In the midst of a crisis, where unemployment exceeds 30 million individuals, oftentimes the last thing on your mind is your credit report. Why should you care about your credit report when your household income has decreased from two persons to one or zero. You should care because your credit report is tied to your next job, apartment rental or house purchase. This is why it is critical that preserving and protecting your credit be part of your pandemic survival strategy. Consider the following credit information.
1. Modifications under the CARES Act to the Fair Credit Reporting Act:
Under Section 4021 of the CARES Act, the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et. seq., is amended to impose new reporting requirements on institutions that furnish credit information to credit reporting agencies. Section 4021 provides that an institution that makes an “accommodation” with respect to one or more payments on a credit obligation or account that is subject to deferrals or forbearance agreements because of the COVID-19 pandemic—and the consumer makes the payments or is not required to make one or more payments pursuant to the accommodation—must report such obligation or account as “current” or as the status reported prior to the accommodation.
Are all your credit accounts current?
In other words, accounts that were current before the accommodations would remain current during the relief period, irrespective of any accommodations. On the other hand, delinquent accounts before the accommodations would remain delinquent, unless brought current by the consumer.
It’s important to know that this new reporting requirement does not apply to consumer accounts that have been charged off. These responsibilities will apply to reporting on accommodations made to consumer accounts between January 31, 2020 until 120 days after the end of the COVID-19 national emergency.
2. Greater Credit Access:
Starting on April 20, 2020, the three credit reporting agencies: Equifax, Experian and TransUnion will allow you to check your credit report for free each week for the next twelve months. Given COVID-19 scams, it is critical that you check your credit report frequently. These frequent credit checks by you will not impact your credit score. You can access your free credit report each week through AnnualCreditReport.com
3. Current Account:
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. This applies only if you are meeting the terms of the agreement.
4. Delinquent Account:
If your account is already delinquent and you make an agreement, then your account will maintain that status during the agreement until you bring the account current. 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.
COVID-19 now provides a shield in protecting your credit status. Remember, the CARES Act requirement applies only to agreements made between January 31, 2020 and either 120 days after March 27, 2020 or 120 days after the national emergency concerning COVID–19 ends. Take advantage of these options. Who knows, it may even be an opportune time to start rebuilding your credit.
Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC