The coronavirus outbreak has ruined the finances of countless Victorians in just a couple of months. The spread of COVID-19 has caused the Australian economy to plunge into a recession, resulting in job losses and income reductions.
The pandemic might have drained your money in the bank and kept you from making as much as usual. But it could also compromise your ability to spend money you haven’t earned yet.
Every financial decision you make could have a direct or indirect effect on your credit. If you’re planning to buy a property for sale in Truganina, Southbank, Parkville, or Carlton during or after this period of uncertainty, you’ll need a good credit score to qualify for a mortgage with favorable terms. Otherwise, you’ll be subjected to stricter scrutiny and get rejected.
There’s no easy way to navigate in a pandemic with no end in sight. But the tips below could help protect your credit score until the situation becomes better.
Pay as Much as You Can
In some ways, the world hasn’t stopped because of the coronavirus scare. Many lenders, credit card companies, and utility providers still expected to be paid for what they provide.
You might not be able to pay your bills in full, but at least settle your minimum balances on or before the due dates. Doing so could help you avoid some penalties.
Although partial repayment might not let you escape interest charges, your punctuality will prevent late payments from appearing on your credit reports.
Talk to Your Creditors
If you can’t repay what you owe on time, reach out to your creditors. The financial sector understands the possible implications of the pandemic for individuals. That’s why many banks have implemented some financial hardship policy to help cash-strapped customers get by temporarily.
If your financial institution offers such, you’ll be able to know your options to manage your obligation more efficiently and avoid any credit score reduction.
Enter a Payment Deferral Arrangement
More often than not, consumers who have little to no means to sustain their bill repayments could ask for deferrals.
A reasonable agreement will prevent non-payment from showing up on your credit reports if you’re not behind on your repayments before being granted relief.
If you’re not up to date on your repayments, your creditors will leave the field for your payment history information blank throughout the deferral period and deal with it afterward.
A payment deferral arrangement won’t freeze your credit score, nor will it prevent it from going down since there are also other factors in play. But it’s worth the trouble because it could keep your score the same or minimize the reduction over time.
Monitor Your Credit Report
You’re entitled to a free copy of your credit reports every 12 months. Take advantage of this right to ensure that all items, positive and negative, on your file are accurate. A single inaccuracy could pull your credit score down significantly.
Nobody could say when we would beat COVID-19 in Australia and put an end to all of its financial horrors. What we could somehow control, though, is the movement of our credit scores. With wise decisions, you could live through the pandemic without severe credit damage.