CARES Act and Protecting Your Credit

The CARES Act is the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. It is an over $2 trillion relief package. The CARES Act is to help the American people with the economic impacts of COVID-19.

The CARES Act aims to help:

• American Families and American Workers
  
• Small Businesses
  
• State Governments and Local Governments
  

The CARES Act and Your Credit

With so many Americans affected financially by the COVID-19 outbreak the CARES Act is meant to help. Right now, unless you have an emergency fund, credit may be your only option.

Payment history is the largest factor in your credit score. Many people are worrying about what will happen to their credit when they can’t make payments.

The CARES Act and Payments to Creditors and Lenders

Under the CARES Act, creditors must make “accommodations” for people having trouble making payments. This does not mean that you can stop making payments. It means that they must offer you some other type of payment arrangement. You must contact your creditor or lender to make any special arrangements. The arrangements they make with you will vary.

Types of agreements many creditors and lenders are making

• Forbearance
• Deferment
• Loan modifications like lower interest rates or loan extensions
• Partial or flexible payments

CARES Act and Credit Reports

If you made an arrangement with a creditor they cannot report your payments as past due. This is as long as your account was already current. This applies to agreements made between Jan 31, 2020 and 120 days after March 27, 2020 or 120 days after the COVID-19 national emergency ends.

How Creditors and Lenders Report to the Credit Bureaus under the CARES Act

• If you are current on payments and make special arrangements, creditors must report the account as current.
  
• If you were already delinquent on payments and you make special arrangements, your account will be reported as delinquent until you bring it back to current.
  
• Late and missed payments CANNOT be reported if you have already made arrangements.
• Charge offs may still continue to be reported as a charge off
• Some creditors may use a special code for natural disasters on credit reports for delinquent accounts, this is not required.
  • FICO does not consider disaster codes for credit scoring.
  • VantageScore will not use late payments with a disaster code for credit scoring.

  Important Steps to Take When Making Payment Arrangements

  It is important to document all payment arrangements that you make. Be sure that you understand all terms of your agreement. Keep records and notes of every phone call. Get names of people you speak with and write down what time you spoke to them etc. Take screenshots, save emails. Keep track of everything and keep it organized.

  Check Your Credit Report Often

  Once you have made arrangements, it will be important to keep an eye on your credit report.

  • You can get 1 free credit report each year from the three credit bureaus Equifax, Experian, and TransUnion. Right now they are offering free credit reports weekly through April 2021 visit www.annualcreditreport.com
  • Check the status of the accounts you have made arrangements with.
  • Make sure that if you agreed to skip any payments they are not reporting the account as delinquent
  • Dispute credit report errors with the bureaus and the creditor
  • Credit bureaus now have 45 days to correct errors, normally under the FCRA they had 30 days

  Get Help From Consumer Protection Lawyers

  The CARES Act was put in place to protect you, and when creditors do not follow the rules, we can help.

  We know how devastating credit report errors can be, especially when you are depending on credit to care for your family.

  We have over 20 years of experience fighting back against credit reporting agencies and credit report errors.

  Francis Mailman Soumilas, P.C. is here for you. Fill out the case review form on this page or call us right now at 1-877-735-8600.

  Get free legal help. There is never any out-of-pocket cost to you. We only get paid when we win.