Protecting Your Credit When a Natural Disaster Strikes

Photo by Pok Rie on Pexels

If you have been impacted by a natural disaster such as Hurricane Ida, your primary focus is on the safety and well-being of yourself and your family. As your basic needs start to be met your thoughts will likely turn towards getting your life back to normal. The many concerns you may be weighing include:

How do I get access to money?
What will happen if I miss payments on my credit cards and loans?
How might the financial decisions I make now affect my credit rating and access to credit in the future?

These are important items to consider as your credit score influences the credit that's available to you as well as the terms, such as interest rates and amount of credit extended, that lenders offer you. The fact that you reside in an area impacted by a natural disaster or government action does not directly impact the FICO^® Score.

However, you may want to contact your bank and other creditors as soon as possible to make them aware of your situation. Your lenders may have procedures in place to work with customers impacted by a natural disaster. For example, your lenders may work with you to increase your available credit or to set up a deferred payment plan, or temporarily place the loan in forbearance. The placement and reporting of an account in forbearance or a deferred payment plan in and of itself does not negatively impact a FICO^® Score. This holds true with all versions of the FICO^® Scores.

Note, actions such as missing payments, charging credit cards up to and over their limit or opening several new credit accounts over a short period of time can have impact on the score.

So, if you've been impacted by a natural disaster and are worried about keeping up with your bill payments as you sort things out, you should consider what you can do to better position yourself to help against potential impacts to your FICO^® Scores. Here are some tangible actions to consider both before and after a natural disaster strikes:

5 ways to prepare for a natural disaster:

Be in the know about your current credit status.
Assess where you are financially.
Consider automatic payments for your priorities.
Do you have overdraft protection?
Investigate your credit card over limit rules or protection programs.

5 ways to recover from a natural disaster:

Before payments are due, start making calls to alert your creditors.
Ask your creditors about your options.
Time to reprioritize your expenses.
Request a copy of your credit report as soon as feasible.
Consider a credit monitoring or identity theft protection service.

Get the full details and download the guide to preparing and recovering from natural disasters.
With a plan in place, you can focus on immediate and basic needs in keeping you and your family safe and healthy.

Tom Quinn

Tom Quinn is the Vice President of Business Development for myFICO and has over 25 years of experience working with consumers, regulators, and lenders regarding credit related questions and initiatives.