10 Tips when you need to call your lender.

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Many of us are scrambling to get our finances on terra firma these days, and that means some hard choices when it comes to writing checks for our mortgage, credit cards, auto loans, and more. In fact, about one-third of US renters didn’t pay on April 1st, and we’re just one month into this crisis!

Part of the “new normal” of navigating the financial fallout of the Coronavirus pandemic includes applying for unemployment benefits, small business bailout loans, and even calling our creditors to ask for some sort of relief.

Of course, having enough money to pay our bills this month is our first concern, but we also don’t want to enter into any agreement that will blow up in our faces a few months down the line, and we also need to be aware of the changing landscape of credit scoring – and why it’s more important than ever.

Hopefully, you’ll never need the following advice.

But if you do end up calling your bank or lender and need to work out some special arrangement, these tips may help.

  1. To start, get online and do a little research into the type of help that’s helping consumers these days, including Googling your bank or lender. It will only take a few minutes and at least will give you a working knowledge and the vocabulary you’ll need to negotiate.
  2. Call your lender and ask to talk to a representative. This step is harder than it may seem, as call centers are down to skeleton crews and customer service is almost non-existent. Try calling at off-hours and have the phone on speaker phone while you do something else because you may be on hold for a while.
  3. Ok, are you frustrated already after being on hold for hours? I don’t blame you! Try downloading the DoNotPay app – it utilizes a bot to call the company for you, staying on hold electronically and then only forwarding you the live call when someone picks up. The app is only $3 per month and available for iPhones, but there are other similar apps.
  4. Get organized with all of your bills, statements, phone or card numbers, and even a budget or documentation that shows you’ve suffered a financial loss. You may not need it, but you don’t want to scramble for account numbers and passwords, etc. when you finally get to talk to a representative.
  5. Explain to your lender that you’re having trouble and won’t be able to pay your bill. Ask if there are any programs that will provide relief, or if you can suspend payments for a certain amount of time. Inquire if there are federal or state calls to suspend payments or offer deferments, such as with student loans.

Be careful about forbearance plans with your mortgage lender, because they aren’t free payments. In a perfect world, any missed payments would just get added on to the end of your loan as increased principal, but most lenders are setting borrowers up to fail with balloon payments instead. So, if your lender offers a three-month forbearance plan, for instance, you may owe your normal scheduled payment month four, PLUS those three months all added together.

That’s a huge financial burden and nearly impossible for most people who just went through a job loss or other financial issue. Many people will actually be in danger of losing their homes because of these forbearance plans, so get it in writing and be careful!

  1. You’ll have to call each of your lenders or accounts to ask them about relief individually. Keep a log of who you talked to, at what time, and exactly what they said. I’ve heard of people asking the rep on the line if it’s ok to record the call!
  2. Ask how a missed payment, deferment, or any relief plan will report on your credit report. Request that they DON’T report the payment as late or any sort of negative on your credit. They may or may not comply.
  3. If nothing else, ask the creditor to add a disaster code to their item on your credit report. A natural disaster code (SW) shows up as a sort-of asterisk on your credit, intended to add context or qualify hard-hit areas after hurricanes, floods, and other natural events. For instance, when Hurricane Harvey struck Texas and Louisiana in 2017, about 4 out of every 10 consumers had a disaster code added to their credit report.

This code is nothing new and can be applied to your credit in case of a pandemic, too. It won’t take the negative hit to your credit go away, but it will offer an explanation for any creditor who’s looking at your report and gauging risk in the future. Please note that you’ll want to get your lender or creditor to add this code, but then also call Equifax, Experian and Transunion to confirm.

  1. Remember that late payments aren’t reported to the credit bureaus for 30 days, so if you’re just a few days or even weeks late on a payment, you can still call your lender and try to work something out. Communication is key, and you can always appeal to them by asking to chat with a supervisor, and try to get any new terms or relief in writing if possible.
  2. Watch your credit score carefully, as credit standards are already tightening to standards not seen since the financial crash in 2008. For instance, many mortgage lenders are now requiring a 700 FICO score (and 20% down!) to qualify for a home loan! So, maintaining good credit will be more important than ever in coming months and years.

Try to keep balances low, pay more than the minimum payment if possible, think about adding a credit monitoring service, and check your credit score periodically.

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Blue Water Credit is always ready to help if you have questions or need a significant boost to your credit score as soon as possible!

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