Should I repay my loan due to COVID-19 epidemic?

Salt Lake City – Have you taken advantage of COVID-19’s offer to pay off a credit card or car? Examine your credit report carefully.

Some customers are complaining that they have been reported as criminal after evading any payment with what they thought was a blessing from their donor. In one case, a Florida woman temporarily resubmitted her car. Some donors are cutting the lines of recipients. And the millions of people who hold on to students can have their credit scores reduced because of the pending approval by the Cares Act.

Horror stories are the unintended consequences of measures that were supposed to help weather the disadvantages of Americans fighting COVID-19 epidemics. More than two million people lost a job in the United States during the epidemic; A few million more people have had their hours reduced or they have been surprised. To make matters worse, the prices of groceries skyrocketed, and many families even had more mouths to feed during the massive shutdown that left people sitting at home.

To help, the federal government and many financial institutions and banks have deferred payments to borrowers in the form of student loans, credit cards and car payments. The Wall Street Journal reports that more than মিল 100 million in payments, most of them student loans, have been avoided since the epidemic began.

“In general, I’m really impressed with the painful programs that lenders have taken,” said Ted Rossman, an industry analyst at creditcards.com. However, there are signs that donors are becoming increasingly concerned about the financial health of Americans, with some donors tightening standards for new credit and others lowering credit limits, even for well-positioned borrowers.

Credit cards are featured in New Orleans on August 11, 2018. U.S. customers drowned in April due to April adoption as families were frustrated by the disruption caused by the coronavirus epidemic and stopped using their credit. On Friday, June 5, 2020, the Federal Reserve reported that total ing fell by 68.8 billion or 19.6%. It was the biggest drop in a month since the end of World War II. Jenny Kane, Associated Press

Your credit report

The volatility of the credit market is such that Americans can now check their credit reports for free every week until April 2021, as opposed to once a week.

This is why credit experts say you should take advantage of that opportunity.

In addition to sending payments of $ 1,200 or more to many Americans, the Cares Act, passed by Congress in March, ordered the suspension of both principal and interest on all federal student loan payments from March 13 to the end of September. Some break payments were recorded separately by some organizations that give student loans, and some people reported on social media that their credit score has dropped by more than 50 points, in some cases due to pending cancellations.

On its Student Support website, the U.S. Department of Education acknowledged that some orrow recipients received “negative changes” to credit information, but said it was limited to third-party credit reporting sites, such as Credit Karma, not primary credit reporting agencies: Experts, Transunion and Equifax. It encouraged people with student loans to check their scores on those websites and said that scores should not be reduced due to suspension, which was automatic. (Orrow subscribers must choose to continue paying))

Brian Guilder, a certified financial planner in Los Angeles and author of “The Financial Playbook,” says people should do it already, regardless of whether students have a loan or not. The Federal Trade Commission has asked customers to check their scores regularly, especially if they have made special payments due to epidemics.

“For some reason, they can put a missed payment in there and if that happens it could really hurt your credit score,” Guilder said. “If you find a mistake, you’ll want to discuss it immediately.”

A credit report can reveal a total line of accounts related to another account, which can also hurt your score if it shrinks. The end payer is allowed to do so but must give the customer 45 days’ notice in writing. They can do this even if you are a tall, loyal customer. This happened recently in the case of Rossmann, who was informed by the donor that this was going to reduce his available credit because he did not often use the line of credit.

During the Great Depression, Rossmann said, about 20% of creditors cut or cut the credit line of major e-recipients; The number was up to 60% for subprime orrowers. As such, he is not surprised that donors are now doing it.

That said, the combination of stimulus money and the proposed tolerance and suspension orders have so far prevented bankruptcy and default.

“Not to reduce the number of people who are fighting, but I’m surprised that 6% to 10% of orrow recipients are in one of these (pending) programs, which seems really low to me,” Rossman said. “Even among people at some stage of patience or suspension, many continue to contribute, and some banks are shutting down hardship programs for lack of use.”

Expenses vs. benefits

This did not happen in all cases.

Shelley Tanner, a nurse in St. Petersburg, Florida, decided to accept an offer to defer payment to her credit union for two cars, and her car was repaired because she did.

According to Tamper, a television station WFLA, Tanner’s request for a suspension began an audit of his account. Most of the donors who offered deferrals only allowed up-to-date credit unions in their accounts, saying it had discovered that Tanner was c 66 cents less than the monthly payment, which formally passed him and the car was relocated. Following reports of a WFLA restoration, the car was returned.

This is an example of the little things that can ruin a person’s credit score if people don’t pay attention to them and take action when something changes.

Tallin Larson, a reputable personal finance counselor at the AAA Fair Credit Foundation in Salt Lake City, said: “I advise them to talk to different organizations and seek help by gathering as much information as possible. Every individual situation is different, so it’s best to review each situation separately and come up with a unique plan based on the individual, ”Larson said.

Although there have been complaints that some people have been able to make payments at the time of recruitment, Guilder said it could be a smart decision if these borrowers understand the costs.

“There really is no right or wrong answer. The question to ask is, can I sleep at night? Some people need to have that extra money in the bank, ”he said. “It’s okay to give up your long-term financial needs now to protect your short-term needs. This is one of the reasons why people accept money in 401 (k). “

This is another provision of the Care Act: 10% penalty for early withdrawal from 401 (k) for those under 59% of age was waived by 2020 for requests related to coronavirus.

No one knows what will happen after these programs expire, but “donors are very cautious,” Rosen said. “So long, so good, comparatively speaking. I think there is a risk ahead if these programs expire and they are not renewed. What happens then? This is a matter of concern. “

Guilder, meanwhile, recommends that people check their credit reports at www.annualcreditreport.com at least every few months, if their payments are often delayed. And for that reduced credit line – Rossmann resigned, calling the payer.

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