PROTECTING YOUR CREDIT DURING THE CORONAVIRUS PANDEMIC - PART 2

By Liane Fiano | Care of Consumer Financial Protection Bureau

How will my credit be affected?
Depending on whether you were able to make an agreement or accommodation when you talked to your lender, there could be different impacts on your credit reports and scores. Your credit scores are calculated based on the information in your credit report. There are credit scores for different purposes and for loan products. Many factors go into computing your credit scores. Learn more about the relationship between credit reports and credit scores.

Two companies, FICO and VantageScore, among others, create scoring models that analyze your credit and generate a credit score. You can find out more information of how these companies are responding to the COVID-19 pandemic and treating forbearances and deferrals from FICO  and VantageScore . It is important to keep in mind that different lenders use different credit scores including scores they build and manage themselves.

The CARES Act places special requirements on companies that report your payment information to credit reporting agencies. These requirements apply if you are affected by the coronavirus pandemic and if your lender gives you an accommodation to defer a payment, make partial payments, forbear a delinquency, modify a loan, or other relief.

If your lender does make an agreement or accommodation with you:

How your lenders report your account to credit reporting agencies under the CARES Act depends on whether you are current or already delinquent when this agreement is made. These reporting requirements apply only if you are making any payments required by the agreement.

• If your account is current and you make an agreement to make a partial payment, skip a payment, or other accommodation, then the creditor is to report to credit reporting companies that you are current on your loan or account.
• If your account is already delinquent and you make an agreement, then the creditor cannot report you as more delinquent (such as reporting you as 60 days delinquent when you started out 30 days delinquent) during the period of the agreement.
• If your account is already delinquent and you make an agreement, and you bring your account current, the creditor must report that you are current on your loan or account.

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This CARES Act requirement applies only to agreements made between January 31, 2020 and the later of either:

• 120 days after March 27, 2020 or
• 120 days after the national emergency concerning COVID–19 ends.

If your lender does NOT give you an accommodation:

If your lender is not required to provide an accommodation and decides not to make an agreement with you, this will likely impact your credit report. If you are unable to make a payment or a minimum payment as required and you cannot obtain an accommodation, your lender likely will report that your account is now delinquent.

Your lender may offer you or you can request that the lender place a “special comment” on your account noting that the account was affected by a national emergency as a result of the pandemic. The comment will not affect your credit scores, and your loan will still be recorded as delinquent. But a prospective landlord, employer, or lender may take it into account when considering you for a loan, a job, or housing. The special comment may help a lender or other report user understand that you ordinarily make your payments but could not make payments for a period of time due to the pandemic. In addition, the special comment is temporary and may only show on your account for a period of time, such as during the time of a declared national emergency. When the lender stops furnishing the special comment information, it disappears permanently and entirely from your credit report. There will be no record that there was ever a special comment placed on your credit report.

You can also add a “permanent comment” to your credit file saying that you have been negatively affected by the pandemic. This comment will not affect your credit score, and your delinquent loan will still be reflected in your credit score. However, the comment will remain in your file even after the national emergency is over, and a prospective landlord, employer, or lender may take it into account.
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The CARES Act also applies to certain federal student loans and includes requirements relating to suspending payments and credit reporting. During the period that payments on federal student loans are suspended by the Department of Education, any payment that has been suspended is to be reported as if it were a regularly scheduled payment made by the borrower.