Keep an Eye on Credit Reports During Payment Relief

Congress quickly responded to the coronavirus pandemic by providing payment relief to student loan borrowers and homeowners with mortgages. Many creditors also volunteered to defer payments or make other accommodations to borrowers affected by the virus.

This relief isn't meant to leave a negative mark on credit reports that could ding credit scores. The accounts of borrowers with federal student loans, for example, are supposed to be listed as "current" on their credit reports even though their payments were suspended through September.

But consumer advocates advise people to stay on top of their credit reports to make sure payment relief is accurately reported. The reason? Some consumers have found errors. In a recent lawsuit, borrowers claimed their student loan servicer incorrectly reported their education loans as "deferred" instead of "current," causing their credit scores to drop. 

To protect against errors, review your credit reports regularly. You can now get free reports from the three major credit reporting agencies — Experian, Equifax and TransUnion — on a weekly basis through April 2021, instead of just once a year. Get reports at AnnualCreditReport.com.

When Congress passed the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act in March, lawmakers tried to ensure that consumers' credit won't be damaged if they receive financial relief.

Besides the suspension of payments on federal student loans, the CARES Act also allows homeowners with federally backed mortgages to be granted a forbearance, or pause in payments, for up to one year if they request it. These forbearances are not to be reported negatively on credit reports.

The CARES Act also offers some credit protection if you reach an accommodation with a creditor — as long as you keep up with the terms of the agreement. If your account was current before the accommodation, it will remain current even if the creditor lowers your payments or allows you to skip them. And, unless you catch up on back payments, an account that was delinquent before the accommodation will stay delinquent, but it can't fall further in arrears.

If you find an error in your credit report, you may dispute it using these steps recommended by the Consumer Financial Protection Bureau.

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