May 21st, 2014
While you're surely aware that floods, fires and tornadoes can cause major damage to your home, did you know that they can also negatively impact the state of your credit? If you use up all of your credit card balance for disaster relief items or forget to pay your bills because your home does not have electricity, your score will drop. While flood or homeowners insurance can help you fund the repairs you need to make on your home, it cannot assist you in improving your credit score. Here are a few ways to repair your credit after a natural disaster:
Access your credit report
If you need a little extra money to help deal with the repairs to your home after you file an insurance claim, you may be forced to use your credit card. With a lot of repairs to make, you could easily use up your balance. To help guide you in planning out your finances during this time, get a copy of your bank statements and credit report, to help you understand where your finances are at. If the situation occurs that your score drops because of the natural disasters, you can show your creditors your report to let them know that your current financial situation was altered by the storms, not by your carelessness.
Of course, you'll have to do more than just show your credit report to financial institutions. You don't need to prepare a speech for a tribunal, but if you write a statement about what you used your funds for, such as buying food or building supplies, creditors and banks may give you a little more leeway, such as waiving late fees.
Be in constant contact with creditors
During this time, it is important to remain in constant contact with your creditors. Your lenders will be alarmed if they see you have used up your balances in a short period of time without giving them any notification, as they may think there is fraud on your account. As you alert them to your situation, ask if they can provide any financial relief. This can be an extended credit card limit or even waived late fees for a month or two. Each credit card company has different rules about natural disaster relief, so talk with your creditors and see how they can help.
Document all changes
As you talk to your lenders, make sure to document everything. If the card company representatives grant you a few months of no payments and then retract their offer, you can have a little more leverage if you ask for the changes in writing.