With millions of individuals suffering from the economic fallout of COVID-19, and with the coronavirus pandemic now into its second month, many Americans will find themselves unable to pay May’s rent this week — and may likely forego other timely payments as well.
About 31 percent of renters were unable to make their monthly payments during the first week of April, according to the landlord and real estate development trade group the National Multifamily Housing Council.
And though most tenants were able to pay the rent later on (with 89 percent making a payment by April 19), the absence of a follow-up to the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s $1,200 stimulus and the fact that 26 million Americans are now unemployed, may well lead to further rent delinquency come May 1.
Ripples Outside the Renter’s Market
In addition, many homeowners are delaying mortgage payments in response to the pandemic’s economic toll. An estimated 3.4 million are temporarily skipping payments, according to market analytics group Black Knight.
Such widespread economic hardship has affected consumer debt as well — the Federal Reserve charted a 6.4 percent increase in consumer credit immediately preceding the coronavirus pandemic, leaving many with interest-accruing debts they will likely be unable to pay as this financial and public health crisis continues.
How to Handle Paying Your Rent or Mortgage During Coronavirus
Whether you’re worried about paying your rent or mortgage during this time or concerned about unpaid debt, there are provisions in place to prevent financial ruin. That said, you must take the first step.
If you’re renting, make a call to your landlord or property manager to see if you can receive some form of rent relief.
Even if you’re unable to get your monthly cost knocked down, requesting an extension or indicating you can pay in a few weeks can go a long way in safeguarding your finances, given that your landlord can report rent delinquency to the three major credit bureaus, which could affect your credit score.
Likewise, if you’re a homeowner, the CARES Act enables most mortgage holders to stop making payments, or lower the monthly amount, for up to a year. Of course, this requires contacting your lending institution to coordinate a temporary forbearance.
Dealing With Other Bills
Finally, if you are facing upcoming credit card bills, but are uncertain about whether you’ll be able to pay them, contact the credit card companies. Explain your hardship, specifically detailing how you’ve been affected by the pandemic. From there, see how you can refinance your remaining debt or pay it off at a later date.
If you’re worried about your credit history, there are safety nets in place to prevent your score from dipping throughout COVID-19.
“When a consumer is in a deferred payment or forbearance program reported to a credit bureau, or with a natural disaster code, there is no negative scoring impact,” according to a statement by credit trade association Consumer Data Industry Association (CDIA), of which Equifax, Experian, and TransUnion are members.
Reaching Out for Help
CDIA also emphasizes the importance of contacting lenders in order to receive assistance during this uncertain period.
“Consumers cannot get credit relief without first asking for help from their banks,” the statement continues. “As a first step, consumers having financial issues should contact their lenders.”
Remember that there’s nothing wrong with asking for a bit of help throughout this pandemic, especially given the number of individuals affected by recent events. If you’re still confused about how coronavirus will continue to affect your finances, check out our COVID-19 page for daily updates as the situation unfolds.