COVID19 has upended the economy. Many people have been laid off, and many are forced to take time off from work. As a result, bills can go up. If they cross the limit of your budget, you will end up taking on debt. Therefore, you must keep an eye on your credit score and other financial aspects.
A poor credit rating can lower down the chances of taking out short term loans in Ireland down the road and therefore, you cannot take the risk of smashing your creditworthiness during the pandemic. Here is how you can protect your credit score during coronavirus lockdown.
Review your credit report
Credit reference agencies issue a free credit report once a year. You can get it immediately if you have not availed. Otherwise, you will need to pay a nominal fee. First off, you should get your credit file to see your current score. Knowing your credit rating will help you understand where you are and what you need to do to improve it.
Make sure that your credit file does not consist of any error or defaults that are not in your knowledge. If so, report to your credit reference agency about this and dispute such errors. It may take a couple of days to investigate it and remove from your credit file. Make sure that you keep monitoring your credit file sporadically.
Avail coronavirus assistance programmes
It is useful if you can keep up with repayments during the pandemic. However, if you feel you will not be able to continue to make repayments on time, you should talk to your lender immediately. Nowadays, many lenders are providing coronavirus assistance programmes. You need to pick up the phone and request your lender for a relief programme. You will have to inform each lender in case you have multiple accounts.
Your lender can also help you extend the repayment term or put you on a different repayment plan. Of course, a lender would like to get their money back. The repayment term extension does not mean you will escape interest payments. Expansion in the repayment term allows you to have some room for arranging money, but interest will keep accruing unless you settle all your dues.
Revamp your budget
Even though you are on a budget, you will have to revamp it. Since your financial circumstances have changed, you need to analyse how you can have enough money to keep up with monthly repayments as well as managing your regular expenses. If your pay is cut or you are out of work, reworking your budget is crucial.
Take a look at your monthly outgoings. Since you cannot spend money on theatres, cinemas and at restaurants due to the outbreak of COVID19, you can easily ensure your regular spending with the available cash. You will be likely to have some more money in case of a medical emergency or any other unexpected expenditure. In this situation, you can take out unsecured personal loans.
As long as you have a repaying capacity, lenders will not deny lending you money. Understanding the fact that you may need money for urgent reasons, some lenders offers loans at low-interest rates regardless of your credit rating.
Even though your lender extends the repayment term, do not forget that the interest rates will not stop accruing. If you have multiple debts, you should try to segregate them on priority basis so that you can get rid of larger loans as soon as possible.
You can seek extension in repayment terms for debts that do not carry high-interest rates. You can also ask your lender if they can allow you to pay less than the due amount. If you have credit card dues, you should try to open a 0% balance transfer card. It means you can avoid paying interest for a specific time.
As you know that a credit score plays an imperative role when it comes to borrowing money, you cannot afford to lose it even in such a pandemic. Try not to spend money unnecessarily and talk to your lender if you are struggling to keep up with repayments. Your proactive approach can prevent you from losing your credit score