Protecting Your Credit
The spread of COVID-19 has put a damper on the economy and brought financial insecurity
into many people’s lives. The good news is that governmental agencies, banks, and
other credit providers are instituting policies that are designed to support consumers
through this difficult time. If you are worried about your credit, or you are worried
that you will not be able to pay your bills, read this step by step guide to gain
some valuable information and protect your credit score.
Step 1: Assessing Your Finances
Obtaining Your Free Credit Reports
The first step in protecting your credit is to request your free credit reports
from the three big credit bureaus (Equifax, Experian and Trans Union). Federal
law dictates that you may receive one free copy of your credit report every 12 months
for each credit bureau. Federal law requires that the credit bureaus make
an actual free report available to each consumer at
www.annualcreditreport.com. Once there, click the “Request yours
now!” link. Try and avoid using any of the “for-proft”
or marketing websites such as “FreeCreditReport.com”, which is ironically,
Follow the steps to receive your reports. You will need to complete the last
step for each of the three credit bureaus.
What if you have already received your one free copy in the last 12 months?
Don't worry, you can pay a small fee to receive more copies if you need to,
or you can also obtain a copy for free if you were recently turned down for credit
based on that agency's credit report. We recommend you print or save your reports
for your records.
Make a List of All of Your Creditors and Current Payment Status
As part of this process, it is helpful to pull the information out of your credit
report files and into a spreadsheet or other document so that it is easier to process
and act on it. Make a list of all your creditors and their corresponding balances
and payment statuses. If your financial situation has changed, you should note
which payments will be difficult (or impossible) to make.
Prioritize the payments
that are the most important, such as mortgage
payments. You may be surprised to learn that your mortgage lender has already dedicated
significant resources to help you get through this.
You should also check to make sure there are no errors and that all information
accurate. If you find information that is inaccurate, you need to formally
dispute that information. This puts the bureaus on notice and allows them
to look into the problem. Click the following links for information on each
credit bureau’s dispute process:
We recommend that all disputes be made in writing and with the help of an attorney.
Sample letters are available if you would like. Contact
Four of the most common reporting inaccuracies to keep an eye out for:
- Mixed Files: Sometimes accounts from two different people can end up in one
file. This mistake is often made when two people have very similar names (ex. Matthew
Smith vs Matthew Smyth) and with similar social security numbers. To identify
this problem, look at your identification information on your file and the names
associated with your accounts. Ensure that these are correct and match.
Pay close attention to differing middle names or initials, as this could also be
an early sign of an issue. But more importantly - as obvious as this may seem
- make sure that every account contained within your credit file was actually opened
by you. A mixed file is different than identity theft in that a mixed file occurs
because the data within the credit bureau’s system gets mixed up whereas identity
theft occurs when someone else is using your personal identifying information.
- Incorrectly Reported Late Payments: Sometimes payments are incorrectly labeled
as late, which will negatively affect your credit score. There are two main ways
this might occur: 1) You were not late on a payment, but it was reported that way.
Try to verify with your records that it was paid and received on time. 2)
You were late on a payment, but it was over seven years ago. Late payments
that occurred more than seven years prior should fall off of your credit report.
This clock starts after the original delinquency, so double check to see whether
it has been seven years since the missed payment. It is very common for debt
collectors to buy a debt for pennies on the dollar and "re-age" this field so that
they can get a fresh start on collecting it by keeping it on your credit report
for another 7 years. This is a clear violation of the law that we frequently
- Bankruptcy Reporting Errors: Often either a creditor or the credit bureau
fails to correctly report the status of an account that was (or was not) included
in a bankruptcy. Sometimes even a bankruptcy is reported in a credit report when
that consumer never filed bankruptcy.
- Reported as Dead when you are Alive: One of the most remarkable
credit reporting errors is reporting a consumer as deceased when they are alive.
Seems simple, right?
- Identity Theft or Fraud: This occurs when another person – someone
you may or may not know – uses some of your personal information or steals
your credit card details and illegally uses it to steal from a credit card company.
The lender then mistakenly and inaccurately puts the account on the innocent consumer’s
Potential Identity Theft?
Identity theft is a serious problem and may not be easy to detect. Look for any
of the following indications:
- Unknown credit accounts have shown up on your credit report.
- You have been receiving mail or pre-approved credit offers with someone else's name
at your home or office.
- Companies that you have not done business with or applied to for credit have been
looking at your credit report.
- Debt collectors have started sending you collection notices for accounts you do
- Your credit report lists an alias name or address that you have never used.
