With the unemployment rate at 8.4% and Americans still waiting for another COVID-19 relief package, a new study reports the States with the Most People in Financial Distress During COVID-19.
To shed light on the financial troubles experienced by people across the U.S., and to show where those difficulties are most pronounced, WalletHub compared the 50 states and the District of Columbia across nine key metrics.
According to a news release the data set includes factors like the average credit score, the change in the number of bankruptcy filings between July and January, and the share of people with accounts in distress. WalletHub defines an account in distress as one which either is in forbearance or has its payments deferred.
Some key findings are below:
California’s Financial Distress During Coronavirus (1=Most Distressed; 25=Avg.):
30th – Change in Credit Score – August vs. January
46th – Change in the Share of People with Accounts in Distress – August vs. January
45th – Change in the Average No. of Accounts in Distress – August vs. January
27th – Change in Number of Bankruptcy Filings – July vs. January
30th – WalletHub “States Where People Need Loans the Most Due to Coronavirus” Score
WalletHub offers some tips for people whose credit scores have fallen due to financial difficulties caused by COVID-19
“People whose credit scores have fallen due to COVID-19-related financial difficulties should first take steps to make sure their scores don’t decrease further. They should speak to each creditor to see what relief options are available, such as payment deferrals, interest rate reductions, or waived fees, to make bill payments more manageable,” said Jill Gonzalez, WalletHub analyst in the news release. “Another way for people to safeguard their credit scores against further damage is to tighten their budgets and forego non-essential expenses, which will shift extra money toward paying bills and minimize future borrowing. Responsible use of credit and on-time payments will help a person’s credit score recover more quickly.”
In terms of what the government can do to minimize the number of Americans experiencing financial distress, Gonzalez said, “To minimize the number of Americans in financial distress, the government should provide another bipartisan relief package similar to the CARES Act, and should extend extra weekly unemployment benefits for as long as the pandemic lasts.
“In addition to monetary support, people who enter into modified payment agreements with their creditors, such as forbearance or deferral, should have their accounts reported as current until the pandemic ends, even if they were already delinquent when the agreement started. Currently, people who enter into agreements with their creditors are only protected against negative reporting if they were already current on their payments when the agreement started.”‘
Visit here to read more about the report.