Ignoring bills can hamper your financial recovery
By Tamara E. Holmes | Updated: September 2, 2017
Personal Finance WriterWrites about finance and health
John Crux Photography/Moment/Getty Images
John Crux Photography/Moment/Getty Images
If you are currently rebuilding your Residence
Or life after a natural disaster, the last thing you need to think about is
Whether you paid your credit card bill on time.
You must, however. “A consumer’s delinquent
Payments could ruin their credit rating when they want access to
Credit the most,” says Melinda Opperman, executive vice president at Springboard Nonprofit Consumer Management Inc..
While assessing property damage,
Calling insurance companies and applying for government disaster assistance may
Be top of mind, here are the steps you should be taking simultaneously to maintain
From ruining your financial future your old debts.
1. Get a copy of your credit report. One of the first things you should do following a disaster is
Get a copy of your credit report, says Tom Quinn, vice president of business development
myFICO.com. If the disaster causes difficulties, your credit rating
may plunge. By having a copy of the credit report before it reflects any
Financial impact you may make the case to a
Lender or someone checking your credit — such as a landlord —
That the disaster, not fiscal mismanagement, caused your low credit score,
HOW HARVEY WILL AFFECT CREDIT: BUT CONTACT LENDERS, LATE FEES OFTEN WAIVED
By Kelly Dilworth
After the Texas coast was battered by Hurricane Harvey and flooded the largest city in Texas, my brother spent around his Houston-area neighborhood, helping his neighbors with homes that were flooded.
My stepsister took refuge on higher ground, far from paperwork and her belongings from the storm in a neighbor’s home.
They had a hard enough time keeping track of the information on phones with limited battery power and assessing where to go as roadways swelled with water. Was to also be concerned about their credit.
Only when many other bills and loan payments came due Hurricane Harvey hit. Louisiana residents and many Texas will have trouble paying their bills for months as they attempt to rebuild their communities and homes. Borrowers whose houses were insured could end up waiting a very long time forcing them to dip into their savings or borrow to compensate for the funds that are delayed.
Several banks with branches in regions such as Wells Fargo, Citi, Chase, BBVA Compass, Regions Bank and Amegy Bank, have said that they will temporarily waive late fees on credit cards and other loans taken out by those. Some banks have vowed to work with clients on deferral plans that debtors’ credit reports are not affected if they temporarily run into trouble paying their bills.
Credit reporting companies and Credit scorers are taking steps to help those dealing with flooding, living in shelters and coping with the loss of houses and jobs.
The Consumer Data Industry Association, the credit reporting trade group, for example, issued a notice to other information furnishers and creditors, reminding them that they can make a distinctive notation that was disaster-related when reporting customers’ credit information. A code included by a lender can mention that a creditor is currently working with the user to defer payments or that the consumer has been affected by a natural disaster.
VantageScore: The credit scoring firm will ignore any late payments on an account that’s been flagged as being affected by a natural disaster, but will consist of positive payments that customers who manage to pay their bills, despite the setbacks, will be rewarded. “VantageScore is unique because we just ignore the negative information,” VantageScore spokesman Jeff Richardson said.
FICO: FICO says it will still consider loan details and payment information, such as a credit card balance and amount of credit history. FICO will not penalize consumers whose accounts are marked as being deferred or in forbearance — a condition of loan forgiveness — due to a natural disaster, Ethan Dornhelm, vice president of analytics and score, said.
Review your coverages and you want to consult your lender, however, if you’ve been affected by a natural disaster.
“If a customer contacts the creditor due to an inability to pay due to the disaster, he or she can be put into forbearance,” Kelsey Audagnotti, a spokeswoman for the credit reporting firm Experian.said. “But if he or she does not pay, and does not contact the creditor, then the lender has to report as delinquent, which can have a substantial effect on a credit rating.”
Lenders and contacting banks is just another thing my brother and stepsister — and the tens of thousands of other people have to do.
When you are spending your days rescuing others, or sheltering with neighbors on ground, you don’t think about late fees, bills and credit scores. But a dip in credit can impact a hurricane survivor’s ability to rent an apartment or get a loan for a company or to replace a vehicle that’s underwater and totaled.
2. Create a you are waiting to get a check in the insurance
Company, have a realistic look at your savings and earnings. Look at what
You will need for the basics such as food and shelter.
Be, if your house is destroyed
Sure to cut services, such as electricity, cable or Wi-Fi off. Your
Post-disaster budget ought to be bare-bones. Cut luxuries until you can get
back on your feet, Opperman says.
Once you’ve established a post-disaster
Budget, you will know how much you have left to pay on your credit cards and
Even if you have enough in savings to pay off your credit card, then you might want to budget minimal payments for a while to save
Cash until your life becomes stable again, Opperman says.
3. Contact your creditors. It is time, once you know how much money you are working with.
Sometimes when disasters
Occur, credit card companies will email their clients to let them know
They’re aware of the disaster and will waive late penalties for those who
are affected. But don’t let the communication stop there. Credit card issuers
Will do far more for you if they know about your situation, says
“Based on the client’s
Those options, individual situation could include various short- and long-term
payment assistance programs or even temporary payment moratoriums,” Brown
When communicating with your creditors, look on the back or a statement
Of your credit card to get the number and call the creditors
than responding to an email. This way you protect yourself from scammers who may be fraudulently posing as creditors to collect
Possibly and information steal the identities of disaster victims.
“A customer’s delinquent payments could ruin their credit rating at a time when they want access to credit the most.”
4. Document all conversations. When contacting your creditors, be prepared to tell them how
You affected, how long you think your capacity will be
Affected and how much you can afford to put on your invoice.
Keep a detailed
Record of the conversation
When the phone call took place. To be on the safe side, when talking to a
Customer service representative, “say, ‘I will wait on the telephone a
Moment while making your notes,'” Opperman says.
If a creditor
Agrees to a change agreement, such as a three-month
Suspension of payments, ask for something in writing.
5. Explain the disaster’s effects on
your credit report. As you are recovering
From a disaster, you can add a 100-word statement to your credit report
Your credit influenced.
While this will not affect
Your credit rating, it lets
On and conveys that you
Delinquent accounts current. Some creditors may consider
That in any lending decisions.
Remember to update and remove
So the statement does not hinder, the 100-word announcement as your situation improves
Your borrowing abilities in the future.
6. Search for recovery
funding. Your insurance policies and
Government assistance may allow you to rebuild your home or possibly replace
Your vehicle, but you might have to look for additional resources to pay debt obligations, particularly if your job was affected by the disaster.
DisasterAssistance.gov provides long-term and short-term disaster assistance programs with links
That may be able to help, or you could try raising funds
Lending/fundraising sites, such as GoFundMe
See related: After Hurricane Harvey: How cardholders can help, When disasters hit, charity scams follow
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