Have you been temporarily laid off or furloughed? Has your income been reduced? Concerned about your credit? If so, here is information you need to know.
First, neither income nor employment are part of your credit file. The credit bureaus do not know if you are a minimum wage employee or a millionaire. They don’t know if you are working full-time, part-time, or not at all.
It is illegal to base credit on income, because that would discriminate against the poor. But beyond that, why would they care? Think about it.
Visa and MasterCard don’t care what your income is; they only care that you pay them on time, per your agreement.
If you make $2,000 per month and are debt-free, using your two credit cards as a convenience only, always paying the balance in full at each billing, you will have a top tier credit score.
If you make $10,000 per month and have two automobile loans, have six credit cards that carry high balances (over 50 percent of the limit), and you missed a payment in the past year, then your credit score will be sub-par.
What If You Are Going Through Financial Crisis?
If you are unable to keep up with all your payments due to the economic turndown from the pandemic, here is your priority:
- Pay your mortgage on time first and foremost. Mortgage lenders do not allow a partial payment. If you cannot pay in full, call the phone number on your billing statement and ask what type of plan they offer. Depending on who owns your mortgage, there are different options available. Whatever you do, don’t just stop paying.
- If you cannot afford your auto payment, do not do voluntary repossession. There is no grace for turning in your car voluntarily. It will ruin your credit and you will still be liable to pay the difference between what you owe and what they sell it for at auction. A voluntary repo is exactly the same as a forced repo. Don’t do it!
Instead, drive your car into the dealership and trade down for a used vehicle that either has a lower, affordable payment or no payment at all.
- Credit cards are the lowest and last priority. If you cannot make the minimum payment, call and ask for a plan in writing. A verbal agreement by a representative on the phone means nothing. You must protect your credit by getting the agreement in writing.
Why Not Repair Your Credit Now?
If you have some time, why not pick up a copy of this guide that has helped so many people get their credit back on track? Just yesterday, a book reader emailed me and said, “Thank you for changing my life!”
No matter where you are now, you have the power to take control of your future. Put the mistakes of the past behind you and build a credit profile you can feel proud of. Others have done it, and you can, too!
Keep safe and God bless you on your journey.