- You have received bills, statements, or other account information in the mail relating
to accounts you didn't open.
While these may be indications of identity theft, it is not conclusive. Credit
agencies will often make mistakes such as "jumbling" information back and forth
between the credit files of two similarly named individuals. Although these
signs do not mean you should panic, you should not just sit back and hope it goes
away. If you believe you are a victim of identity theft,
Step 2: Find Solutions
COVID-19 and Your Credit Score
Pandemics like COVID-19 have affected nearly everyone in the United States.
Despite these difficult ecomonic times, the credit bureaus and their lobbysists
blocked efforts that would have required them to stop reporting negative payment
histories during the Covid-19 crisis. However, the new law passed by Congress
does prohibit the credit bureaus from reporting negative credit information (such
as delayed or non-payment of a debt) IF agreed to by a lender during this time.
CARES Act Protects Your Credit Report if You Contact Your Lender
Congress has recently passed the “Coronavirus Aid, Relief, and Economic Security
Act” or the CARES Act. Part of the legislation provides a mechanism
for consumers to contact their lender for an accommodation or forbearance if they
are experiencing indirect or direct hardship due to COVID-19, regardless of delinquency
If you are approved for a forbearance, a payment delay, or other payment arrangement
with your creditor or servicer, and you are current on your accounts, then the creditor
or servicer will continue to report you to the credit rating agencies (or CRAs)
as current or up-to-date. In this case, your credit report and score would not be
negatively impacted by these non- or delayed payments during the covered period
of the arrangement. Unfortunately, if you were already reported to be behind on
payments prior to the payment arrangement, the creditor or servicer can continue
to report you as late to the CRAs, meaning continued non-payments may be treated
negatively on your credit report and score.
Federal student loan payments, which are suspended through September 2020, are treated
on credit reports as if the payments are made. Therefore, if you are unable to make
payments on your federal student loan, non-payments through September 2020 will
not negatively impact your credit report and score.
That means, if you contact a lender – mortgage, credit card, auto loan, personal
loan – any creditor, request and receive a deferred or reduced payment term,
your credit report and credit score cannot be harmed. This requirement makes
it essential that you directly contact your lender(s) and request a payment waiver,
deferral or reduction.
Preparing beforehand will significantly help maintain your score and avoid getting
into financial trouble. However, in these uncertain times, hardship still
finds a way into people’s lives regardless of preparation. If you have
lost your job or are unable to work because of COVID-19, don't panic and give up.
You have options and support that will help keep you afloat. However, it is
important to be proactive. Here is some advice for what to do if you find
yourself in a challenging economic situation where your expected monthly expenses
will exceed your projected income.
Contact Your Lenders
It is important to contact your lenders before you miss
payments. You will be surprised at how easy many of them have made the process of getting
help. By contacting them prior to the delinquency, they can offer solutions
before your credit score is affected. Contacts and details for
Credit Cards, Auto and
Student Loans, and other credit types are
Try to avoid going through third parties, as this will likely slow down the process.
You do not need to pay anyone to help you with these requests. Lenders are
there to help you and you do not need a debt settlement or other business to handle
this in your stead.
Ask your creditors what your options are. There are many creative solutions
to your problems that your lenders are able to use to help you. On top of
policies already in place, the five major governmental financial agencies, including
the FDIC and OCC, have issued a joint statement offering guidance to financial institutions
and encouraging them to work with consumers to meet their needs. Essentially,
these agencies are allowing banks, credit card companies and other lenders to make
allowances for customers who are affected directly or indirectly by COVID-19.
Some of these accommodations include increasing credit limits, waiving late fees,
restructuring loans, and allowing consumers a forbearance (an extension or allowance
to skip payments) in order to avoid delinquencies and negative reporting.
These policies often do not go into effect on their own; you must contact
your lenders. Each lender may offer different solutions, so try to contact
each one of them. See the list below and on the other parts of this site for easy
access to your lender’s contact information. Take careful notes of their
responses, so that if there are any issues later, we can help you enforce your rights.
(Creditors often record these calls as well).
Continue to Monitor Your Credit Reports
Improving your credit is a constant battle. If you are working with your lenders,
make sure to continue checking your reports to ensure they are accurate. Furthermore,
you will want to ensure that any agreements reached with your lenders are reflected
accurately in the reports. As time goes by, periodically reevaluate where you are
financially. Has your situation improved or worsened? Six months from
now you may be in a different situation and a different strategy may be better for
Whatever your situation, you will always have support.
