How COVID-19 Can Affect Your Credit

Many consumers have been affected by COVID-19, and it is as important as ever that people protect their credit, as this could increase their financial resilience during and after a pandemic. Last month, The Coronavirus Aid, Relief, and Economic Security Act, or The Cares Act went into law to help protect consumers credit.

The Cares Act

The Coronavirus Aid, Relief, and Economic Security Act determines how companies that send information to the credit bureaus will report accounts that have payment accommodations in place. If the consumer follows the agreed upon accommodations the account that had been current previously will continue to report as current for both account status and payment history. The act does not pardon previous negatives on your account. Consumers can also ask lenders to add a “disaster code” to their credit report to indicate that they have been affected by a natural or declared disaster.


Protecting your credit important during a financial crisis as having access to credit is comparable to having an emergency fund. This can open the door for better options when you need them, such as a low interest loan. Make sure you are under your credit limit and do not miss any payments. A payment that is more than 30 days late, can cause your credit score to drop drastically and stay on your report for seven years.


Knowing how to prioritize bills if you are not going to be able to pay them in full can also help protect your credit score. Start by cancelling any bills on autopay to prevent any overpayment or overdraft fees. Reach out to creditors to ask for an agreement for lower payments, higher credit limit, or skipping some payments. If both parties can come to an agreement, be sure to document any agreement, whether with screenshots, email threads, or ample notes about a phone call.

It is important to know, that a lot of the hardship and forbearance programs are not automatic, consumers will need to apply for most of them. And make sure that you fully understand how they will affect your credit reports and scores.