Ways to prep your credit score for a post covid 19 credit application


India is gripped by the Novel Coronavirus and its presence can be felt across the country. On March 25, the Prime Minister had imposed nation-wide lockdown, which went in four phases till May 31, to control the spread of the virus. Due to this, the country went into economic distress as several businesses got shut, while many others lost their jobs. In fact, those with a secured job were in difficult financial circumstances as their salaries were either put on hold or paid after a huge deduction.

Sudden health crisis made people worrying about their financial future as well. Even though the Reserve Bank of India had announced loan moratorium facility to the borrowers for the months of March, April and May, people are still worried as the crisis is likely to remain for longer time. And this has been raising alarm for many borrowers who are keen to keep their credit health in good shape.

So, if you too have been looking for ways to prep your credit score for a post-covid-19 credit application, here are the practices you need to follow in view of your financial standing.

Ask for help

First of all, understand that we are in this time of crisis all together, so everyone is up for all possible help and assistance. Therefore, get in touch with your respective bank or financial institution to ensure if they can extend any financial help to you. You can also request them to extend the moratorium period for another few months without reporting the account to the credit bureaus. Remember, if you’re not able to make the due payments, make sure to inform the lenders in advance. Otherwise, if the payment gets bounced, it would be reported to the credit bureaus and ultimately, your credit scores will be at risk.

Make possible payments

Even though your financial health is badly affected, make sure to clear at least minimum dues to avoid late payment penalties. This will not just save you from paying hefty penalties, but will also build your relationship with the creditor. So that whenever you’ll need a new loan or credit in near future, lenders will consider your loan application on the top priority as you had a good repayment record even during the Covid-19 outbreak.

Keep a check on your credit reports

The Reserve Bank of India had directed all the banks and financial institutions to not report the credit accounts to credit bureaus for the months of March, April and May. But, that doesn’t mean you can avoid checking your credit reports for the given months. Remember, it’s always wise to keep a check on your financial health, especially during such time of crisis. Doing so would keep you alerted in terms of identifying any error or misinformation on your credit report and thus, you can get the error rectified at the earliest. Also, you will get to know your financial standing and thus, can plan your new loan applications accordingly.

Add consumer statement

You can also add a consumer statement of about 100-words to your credit report to explain your financial standing. For instance, give reason why you skipped a loan EMI or carried credit card dues for months. This will give your prospective lenders a clearer picture of your credit health. Therefore, even after having low scores, lenders might consider approving your post-covid-19 credit application.

Don’t apply just yet

No doubt, everyone is facing huge financial crisis during this time of global pandemic. Even the banks and financial institutions are extending loans and credits to the customers without any security. But, that doesn’t mean you should apply for a new loan or credit card just for the sake of attractive offers. Make sure to identify your needs and see if they are really of utmost significance. You can always avoid getting into debt trap for meeting irrelevant expenses, especially when lakhs of people are losing their jobs and facing huge business losses. So, when you have a secured income, make sure not to invest it in making multiple loan EMIs and try saving some bucks for future financial security.

Final words:

Definitely, the time is extremely difficult for every one of us, both in terms of health and wealth. But, panicking in such crisis won’t make any sense, instead it best to keep your mind calm and serene to pave way for all possible solutions. Also, it is important to prioritize things during this given period and to identify what expenses you can certainly avoid to save even a bit of amount.