Credit Scores and Covid-19

Has Your Credit Score Been Affected By Covid-19?

COVID-19 has taken a toll on consumers’ credit scores. Many consumers have been laid off from work and are unable to get credit. Other consumers who have been able to keep their jobs but are working reduced hours or reduced shifts, especially in the restaurant industry, and are unable to make credit payments on time. As result, access to credit is more important now than ever for consumers.

5 Factors Used to Calculate Credit Scores

Payment History. One of the most important factors considered when calculating a credit score is the consumer’s payment history. According to Fair Isaac Corporation (FICO), payment history accounts for 35% of a consumer’s credit score. On time payments are important because past due payments can stay on a credit report for up to 7 years.
Credit Utilization. Credit scores begin to drop when 30% or more of the available credit is used by the consumer. That means consumers should keep their credit balances below 305 of the total credit limit.
Inquiries. Hard inquiries on a credit report can reduce a consumers credit score 5-15 points. Hard inquiries remain on consumers’ credit reports for 12 months. Consumers should try and space out credit applications instead of applying with several creditors over a short period of time 9ess than 6 months). The number of inquiries can also be a reason for a credit denial.
New Credit. New credit accounts may lower a consumer’s credit score because new accounts decrease the average length of credit history. In other words, the consumer’s average account age will be shorter and this will decrease the credit score. Likewise, closing accounts can have the same negative effect on a consumer’s credit score for the same reason.
Short-Term and Unsecured Loans. These types of loans are generally considered risky loans for creditors. Potential creditors may view consumers’ with unsecured short-term loans as higher risk borrowers. Avoid these types of loans if at all possible. Short term loans carry high interest rates!

What Can Consumers Do to Protect to Credit Scores?

Review credit reports. Consumers should review their credit reports on a regular basis. The nationwide consumer reporting agencies, Equifax, Experian and Trans Union, are allowing consumers to obtain their free credit reports one time a week every week through April 2021. Consumers should take advantage of this and request their reports frequently.
Dispute credit report errors. Consumers should carefully review their reports for any credit report errors. Errors on a credit report may indicate that the consumer is a victim of fraud. Credit report errors can also be caused by a credit bureaus mixing a different consumer’s credit history with the consumer. Consumers should dispute credit report errors directly to each credit bureau. We recommend to our clients to send credit disputes by mail. The dispute letter should be sent by certified mail to track receipt by each credit reporting agency.
Contact an experienced Fair Credit Reporting Act (FCRA) Lawyer. If the credit bureaus verify false information on in response to a consumer dispute, then the consumer should contact an experienced FCRA lawyer to evaluate any potential claims

The Adkins Firm represents consumers who have credit report errors and background report errors.

Have you requested your free credit reports from the credit reporting agencies? Are the credit reporting agencies reporting false information about you? Have you disputed the inaccurate information and the credit reporting agencies verified the disputed information is accurate and belongs to you?

If you answered yes to any of these questions, then you may have claims under the Fair Credit Reporting Act. Attorney Micah Adkins represents consumers in federal court across the United States, and he may be able to help you, too. Contact us to schedule a free case review.

Remember, its your credit report!