These are stressful times, particularly if you’re having a hard time making ends meet. As a Credit Human member, we want you to know we’re here to help.  

Finding ways to manage debt is something many of our members are thinking about right now. If like many people you’ve had a loss of income and are worried about paying your bills, there are several options to consider to help protect your credit and reduce your payment obligations right now.
 

Don’t be afraid to ask for help

Start by reaching out creditors, utilities, your landlord – anyone to whom you make regular payments. You may be surprised by how many options you’ll have for payment flexibility, especially with many new rules in place due to the pandemic:

• Check the websites of all your creditors and billers to see what relief may be available. Don’t forget to consider bills that you may have set to autopay. While those bills may not be top of mind, you may find savings by working with those billers to reduce your regular payments. Like Credit Human, many financial institutions are providing payment relief options for credit cards, personal loans, auto loans, home loans and others if you contact them. Most utility companies are offering deferred payments and even pausing service shutoffs.
• If you have student loans, the federal government is suspending all payments on federal student loans until December 31, 2020 – which means that if you’re one of the millions with federal student loan debt, you just got a monthly bonus in the amount of your regular payments. Use that bonus to help with your remaining bills. If you have private student loans, reach out to the financial institution or educational institution to explore their payment relief options.

Prioritize what you need most and protect your credit

• Prioritize your payments according to your needs and what you stand to lose if you don’t pay. This means you should first consider paying for the things you can’t do without. This often includes your mortgage/rent, utilities, water, etc. because they directly affect the health and well-being of you and your family if they get cut off. For example, if you stop paying your electricity, you might lose service resulting in no air conditioning at the heat of the summer, which is definitely a risk to your health.
• Next, pay any debts that are backed by assets. For example, if you don’t pay your car loan, you will eventually lose your car, which can cause significant trouble in your life.
• Lastly, work to cover the debts that can impact your credit score if you miss a payment, such as credit cards and any loans you have. If you can’t make all of your payments in full, making a minimum payment can keep you in good standing and protect your credit. Be aware that when it comes to medical debt, the credit bureaus provide a six-month grace period before they will include medical debt on your credit history.

If you’re considering using credit to create slack

Here are some things to thinking about if you’re considering building slack with credit:

• It may be difficult to get new credit if you’ve experienced a drop in income. And down the line, new credit also becomes another bill to pay. Consider any existing lines of low-cost credit first, such as a home equity line of credit
• Be cautious about using credit cards to cover your expenses – credit card interest can add up much more quickly than we expect
• Look into a signature loan to help you weather the crisis

As difficult as it may be when you’re feeling stressed, staying calm and developing a financial strategy is very important for you and your family. It can help you get through any crisis you may be going through in the short term, and protect your financial future in the long term.

Contact one of our Financial Health Center locations to speak to someone about your specific situation and get on the path to creating and maintaining the financial slack you need right now.