Times are tough. Not to keep touching on the obvious but COVID has had us all at our wit’s end at times, whether from panic, overwhelm, exhaustion, boredom, or some combination thereof. Although the end of the pandemic is approaching, you never know when the next crisis will pop up. This one has gotten people to deeply focus on and reassess priorities. Whether you want to make a big move, or just alleviate some pressures of paying bills, a good place to start is to reassess, reorganize and restructure your payment obligations.

Central banks all over the world have been slashing their rates, which aren’t expected to go up anytime soon. This translates into better loan terms and lower payments for you. Credit reporting agencies like Experian, TransUnion and Equifax are multinationals operating in most countries. So although the rules differ a bit across borders, the basic concepts are the same.

To take advantage of this…

Do your homework first.

Look at what you owe and really assess your needs vs. wants. How often do you really use all the subscriptions you’ve signed up for? If less than monthly, cancel them. Or threaten to cancel them and they may give you a discount for the next year. Or they might offer a discount when you’re ready to come back.

If you live in the U.S., you can access your credit history for free (now on a weekly basis rather than annually!) at annualcreditreport.com to get an eagle’s eye view of everything you owe. First make sure the information on there is accurate. If you see anything you don’t recognize, dispute it through the credit report platform so you’re not punished for someone else’s misdeeds or data entry errors. It can take up to 45 days to resolve a dispute. For more details and additional options on how to remove incorrect items from your credit report, have a look at this in-depth article from money.com.

Assess your situation

Next, figure out what makes sense to refinance or consolidate. Do you have any loans you’ve been paying for more than 2-3 years? Check what current rates are with your bank or credit union and run a calculation to see what your new payment would be if you were to refinance it. Do you have any credit cards that you’re only making the minimum payment on? If so, it could take decades to pay off. You may consider consolidating your credit card debt into one monthly payment, which usually ends up being both a lower payment and lower rates, and you have a finish line in sight rather than never ending revolving debt. I did this at the beginning of the pandemic, which lowered our outgoing cash flow by $300/month!

Housing expense

Mortgage rates are crazy low right now and the real estate market is moving fast. Now is a good time to consider moving or refinancing. Refinancing your mortgage will essentially allow you to skip a payment for a month or two in addition to saving you more over the long-term. Also, because so many people are buying homes and the economic crisis has got rental rates trending downward, there are also great deals on rental properties. Moving will require having all your ducks in a row, so read this article and FAQs for more tips to make your financial situation look as good as possible and optimize your credit score in order to qualify for the best place possible.

Student loans

For student loans, try to keep your federal loans federal. The federal loans always have more flexible forbearance and forgiveness options when hardships hit so it’s best to not refinance them as private loans if possible. Although private student loan lenders often have concessions for hardships, they won’t have as much. After consolidating some student loans recently, we found Credible, Earnest, and Lendkey to have reasonable terms and rates, but do your own homework.

Vehicle payments

Auto loans tend to have similar rates across the board at any given time. Check the rates at a few local credit unions to see what their lowest rates are. Also check what their skip payment fees are (to anticipate future hardships) and anything else that might be important to you. For example, if you value green business practices, look for robust online banking systems. If you do a lot of international business, check how much their wire fees are. I’d recommend applying several places to compare offers. Try to apply everywhere on the same day so that all the credit inquiries count as only one.

Other options for help

If you don’t want to refinance anything or are still working on improving your credit score, another option to try is contacting the person or entity you owe and just ask for some help. Some places will allow you to make partial payments for a few months. Others will allow for interest-only payments for awhile. Everyone is aware of the impact of COVID these days and unless they’re complete jerks, most are willing to make some sort of concessions. Look up their customer service contact information and ask what kinds of assistance are available for people experiencing hardships.

Timing is everything

Once you’ve decided WHERE to apply, make sure your credit looks as good as possible. That translates into figuring out WHEN to apply. The information on your credit report will be from the last billing cycle for each account you have. Try not having anything over the limit on the last day of the month before your credit is checked, which means planning ahead by a few weeks. Even if you need to juggle some funds around, try to have things paid down as much as possible the month before you apply for any refinances.

The previous two articles in this series, here and here offer additional tips on how to get into the right mindset for understanding optimizing your credit score.

What financial habits or changes have you implemented since the pandemic began?