You can contact us. Take a look
at our website for more useful information on a variety of topics. Please see List of Major Lenders below for
points of contact for the larger national lenders.
General Information on Credit Reporting
There are three main credit reporting companies: Equifax, Experian, and Trans Union. The “Big Three” credit bureaus, as they are also known, collect your
information from banks, credit card companies, court orders, and many other organizations
that issue credit. While all three bureaus collect your information, they
do not all have the same information. One bureau may have incomplete or inaccurate
information while the others do not.
Because these companies are constantly collecting your information, your credit
is constantly changing. This information is not in paper form, but rather in a massive
database. When your credit report is “pulled,” there is a search
program or algorithm that finds your “personal identifiers.” Meanwhile,
it filters out any obsolete credit information or any credit information that does
not belong to you. What information that remains is combined into one report
that is your personal credit report.
This report generally has five sections:
- Identification Information: This section usually includes your name, address,
social security number, date of birth, former addresses, your employer's name, your
job description and possibly your home phone number.
- Credit History | Revolving Credit: This includes credit that may have a definite
minimum amount owed each month, but the actual payment may vary. Credit cards would
fall under this section.
- Credit History | Installment Accounts: This includes credit that is a definitive
amount and paid in fixed installments. Mortgage payments would fall under this section.
These Credit History sections may break down the accounts that have missed or late
payments to show how late they were.
- Collection Accounts: These accounts are being collected, usually by a collection
agency, but sometimes also by companies that buy huge portfolios of charged off
debt, as well as some law firms.
- Inquiries: This section of your report tells you who has obtained a copy
of it and is one of the most important sections of the report to review, as it is
usually the best early indicator of identity theft or attempted identity theft.
These inquiries fall into two categories:
- "hard" inquiries -- where a current or potential lender or other entity obtained
your report for one of the specific "permissible purposes" defined in the law, for
example when deciding whether to approve your loan application, or deciding how
best to collect money from you; or
- "soft" inquiries -- where an entity obtained a portion of your report, for
example, a credit score, or some other partial set of your credit data to take other
very limited actions authorized by the law, for example, to decide whether to market
to you for a certain type of pre-approved credit product.
Importantly - hard inquiries affect your credit score, while soft inquiries do not.
The Fair Credit Reporting Act governs this process. You have rights under
this act that include, but are not limited to, the right to know what is in your
file, the right to dispute information, and the right to ask for a credit score.
For more information on the Fair Credit Reporting Act, click
What is a Credit Repair Scam?
First, it is important to be aware of the many types of companies that attempt to
prey on consumers experiencing financial difficulties in times like this. Some companies advertise that they can give you a “new credit identity”
or “instantly repair your credit.” While the thought of a fresh
start for your credit is tempting, do not be fooled. Often what these companies
offer is a scam. Some sell social security numbers illegally to try and trigger
the creation of a blank credit file with the credit reporting agencies. This
process is illegal, and if you use a social security number other than your own,
you could face fines and/or jail time.
Some common signs of a credit repair fraud company include:
- They insist that you pay them upfront before doing any work.
- They tell you not to contact the credit reporting bureaus directly.
- They ask you to dispute information on your credit that you know is accurate.
- They tell you to give false information on your file.
- They do not give you your legal rights when you ask them what they can do for you.
- They advertise by offering a “New Credit Identity.”
How do these credit repair fraud companies work? If you provide them money, they
will give you a nine-digit number that looks like a social security number. They
may call it a “Credit Profile Number” (CPN) or ask you to apply for “Employer Identification
Number” (EIN). An EIN is a legitimate number given to you by the Internal Revenue
Service (IRS), but it is not a substitute for a social security number. They will
tell you to apply for credit using this number and then lie about your information.
The purpose is to hide your actual personal identifiers from the bureaus. They
will tell you this is legal, but it is not. Using a fake number like this could
carry serious legal consequences. It is a federal crime to lie on a credit report
or loan application, misrepresent your Social Security Number, or obtain an EIN
number under false pretenses.
The Credit Repair Organization
Act (CROA), which is enforced by the Federal Trade Commission, makes it illegal
for credit repair companies to lie about what they can do for you, and to charge
you before they've performed their services. The law requires that before they offer
you services, they explain:
- Your legal rights.
- The services that they will provide.
- That you have a three day right to cancel with no charge.
- How long it will take to get results.
- The total cost you will have to pay.
- Any guarantees that you have.
If you have hired a credit repair company and you believe that they have
not lived up to their promises, contact us.
List of Major Lenders:
Below is a list of additional information and references for you to use.