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How to Maintain Your Credit During a Crisis

Through April 20, 2021, Experian, TransUnion and Equifax will offer all U.S. consumers free weekly credit reports through AnnualCreditReport.com to help you protect your financial health during the sudden and unprecedented hardship caused by COVID-19.

During a crisis, such as a financial collapse, global pandemic or natural disaster, your credit might be the last thing on your mind. But it's important to keep your credit on your radar—especially during a crisis.

When an emergency hits, it might be harder to afford financial obligations or remember to pay your bills on time. It's important to stay on top of your finances as best you can and protect your credit as late payments can have negative consequences long after the crisis ends. Continue to monitor your credit and be proactive about working with your lenders if you worry you'll miss a payment.

Monitor Your Credit

Credit reports impact numerous areas of our lives. They help lenders decide whether to approve you for loans and credit cards, and what interest rate and terms you'll receive. Landlords and employers often review credit reports during the application process to assess your financial stability. And utility and cellphone companies may check your credit when you apply for a new account.

If you haven't checked your credit report in a while, now is a good time. In addition to gaining a better sense of where your finances stand, monitoring your credit report regularly can help you spot fraud and identity theft, which can be prevalent during times of crisis.

You're legally entitled to check your credit reports with each of the three major credit bureaus—Experian, TransUnion and Equifax—for free once a year at AnnualCreditReport.com. But due to the COVID-19 pandemic, you can now check your reports for free weekly through April 20, 2021. While your three reports generally will be similar, it's important to check them all to ensure they are accurate. A good strategy is to check your report from one of the three bureaus every four months so you can periodically ensure any new information that appears is correct.

You can also get a free credit report every 30 days directly from Experian, which comes with several other benefits. These include free credit monitoring with daily alert notifications, information on what's helping and hurting your credit score, and more.

When reviewing your report, if you see any accounts listed that you didn't open, you can report it swiftly before more damage is done. It's important to remember that accounts such as credit cards can appear under different names depending on the bank or other institution that manages the account. Double-check to make sure an unfamiliar provider isn't actually a legitimate account you own or have cosigned for.

If you find anything on your credit report you believe is inaccurate, you can dispute that information. Keep in mind that you must dispute it with each credit bureau where the inaccuracy occurs. You can start the dispute process online with Experian.

Contact Your Lenders

During a financial crisis, continue to pay all your bills on time as usual if at all possible. But if you're struggling to make ends meet due to income loss or other circumstances resulting from the crisis, don't skip your payments or pay late.

Instead, contact your lenders immediately to inform them of your situation and ask if they have any hardship options. Sometimes during major disasters or crises, lenders offer impacted customers helpful options such as temporarily lowering interest rates or payment amounts, pausing payments for a set time, or placing loans in deferment. You must be proactive, however: Most lenders won't come to you with these options; you need to go to them.

If it looks like you will also struggle to pay utility and service bills, such as your cellphone, internet or electricity bill, contact your providers right away. Inform them of your situation and ask if they can offer flexible payment options or any other assistance in light of the crisis.

Evaluate Your Current Financial Situation

During a crisis like the coronavirus pandemic, it's important to know your financial state. Check your account balances and assess how much you have in checking, savings and in debt. Estimate how far your savings will go if you or your partner becomes unemployed and how much more you might need to set aside for an emergency. You may want to adjust your budget and redirect at least some of your disposable income to savings or debt to help you weather current or potential reductions in income.

An economic downturn may prompt you to reevaluate your investment strategy, particularly if you're close to retirement. But it may not be the best time to make drastic moves with investment and retirement accounts, especially if it's an emotional or impulsive decision. If you're not sure how to best evaluate your current financial situation and adjust accordingly, consult an expert, such as your company's 401(k) representative. Depending on your situation, a certified financial planner, investment advisor or credit counselor can help you make a plan that will give you peace of mind.

Stay Proactive and Plan Ahead

During times of crisis, desperation can lead to spikes in scams and identity theft, so it's especially important to protect your identity. In addition to regularly reviewing your credit report, you can take more proactive measures such as putting a fraud alert on your credit report if you are a victim or think you may become a victim of identity theft.

A fraud alert instructs creditors to take extra measures to verify your identity when they are processing an application for credit. It only takes a few minutes to add a fraud alert to your credit report, and placing an alert with one of the three consumer credit bureaus (Experian, TransUnion or Equifax) triggers alerts at the other two. If you want to remove a fraud alert, however, you need to do so with each bureau separately.

It's also smart to plan ahead financially as much as possible. If you haven't already created one, this might mean making a budget to help you see where your money goes each month and set aside savings in an emergency fund. If you lose your job or find yourself with unexpected expenses, this savings can help you get by and avoid taking on more debt.

You can also tighten your existing budget to help you weather the hard times more easily. This could look like cutting back on gym memberships or streaming services and setting aside more for savings or debt payments. This way, if you lose income or face an unexpected expense, your expenses will be lower and you'll have more savings to fall back on.

If you're looking for ways to improve your credit during a crisis, there are a few strategies that can help. Making payments on time (even just the minimum), keeping balances down on your credit cards and avoiding too many new credit applications will all go a long way toward keeping your credit sound and help prepare you to be in a stronger financial position once the crisis subsides.

This article originally appeared on Experian's Education Blog and has been published here with permission.