With so many people out of work and struggling to pay bills, there’s growing concern about the long-term financial impacts of COVID-19.
Miami hairstylist Richy Kandasamy has tried to stay positive. He’s been focusing on the things he’s learned instead of worrying about the obvious challenges.
“It was quite tough. I’ve been doing a lot of meditation,” said Kandasamy. “The bad part, of course, financially after you have three months without having any income.”
While the world seems to be slowly returning to normal, the financial impact could last much longer.
“I’m planning to buy a house,” said Kandasamy. ”I’m thinking now, is that going to affect [me].”
“Really focus on things that can impact their FICO scores,” said Deanne Butchey, a professor of finance at Florida International University.
Butchey says “COVID debt” could have a lasting impact on people’s ability to get approved for credit cards and loans.
She says you could end up with higher interest rates. It could impact your ability to rent a house or even get approved for a mortgage.
“The banks and the landlords will check for bankruptcy,” said Butchey. “It also could impact your ability to get a new job because employers will be doing credit checks to verify your trustworthiness and aptitude for managing money.”
However, there are steps you can take now to minimize those long-term impacts and work to maintain your credit score.
“Any kind of delinquent rent or bills, what you want to do is to reach out to the banks or companies and apply for delay in repaying them or a repayment plan," Butchey said.
She says you should also create a budget and spend only on the essentials. If you’re a homeowner, she suggests applying for a home equity line of credit. Butchey says you might also look into converting your credit card debt into personal loans. And lastly, you could look into borrowing from your 401K, since there’s no penalty under the CARES Act.
“We also know congress has promised to provide for another stimulus package to address the fact that almost 40 million people are still unemployed and even those who have jobs are still under employed," Butchey said.
But it's not clear if or when that additional help will come.