Protecting Your Credit If You're Impacted by the Government Shutdown
, by Tom Quinn
If you are one of the thousands of federal government employees going without pay during the partial federal government shutdown, you may be struggling to make payments on your credit obligations and other bills. You also may be wondering:
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What will happen if I miss payments on my credit cards and loans?
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How might the decisions I make affect my credit rating and access to credit in the future?
These are important things to consider as your credit scores influence the credit available to you and the terms, such as interest rates and amount of credit extended, that lenders offer you. The fact that you are a federal government employee whose pay is being impacted by the shutdown doesn't directly impact a FICO® Score, but potential "fall out" actions such as missing a payment, charging credit cards up to and over their limit or opening new credit accounts over a short period of time can have an impact on FICO Scores. So what should you do to help yourself and monitor changes to your FICO Scores if your pay has been directly impacted by the federal government shutdown as you sort things out and try to get some "normalcy" back into your life?
You may want to contact your bank and other creditors as soon as possible to make them aware of your situation. Your lender may have procedures in place to work with their customers impacted by such unforeseen events. For example, your lenders may work with you to set up a temporary deferred payment plan, or temporarily place the loan in forbearance (meaning you may get temporary relief from having to make full payments on your credit obligations). The placement and reporting of an account in forbearance or a deferred payment plan in and of itself doesn't impact a FICO® Score. However, any associated changes in balances or payment history that are reported on these accounts may impact the score. Each lender is different so you may want to contact all of your lenders. You may also want to visit this American Bankers Association and Credit Union National Association - two resources that list banks and credit unions who have publicly detailed a process for individuals impacted by the shutdown to get relief.
It may also be prudent to obtain and save a copy of your credit report and FICO® Scores as soon as possible. This will give you a picture of your credit profile before any new late payments on your credit obligations stemming from lack of access to your paycheck during the shutdown are reported.
You can also visit myFICO forums to see if others in the community are impacted by the government shutdown.
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.