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According to credit-repair expert Matt Listro, if you’re having trouble paying your bills, the biggest mistake you can make is not reaching out to your creditor and explaining your situation.
In light of the coronavirus pandemic, banks and other lenders have expanded their financial relief programs to accommodate customers who have lost income — but these programs don’t work automatically; you need to reach out.
Another mistake is waiting too long to ask for help. Listro recommends contacting your bank as soon as you realize you may have trouble with your bills so you can get relief before the issue gets worse.
As millions of Americans have filed for unemployment and countless others have lost income for other reasons related to the coronavirus crisis, building and maintaining a good credit score is harder than ever. But it remains as important as ever, especially if you’re looking to apply for any type of loan in the near future.
To better understand how to manage credit problems during this crisis, I spoke to Matt Listro, one of the nation’s top credit repair experts.
Listro is the founder and owner of National Credit Fixers, which has been helping people with their credit since 1996. He’s also the producer of Credit Con, an annual conference for the credit-repair industry, and he sits on the advisory board of NACSO, The National Association of Credit Services Organizations.
You could get help from your lender — if you ask for it
Simply put, if you don’t pay your bills on time, it will be impossible to have good credit. So what should you do if you’re unable to make your payments due to the economic crisis?
According to Listro, there are a lot of misconceptions about your options in this situation, and most companies are actually willing to work with consumers during this crisis.
Listro says the biggest misconception is that people assume that various financial relief programs will work automatically, while the reality is that you need to reach out to your lender to explain your situation and discuss your options.
Listro’s advice for people who have lost their jobs or have seen their hours reduced can be summed up simply as: “Be proactive.” He advises people to call their billers and see if they can be of assistance to you.
Talk to your creditors, including your mortgage company, your credit card company, and your bank. “You don’t know if your landlord will have the ability to be compassionate with you, but they might,” says Listro.
Another issue is people waiting too long to ask for help from their lenders. “Don’t wait until you absolutely need it,” he says. “If you’re on the verge or you’re not sure how things are going to go, call your car loan company and get a little bit of a break now. It might give you the insurance that you need to make sure that you’re better next month or two months from now if this goes on longer than you think.”
Prioritize paying whatever bills you can
Listro says that “business is booming in credit repair,” but not for the reasons that you might expect. Spring is normally the busiest time for the credit-repair business, because that’s the time that people are looking for new homes. The coronavirus lockdown created a pent-up demand for new home buyers looking to quickly improve their credit.
Furthermore, Listro says that the stimulus checks and unemployment benefits have actually helped many people making minimum wage or who have a very low income, since the stimulus and unemployment benefits represent the highest percentage of their income. In this situation, the influx of cash may motivate them to get to work on improving their credit score.
However, the way Listro sees it, credit repair is a luxury item. The first thing you should do is make sure you have enough money to pay your bills. If you have extra money after paying your bills and you’d like help building up your credit score, then you might seek assistance to help repair your credit.
Furthermore, some credit problems simply aren’t repairable. Listro doesn’t think that credit repair is right for everyone, and he doesn’t accept all of the potential clients who seek his services. “We’re not a solution to get out of debt,” he says. Listro also says that some cases are better suited to bankruptcy than credit repair.