Struggling Financially Due to COVID-19? Here’s How to Protect Your Credit Score

struggling financially during covid

Millions of Americans have found themselves unemployed amid the coronavirus outbreak, and many more have seen their hours cut, wages reduced, and household finances significantly altered.

If you’re in this boat, staying afloat may be all that’s on your mind. But if you want to ensure long-term financial health (well beyond the current pandemic) then prioritizing your credit score is also critical.

Fortunately, there are steps you can take to both reduce your current financial stress and protect your credit score in the process.

Are you experiencing hard financial times due to the current health crisis? Here’s what you should do:

If you can, make at least your minimum payments.

One of the best things you can do is make at least your minimum payments every month. That includes payments on your credit cards, mortgage, car loan, and anything other financial product you have a balance on, as well as other bills — things like your electricity bill, water bill, cable, and other utilities.

If you’re late on most of these bills, the creditor will report it to credit bureaus. The exception is in the case of utility bills. Late monthly payments are not reported to the credit bureaus initially, but if they move into collection status, they are.

Payment status has a direct effect on your credit score, and late payments can drive your score down — especially if you have several payments outstanding at once.

If making your payments isn’t possible, call your credit card company, lender, servicer, or utility provider as soon as you know.

If you have any inkling you won’t be able to make your payment — on your credit card, on your car loan, on your mortgage, or on any bill you have in your name — get in touch with the company ASAP. Look at your most recent statement, and call the customer service line listed.

Utility providers may offer payment plans or hardship options, and for some financial products like loans, you may be able to qualify for forbearance or deferment under the CARES Act. This can have a few benefits:

  1. You may be able to pause payments for a period of time while you sort out your finances.
  2. No new fees or interest can be charged during this period, generally.
  3. Your servicer can’t report the unpaid bills to credit bureaus, which helps protect your credit score.

Some companies may have other options beyond those offered in the CARES Act, so be sure to ask about all financial hardship programs you might be able to utilize. If you are able to get on a forbearance, deferment, or another alternative payment plan, be sure to get the terms in writing and know exactly when your missed payments will come due. In most cases, your payments aren’t being forgiven — just delayed.

Minimize your spending as much as possible.

If you want to keep enough cash free to make those minimum payments and protect your score, then take steps to minimize your spending. Avoid ordering takeout, and consider canceling any subscriptions you’re no longer using. If your gym is closed, put your membership on hold. If you’re no longer able to listen to Sirius or Spotify on your morning commute or your favorite HBO show has paused production, consider cutting these for the time being, too. Every little bit helps.

Watch your credit report.

Finally, keep a close eye on your credit report and credit score. Most banks and credit card issues now offer free access to credit score monitoring, so leverage these and check in once per month. You should also check your credit report periodically to be sure your payments aren’t being reported late or haven’t been sent to collections.

Every American is due a free credit report annually from each of the major credit bureaus (Experian, TransUnion, and Equifax), so if you pull from each bureau at separate times, you can review your credit for free at least three times in a calendar year.

An Option for Homeowners

If you’re a homeowner and are struggling financially due to the COVID-19 pandemic, refinancing your mortgage loan may be able to help. This could potentially lower your interest rate, reduce your monthly payment, or even give you extra cash to pay those bills and stay afloat.

Want to see if this is an option for you? Get in touch with an Embrace loan officer today. We’ll talk through all your options.

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Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at or on Twitter at @AlyJwriter.