Seven Tips to Protect Your Credit When Life Happens

Life happens, but you can protect your credit by following these seven tips.

 

An unexpected life-changing event, like job loss, illness, or divorce, can lead to credit problems, even though you've used credit responsibly and earned a good credit score. In fact, most credit problems happen not because of irresponsibility with credit, but because of a temporary setback.

While you can't expect or control everything that happens, you can protect your credit in tough times. Here are seven tips that may protect your credit when the unexpected happens:

1. Size up Your Situation.

Find out how much you own, how much you make, how much you owe, and how much you spend. Ask yourself these questions:

· What are some unimportant things that I could cut back on or get rid of?
· What are some things I could sell for extra money?
· Would a second job help?
· Can I consolidate my debts to save money?
· Can I refinance my home to save money?
· What are some other ways that I can increase my income and cut costs?

2. Talk to Your Creditors.

If you think you may fall behind on your bills, talk to your creditors. Your creditors want to help you protect your credit and work with you to help you keep up with your bills, but only if you talk to them right away. The longer you wait to talk to your creditors, the fewer options you have for protecting your credit.

3. Prioritize Your Bills.

Food, clothing, shelter, and medical care are your most important bills. Paying for those things is the most important. Some bills need to be paid right away; others can wait. Some bills may need to be paid in full; others may not need to be paid in full.

4. Look into Debt Consolidation.

Debt consolidation may help you save money by lowering your interest rates and the amount you owe every month. Debt consolidation may also help you organize and streamline your finances with just one payment. For more information about debt consolidation, visit our Debt Consolidation page.

5. Look into Refinancing Your Mortgage.

Now may be the time to refinance your mortgage for a lower monthly payment, lower interest rate, or to change your adjustable rate mortgage to a fixed rate mortgage. For more information about refinancing, visit our Mortgage Refinance page.

6. Get Help.

Financial counseling can help you protect your credit both now and in the future. Financial counseling can help you work with your creditors, make a budget and follow it, and find out about any special programs for help with debt that you may be eligible for.

7. Protect Yourself.

Make sure that you get any promises or details about help with debt in writing, read everything carefully before you sign it, and ask a legal or financial expert to help you understand anything that isn't clear. Avoid signing anything that you don't understand or that seems too good to be true or too easy to do.

 

 

These are general recommendations not applicable to all financial situations. Every financial situation is unique. Further, the suggestions and recommendations contained within the content provided are not an assurance of any future result. Be sure to discuss your specific financial circumstances with a legal or financial expert before you take action. Contact us for more information.