at least one form of relief The Financial Planning As-
soon. Some relief measures consumers face — auto relief agreement with their accommodation already. sociation and many other
are expiring or have con- and mortgage. lender due to COVID-19 But experts say many peo- certified financial planner
cluded, Congress has yet "I think the full impact of the — such as forbearance, ple who are eligible for organizations are offering
to reach agreement on a pandemic on their credit reduced payment or other help have not sought assis- free assistance to those
new relief package; mean- isn't known yet and that is arrangement — generally tance yet. impacted by COVID-19 as
while the job market and what worries me," said Paul should not see their credit Consumer finance and well.
economic recovery remain Golden spokesman for the score worsen. credit experts urge people Beverly Anderson, President
fragile. National Endowment for The CARES act requires to get help where they of Global Consumer Solu-
Credit profiles don't yet re- Financial Education. "Even that accounts that were in can. Make sure to ask tions at Equifax, said that
flect those developments. with good credit and low good standing before any questions about the terms, everyone's credit situation
There's typically a lag time debt and some savings, COVID-related relief ac- such as how long the as- is unique. All the same, she
between a major econom- after more than six months commodation was made sistance will last, if interest reminds consumers of the
ic event and when it's re- or potentially going on to a will remain in good stand- will be accrued, or if late basics for healthy credit:
flected in the credit files of year, few people can with- ing. Those that were delin- fees may still apply. And establish and maintain re-
Americans. stand that stress." quent cannot sink further how your agreement will sponsible credit habits, like
For example, during the NEW CREDIT NORMAL but can be made current. be reported to the national paying bills on time; pay off
Great Recession, the aver- Consumers should be This rule stays in place until credit reporting agencies. debts as quickly as possible;
age national FICO score aware that some of the 90 days after the national Consider adding a state- apply for credit sparingly
didn't hit its lowest point rules surrounding credit emergency for COVID-19 ment to your credit report and keep your balances
until late 2009, months after have changed, and keep ends. to explain any negative well below their limits.q