With millions of American still struggling to make ends meet, concerns are growing over the pandemic’s long-term effect on consumers’ credit. Additionally, some lenders have reportedly misrepresented consumers’ loan status on their credit reports, misconstruing the federal protections passed earlier this year.
Indeed, credit reporting problems have long led consumer complaints at the Consumer Financial Protection Bureau (CFPB), and they are surging in the COVID-19 era.
Consumers can take steps now to protect their credit:
• Talk to creditors early — Under the federal CARES Act, creditors cannot make negative reports about consumers who receive pandemic-related accommodations such as forbearance or loan modifications. However, consumers who do not make arrangements with their creditors will not receive any credit protection. Consumers who think they may miss a payment should reach out to their creditors as soon as possible. Keep written records of all communications with creditors when possible.
• Check credit reports regularly — Equifax, Experian, and Transunion are offering all consumers free weekly credit reports until April 2021 at annualcreditreport.com.
Carla Sanchez-Adams, an attorney at Texas RioGrande Legal Aid, Inc. recommends “getting a copy of your credit reports at least once a month while they are being offered free of charge by the credit reporting agencies. This way you can check to see if there is any information appearing on your credit report that should not be there.”
• Look for errors — It is important for consumers to examine their credit reports carefully for inaccuracies. Errors on a credit report can make it harder to apply for future credit, buy insurance, secure housing, or find a job. The CFPB has a list of common credit reporting errors here.
Especially during the pandemic, consumers should monitor their credit to make sure any payment accommodations are being reported correctly.
• File a complaint — Consumers can file their complaints about credit reporting with the CFPB and/or the FTC. When the CFPB receives a complaint from a consumer, it sends the complaint to the complained-about company which is then urged to respond to the consumer and the CFPB within a reasonable time.
• Dispute inaccuracies — Consumers who find an error on one or more of their credit reports should not only contact the credit reporting agency right away to fix them, but also the creditor, the source of the inaccuracy.
The credit reporting agencies have dispute forms that consumers can use, but it is usually best for consumers to write and send their own dispute letters. The Federal Trade Commission has a sample letter and instructions on how to send it.
Unfortunately, the CFPB recently allowed credit bureaus to delay their responses to dispute requests, so consumers may not hear back right away.
• Put a freeze in place — “Security and peace of mind are always important, and even more so right now with scams and identity theft on the rise,” said Sanchez-Adams. “If you do not anticipate needing credit anytime soon, it may be a good idea to get a free security freeze placed on your credit file so that scammers and thieves cannot open new credit accounts in your name.”
Scammers who access consumers’ personal information may open new credit cards, take out fraudulent loans, and engage in other activities that could damage credit reports. Consumers who believe they are victims of identity theft or are wary about scams can put a freeze on their credit. The FTC has more information on how to do so here.
• Seek legal assistance — Credit reporting agencies can be frustrating and uncooperative with consumer disputes. Consumers who are having trouble getting errors removed from their credit report should consider
finding a consumer attorney to help them. More than 60 million Americans qualify for free legal aid due to their income status. Qualified consumers can look for free legal aid here. There are other ways to find a consumer attorney, such as through the NACA directory.
Looking for more guidance on consumer issues during the COVID-19 crisis? Check out Consumers Ascending’s tips on Navigating Evictions, Grappling with Aggressive Debt Collection, and Managing Your Mortgage here.
Consumers Ascending thanks Carla Sanchez-Adams of Texas RioGrande Legal Aid for help with compiling these tips and resources.
