By Matt Loeschman
Twitter: @MattLoeschman

If you’re like 87 million other Americans, you may be worried about your credit score due to the global coronavirus pandemic.

A new study released this week revealed a “perfect storm” of credit trouble, as the unprecedented level of unemployment in the United States has left many people struggling to pay essential bills and charging more to their credit cards. People aren’t just getting ill from the coronavirus pandemic — they are also going deeper into debt because of it.

“Around 50 percent of Americans say that paying bills is their top financial priority during this pandemic, followed by preserving cash and then finding a job,” said Jill Gonzalez, communications director with WalletHub. “Nearly 44 percent of Americans anticipate going into more debt during the coronavirus pandemic.”

The problem is even more concerning considering total U.S. credit card debt already stood at over $1 trillion before the COVID-19 crisis took hold. That number is only going to rise.

According to the study, around 60 percent of people are worried about paying a bill during the coronavirus crisis. The most common type of expense that people think they will have trouble paying is their mortgage or rent payment, followed by credit card payments.

“Since all of this began, I’ve added debt on my cards,” Peoria resident Andy Smith admitted this week. “I’ve been making online purchases so there’s just no way around it. Fortunately, I didn’t have a problem paying my rent.”

In addition, creditcards.com reported this week that 47 percent of American adults are now carrying debt on their credit cards (approximately 120 million people), a number that has risen from 43 percent in early March.

“Credit card debt right now is a way of life for so many people,” stated industry analyst Ted Rossman.

“If you don’t have a lot of money coming in, and you don’t have a lot of savings, I actually think it’s OK to carry credit card debt for a time,” Mr. Rossman added. “I think it’s even more important to keep some cash on hand for necessities like food, shelter, and medicine.”

The report states millennial credit card holders have been hit hardest — 34% said they went more deeply into debt because of the pandemic compared to 23% of Gen Xers and 15% of baby boomers.

Ms. Gonzalez said higher unemployment payments or money from the government is assisting some people with bill payments.

“Although around 40 percent of people don’t anticipate trouble paying any type of bill during the coronavirus pandemic, some of this confidence may be attributed to the recent stimulus payments or increased unemployment benefits,” Ms. Gonzalez said.

The study reflects the results of a nationally representative online survey of more than 300 respondents. After collecting all responses, data was normalized by age, gender and income so the sample would reflect U.S. demographics.

TAKEAWAYS

There are several takeaways from the study. First and foremost, nearly 90 million Americans are worried about their credit scores due to the coronavirus. Some of the most worried groups include middle-income people, the 30-44 age bracket and people with fair credit.

Americans want missed payment forgiveness during the crisis — 86% agree that credit scores should ignore any missed payments during the coronavirus pandemic.

Nearly 60 million Americans are most worried about paying their mortgage or rent during the pandemic, followed by 46 million most worried about paying their credit card bill.

Women are 21% more likely than men to expect to get into more debt during thecoronavirus pandemic. Millennials’ top financial priority is paying bills, while Gen Xers’ is preserving cash.

HELPFUL HINTS

WalletHub offers seven tips for protecting your credit score during the pandemic:

• Ask your creditors what they can do to help — Credit card companies and other lenders are helping customers affected by COVID-19 on a case-by-case basis.
• Get in touch with service providers — If you are unable to pay bills for utilities or services such as cable and internet, start a dialogue with those companies to prevent them from sending your account to collections, which would hurt your credit score.
• Pay at least the minimum required to get credit — If you do not make at least the minimum payment required by your credit card company by the due date, you will not get credit for paying on time.
• Check your credit score and credit report regularly — The more you check your credit report and score, the more familiar with it you will become.
• Sign up for free credit monitoring — No one can watch their credit report 24/7 without some help and there are plenty of reputable free credit monitoring services to choose from.
• Be careful about adding new debt — Borrowing to keep other bills at bay might be the best option for some people, but not everyone.
• Make sure you exhaust all government assistance — Don’t assume you are ineligible for financial support from the government or simply wait around for a check to arrive in the mail.

“As so many people have lost their jobs, it’s become a lot harder to make ends meet,” Mr. Rossman stated. “And we see a lot of people turning to their credit cards as a result.”

Matt Loeschman
Managing Editor | West Valley
@MattLoeschman

mloeschman@iniusa.org

Meet Matt

Matt Loeschman has had two separate stints at Independent Newsmedia. He began as a reporter covering Peoria and later Surprise from 2000-2009. In 2017, he returned to Arizona and INI as the news editor of the Daily News-Sun (now the Phoenix Independent). He previously covered the Arizona Rattlers of the Indoor Football League for more than a decade.

Community: During high school football season since 2017, he contributes live postgame radio reports to the AzPreps 365 Friday Night Football Wrapup Show. He supports organizations such as Phoenix Children’s, Boys and Girls Clubs of the Valley and the American Cancer Society.

Education: The University of Texas at Austin majoring in Journalism-News and Public Affairs. 

Random Fact: He can sing and he has been fortunate to meet many famous people during his journalism career including First Lady Hillary Clinton, King of Country Music George Strait and Oscar-winning actor Matthew McConaughey. Attended all 4 home games of the 2001 World Series.

Hobbies: Watching and playing a wide variety of sports, including golf, tennis, pickleball and softball. Playing PlayStation 5, working out, shopping and reading.