Protecting Your Credit When Disaster Strikes
In the wake of natural disasters such as Super Storm Sandy, you may be struggling to get your life back to normal. Among the many concerns you may be wondering:
- How do I get access to money?
- What will happen if I miss payments on my credit cards and loans?
- And how might the decisions I make 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 does not directly impact the FICOŽ Score, but related actions such as 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 what should you do to protect yourself and monitor any changes to your credit score if you've been impacted by a natural disaster and are worried about keeping up with your bill payments as you sort things out and try to get some "normalcy" back into your life?
If you reside in a natural disaster area and find you can?t pay your bills on time, contact your bank and other creditors as soon as possible to make them aware of your situation. Most lenders have "natural disaster" procedures in place to work with their customers impacted by such unforeseen events. For example, many lenders will 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). Each lender is different, so contact all of your lenders.
The lender may include comments about any special payment arrangements set up because of a natural disaster when they send an update to the credit reporting agencies. The FICO Score does not consider such comments as negative information when calculating the score.
It may be prudent to obtain a copy of your credit report and score as soon as is feasibly possible after the disaster. This will give you a complete picture of your credit profile at the time of the natural disaster and before any post-disaster updates have been reported.