When the pandemic began, lenders and creditors quickly implemented assistance programs for their customers. Some were forced by the federal government, while others did it as a sign of goodwill. Either way, it drummed up positive sentiment for an industry that often has a bad rap.
“The timing of those programs was excellent compared to the response of many of the same creditors during the economic crisis of 2008-09,” Bruce McClary, the senior vice president of communications for the National Foundation for Credit Counseling, told US News My Money.
Even as unemployment remains high and millions of Americans are struggling to make ends meet, several lenders and creditors are starting to lift COVID-19 relief programs. But, McClary notes, “That doesn’t mean that options are off the table.”
Many creditors are extending other types of support. “There is a benefit in calling your creditor, having a discussion about your circumstances and exploring solutions to keep it from getting worse,” McClary added.
According to a survey from the American Consumer Credit Counseling, one-fourth of respondents said they request assistance from their creditors. About one in five applications for loan deferrals or lower payments or interest rates were rejected.
Is Relief Still Available For Borrowers?
Depending on your bank or credit card company, you may still have the option to seek assistance. Right now, you can find relief through several major credit card companies, including:
- Wells Fargo
- American Express
The CARES Act extended a foreclosure moratorium on all homes backed by federal loans through the end of this year. If you are a homeowner, you may be able to find other aid as well, since “Homeowners facing financial difficulties due to COVID-19 can get forbearance for up to a year,” as Madison Block, American Consumer Credit Counseling’s marketing communications and programs associate explained.
Call your loan provider to ask about this program. If you request assistance due to financial hardship caused by the coronavirus, you won’t be subject to penalties, interest, or other fees.
What If You Can’t Request Forbearance?
Not everyone is eligible for forbearance programs. If that’s you, consider asking your lender if it offers hardship programs. It never hurts to submit a request, and you may be surprised at what options you have at your disposal. Your lender may extend several offers, including:
- No late fee penalties
- Temporarily lowering your interest rate
- Temporarily lowering your minimum payments
Of course, these programs are short-term fixes designed to help you get through a temporary disruption to your finances. “They are designed for people who are dealing with a minor setback where they know they are going to get back on their feet in two to three months,” McClary stated.
What About Long-Term Relief?
Because no one can say for sure when the pandemic will end, there is a chance that you might need long-term assistance. If that’s the case, McCleary suggested you address your situation with your lender because “It’s always better to be able to operate out in the open than have them guess and take actions that are not helpful to you.”
Suppose you deal with many creditors and are unsure how to begin the process. In that case, Block suggests, “Calling a nonprofit credit counseling agency can be a good option for borrowers who are struggling and not receiving enough help from their creditors.”
The National Foundation for Credit Counseling and American Consumer Credit Counseling are two agencies that can help you find the help you need, create a budget, manage your debt, and more.
Will These Programs Affect Your Credit?
If you request assistance from your lender or creditor, it will not affect your credit score because they will inform the three major credit agencies about your situation.
McClary says that under normal circumstances, an agreement like these can hurt your credit. But while these programs are in place during the pandemic, it shouldn’t be a problem. He also notes, “Take care of the necessities like food and shelter rather than obsessing about your credit score” because you can always improve it once your finances stabilize.
If you are concerned, you can check your credit report for free every week until April 2021 by visiting AnnualCreditReport.com.
- Papandrea, Dawn. “When COVID-19 Credit Relief Creeps Away.” U.S. News & World Report, U.S. News & World Report, 29 Oct. 2020, loans.usnews.com/articles/is-covid-19-credit-relief-going-away.