For the past couple of months, a day hasn’t gone by that didn’t contain COVID-19 in our everyday conversations. While this is distracting at the very least, there are other effects besides people getting sick and the economy being mostly shut down.
And for the record, COVID-19 did not cause the economy to shut down. The hysteria caused by mainstream media and certain politicians is what has caused most everything in our economy to stop.
I can’t say for sure whether the shutdown was intended to cause damage to the world economy but I believe it was, just like the “Great Recession” was engineered by the big banks so they could make billions of dollars while the economy crashed and many smaller banks went out of business. (I could go on about this but that is a subject for another post.)
With the economy shut down, it is no secret that many people have been hurt financially. No one knows the full extent of the damage at this point but it will certainly be talked about in the months and years to come. The fact is that the most damaged will be small businesses.
Unfortunately, small businesses employ more people than big businesses do. This fact makes it clear that when you damage small businesses, you are hurting the majority of the population. And in spite of bailout money (which I still haven’t seen anyone receive, regardless of the claim that all the money has been spent), many small businesses are facing difficult times, now and in the near future.
This will cause some of them to close, affecting not only the business owners but also employees and their families. More people will miss mortgage payments, credit card payments and car payments because of reduced or no income.
And while I cannot tell a client not to make a payment (this is against the law for someone who is a licensed loan officer), I will say that people will need to make choices.
When you can’t make all your payments, you will need to prioritize your bills. Food, while not technically a bill, has to be a top priority. Rent or mortgage is next. Car payments could be next. credit card payments will likely be at or near the bottom of the list.
No one wants their credit score to go down the tubes but we all have to make choices. One’s credit score may have been a top priority when things were easier but when it comes down to a choice between your credit score and keeping a roof over your head or feeding your family, to hell with the credit score. You can fix that later.
People are going to have late payments. They are going to have higher credit card usage. They are going to be looking for more credit to get through the problem of having less income. All these things are going to cause a decrease in credit scores.
There will be millions more people looking for solutions to their credit. Some of these people will go to credit counseling services that may or may not explain to them that their credit scores will most likely drop like a stone. Others will sign up for credit repair to fix the problem. Maybe it will, depending on what company you choose.
But none of this changes the fact that the average credit score is going to go down in the aftermath of COVID-19. People will need solutions to get their credit scores fixed. And there are solutions. Choose wisely.