KEEPING YOUR CREDIT “HEALTHY” DURING COVID-19 To help consumers stay financially afloat during the COVID-19 crisis, many lenders have offered payment modification programs that allowed consumers to make reduced payments or skip payments altogether, without damaging their credit history. Unfortunately, in some cases, companies have not held up their end of the deal. The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, which became law in March, states that if a consumer is current on their payments and receives some form of payment relief from a creditor, and they comply with the terms of that financial hardship program, their payment status should continue to be reported as current. The Consumer Financial Protection Bureau (CFPB) is the federal agency that handles complaints against mortgage lenders and credit card companies, among other types of lenders. A common complaint they have received from consumers since March is that lenders granted payment accommodations, but still reported their accounts as delinquent. As a result, many consumers have seen their credit scores negatively impacted. In many cases the bank, credit card company, or mortgage lender did not honor its promise that by using the COVID relief program, the consumer would not incur late fees or receive negative marks on their credit history. Regarding other types of debts, such as federal student loans, the CARES Act automatically suspended all payments on federal student loans for six months, until October 2020. To make sure deferred payments do not negatively impact credit histories, Congress instructed the Education Department to make sure they are reported to credit bureaus as on-time payments. Borrowers who wish to still make payments can do so manually or opt out of the administrative forbearance period and resume their automatic payments. Additionally, interest on these loans has temporarily been set at 0%. This 0% interest rate and suspension of payments will last through Sept. 30, 2020, but borrowers can still make payments if they choose. Any payment a borrower makes while the interest rate is at 0% will help pay down the principal balance. So, if you’re able to, now may be a great time to chip away at those balances. If you received an accommodation, forbearance, payment deferral, or any sort of COVID relief from a creditor, check your credit report at least once a month to make sure this is reported correctly. You should do it before you apply for credit, a loan, an apartment, or a job. If you find an error caused by a lender that is not in compliance with the CARES Act or for any other reason, challenge it with the credit bureaus. You can do this by mail or online through the credit bureaus directly. A dispute gets sent through the credit bureau to the creditor, and the creditor must investigate and respond within 30 days. In many cases that will solve the problem. If the creditor responds stating it’s accurate or if the inaccurate information goes off and then comes back on, then you take your problem to the creditor and tell them they are reporting this incorrectly, and please fix it. If the issue remains unresolved after a dispute, you could also file a complaint with the Consumer Financial Protection Bureau through www.consumerfinance.gov. Keep in mind, The Fair Credit Reporting Act gives you the right to dispute errors on your credit report. However, when negative information is accurate, the credit bureau can show most of those negative credit items for 7 years and bankruptcy information can stay on your report for 10 years. It is always a good idea to monitor your credit score. This will serve as an early warning system should something happen to your credit file. As soon as you notice a significant drop in your score you can investigate it. If there is a problem, you can quickly dispute it to hopefully get any inaccurate negative information removed from your report. To see your credit report for free, go to www.AnnualCreditReport.com or call 1-877-322-8228. This is the site authorized by the federal government to access your free credit reports. From now through April 2021, you can check your credit files with the three major credit bureaus: Experian, Equifax, and TransUnion for free once a week. Before the pandemic, this could only be done for free once every 12 months from each of the 3 credit bureaus.
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