Protecting your credit score is a good idea any time you’re planning to buy a home or refinance but it’s taken on added importance during the pandemic. Experts have warned of an increased risk of identity theft due to COVID-19 scams and unexpected job losses have threatened people’s ability to stay current on bills. Regardless of your circumstances, there are steps you can take to keep your credit score sound.
1. Monitor your credit report
Check your credit report to watch for identity theft and errors posted by creditors. The three major U.S. credit bureaus—Equifax®, Experian®, and TransUnion®—have made it possible for consumers to check reports weekly in response to COVID-19. The benefit is good for one year as of April 20, 2020, and reports are available at AnnualCreditReport.com.
To fact-check additional records, see the Consumer Financial Protection Bureau’s (CFPB) list of consumer reporting companies. These include a range of screeners that can influence your job options and home insurance costs, among other things. The list also includes information on disputing errors.
2. Watch your credit card limits
Check your credit card limits in case they’ve been lowered. Some credit companies have cut them during the pandemic without notice. This means impacted cardholders may be using a greater percentage of their available credit, which can hurt credit scores. As an example, if you used $1,000 of a $10,000 credit limit that dropped to $5,000, the percentage of your credit used has jumped from 10% to 20%. Learn more about the importance of these debt-to-credit ratios and other factors that may protect your credit score in our blog, “What Makes Up Your Credit Score.”
3. Contact lenders and creditors you can’t afford to pay
Contact creditors if you’ve fallen on difficult times, as they may offer options that can help protect your credit score. According to the CFPB, accommodations may include forbearance, reduced interest rates, and more.
4. Look into your rights under the CARES Act
Research the CARES Act’s credit score protections. For example, if you aren’t delinquent and arrange an accommodation with a creditor, you may have new protections. The creditor must report that you are current if you don’t break your new agreement. Click on the CFPB link in the previous section to learn more and watch for information on time limits that may apply.
5. Beware of scams and hackers
Protect your identity and finances online and offline. As a general practice, be suspicious of unsolicited offers, including mortgage offers, and don’t share sensitive information with an unverified source. Equifax also offers cybersecurity tips here, including keeping software updated on your cell phone, computer, tablet, etc. For more recommendations, read our blogs on preventing identity theft and COVID-19 scams. You can also sign up for scam alerts from the Federal Trade Commission here.
6. Freeze your credit and place alerts as needed
Put a security freeze on your credit files, if inclined. Freezes can prevent creditors from seeing your credit reports which may stop a scammer from opening an account in your name. Equifax, Experian, and TransUnion offer these for free, and they can be lifted when necessary. If you believe you’re an identity theft victim, the CFPB recommends freezes, fraud alerts, and active duty alerts. Fraud alerts allow creditors to access your credit report, but creditors must take measures to confirm they’re really working with you. Active duty alerts require creditors to take actions that protect military members’ identities.
For more information on protecting your credit score, see the resources below:
- Consumer Financial Protection Bureau
- Equifax COVID-19 Resource Center
- Experian COVID-19 (Coronavirus) Resources and Credit Education
- TransUnion COVID-19 Support Center
Tradenames and trademarks used in this blog post are the property of their respective owners. Nationstar Mortgage LLC d/b/a Mr. Cooper is not affiliated, associated, or sponsored by any of these owners. Use of these names and trademarks is not intended to and does not imply endorsement, but is for identification purposes only. Information provided does not necessarily represent the views of Mr. Cooper. Information is subject to change without notice.