Covid-19, first your health and now many consumers have to worry about their credit.
You are doing your part by social distancing, keeping good hygiene and wearing your mask in public but you would be wise to add one more task to your new normal; review your credit report for errors. Every consumer should be aware of some credit reporting hot spot issues that are happening as a result of Covid-19. Many consumers are finding credit issues that are leading to lower credit scores and/or other denials of credit. Consumers can obtain their credit reports for free at www.annualcreditreport.com. Typically, these are only available once per year but now, due to Covid-19, they are available WEEKLY through April 2021.
So what exactly should you be looking for?
- If you have continued to fully pay all your obligations on time, your credit report should not report any recent late payments or past dues. You would be wise to also be on the lookout for any comments on your credit reports that may give a lender the impression you are not paying your obligations as normal. I recently spoke to a young business professional who never missed a payment to anyone nor did she make special payment arrangements with any of her creditors. After applying for a mortgage, she was shocked to find out that her auto lender reported a comment of “Affected by natural or declared disaster”. She had no idea how or why this wording was reporting. She explained that not only did she pay her auto on-time, she was actually paid a month in advance. Sadly, she was advised that this comment would lead to a denial with underwriting as the wording indicates she was not paying the account as agreed.
- Many consumers have not been able to fully pay their obligations on-time and have made special payment arrangements with their creditors. Often, these special payment arrangements include either a forbearance or a deferment. It is very important to get any special payment arrangements in writing so you have proof should you need it later. The credit system has specific coding for your creditors to use to indicate these types of special payment arrangements. This coding only works if your creditor reports it correctly. If you are in such an arrangement, you want to make sure your creditor is not reporting any late or past due payments on your credit report during the time you are in a special payment arrangement. Reporting of any recent late payments will be detrimental to your credit score and credit profile.
What do I do if I see such an error on my credit report?
You have the right to dispute any information that you feel is not accurate on your credit report. It is my experience that it’s best to file disputes in writing and if you choose, you can include any supportive documentation. The credit report you obtain from www.annualcreditreport.com will contain additional information on how you can file a dispute.
How to raise credit score.
If your credit needs some help, take action. There are a lot of resources available on steps to improve your credit. You can get free information from the FTC or contact a professional credit repair company like CureMyScore.com for help. By taking action to improve your credit, you may qualify for the home of your dreams or a new auto while paying less in interest charges.