About 33 million Americans have filed jobless claims since mid-March. The unemployment rate has skyrocketed to nearly 15 percent, the highest level since the Great Depression, and the U.S. workforce has lost an unprecedented 36.5 million jobs. According to a Fidelity Investments study on Market Sentiment, nearly half of those surveyed said that because the of the demands of work (or looking for work), and home (with social distancing, children at home, etc.), they have not dedicated any time whatsoever to addressing their financial futures. That’s changing, however, as the Covid-19 threat appears to ebb, and Americans begin to focus on a much more optimistic future.
In “Should I care about my credit score during Covid-19,” author Taylor Moore on nextadvisor.com says, “With unemployment rates at a historic high and a contagious virus on the rampage, it may seem frivolous to think about managing one's credit score at a time like this, but it’s an important component of your financial health that will follow you past the pandemic and into the future. And right now, there’s a lot of confusion about what gets counted in your credit history.” The phrase “a lot of confusion” could be considered a real understatement, given the amount of confusing, and often conflicting, information regarding credit score management and reporting. As bankers, it’s critical that we, of course, continue to be that expert advisor to our customers, providing them with much-needed financial products and services.
One of those critical services is guidance, especially at this moment, in managing their credit. How should you advise them and, hopefully, bring some clarity to what they’ve seen and heard? Here are a few things:
- Monitoring credit closely: Free weekly credit reports are now being made available by the major reporting agencies and can be accessed simply by visiting AnnualCreditReport.com. Whether or not they’ve missed any payments, staying on top of credit reports and scores is always a good idea. Should inaccurate information be found – in the case, for instance, of fraud or identity theft – actions can be taken in a timely manner to limit exposure.
- Prioritizing debt: According to US News, this starts with “taking advantage of the CARES Act and the temporary credit score protection offered to those who are unable to make their minimum monthly payments.” If their accounts are currently in good standing, your customers can ask their lenders for payment accommodations. Then, if they can pay some of their bills but not all of them, they should prioritize based on the two different types: secured and unsecured. Paying secured debts first, i.e. mortgage and auto, ensures that they do not lose their home or vehicle.
- Making every effort to make payments on time: While it may get difficult, it’s best to make at least a minimum debt payment by its due date every month. Credit scores are greatly impacted by late or missed payments. If your customers hope to emerge on the other end of this crisis with a credit score that will serve them well, they should make every attempt to maintain on-time repayment even if they’re only paying the minimum amount.
When it comes to important matters that can have a long-lasting impact on such things as credit, financial institutions have not just an opportunity, but a responsibility to keep their customers informed. Take this opportunity to be the trusted advisor that your customers need.
For more information on how BankMarketingCenter.com can help you with communicating vital information to your customers – for example, with our ads focused on credit score management during Covid-19 – visit bankmarketingcenter.com. Or, you can contact me directly by phone at 678-528-6688 or at firstname.lastname@example.org. As always, I would love to hear your thoughts on this subject.