Protecting Your Credit

Overview

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.

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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, not free.

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.

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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.

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Identifying Inaccuracies

You should also check to make sure there are no errors and that all information is 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: Equifax | Experian | Trans Union.

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 us.

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 litigate.
  • 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 credit report.

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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 not have.
  • 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, contact us.

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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 have 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.

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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 status.

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 Mortgages, Credit Cards, Auto and Student Loans, and other credit types are available here.

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).

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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 your credit.

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.

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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 report 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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:
    1. "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
    2. "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 HERE.

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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.

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List of Major Lenders:

Name COVID-19 Page
Ally Bank
Phone (bank): 1-877-247-2559
Phone (auto): 1-888-925-2559
Contact Page: Contact
COVID-19 Site
American Express
Phone: 1-800-528-4800
Contact Page: Contact
COVID-19 Site
Bank of America Corp.
Phone: 1-800-432-1000
Contact Page: Contact
COVID-19 Site
BB&T Corp.
Phone: 1-800-226-5228
Contact Page: Contact
COVID-19 Site
Caliber Home Loans
Phone: 1-800-401-6587
Contact Page: Contact
COVID-19 Site
Capital One Financial Corp.
Phone: 1-877-383-4802
Contact Page: Contact
COVID-19 Site
Charles Schwab Corp.
Phone: 1-866-855-9102
Contact Page: Contact
N/A
Chrysler Capital
Phone: 1-855-563-5635
Contact Page: Contact
COVID-19 Site
Citigroup Inc.
Phone: 1-800-432-1000
Contact Page: Contact
COVID-19 Site
Discover
Phone: 1-800-347-2683
Contact Page: Contact
COVID-19 Site
Fairway Independent Mortgage
Phone: 1-800-201-7544
Contact Page: Contact
N/A
Flagstar Bank
Phone: 1-800-945-7700
Contact Page: Contact
COVID-19 Site
Ford Motor Company
Phone: 1-800-727-7000
Contact page: Contact
COVID-19 Site
Goldman Sachs Group Inc.
Phone: 1-212-902-0300
Contact Page: Contact
N/A
Honda Financial Services
Phone: N/A
Contact Page: Contact
N/A
JP Morgan Chase & Co.
Phone: 1-800-935-9935
Contact Page: Contact
COVID-19 Site
Loan Depot
Phone: 1-888-983-3240
Contact Page: Contact
COVID-19 Site
Marcus (by Goldman Sachs)
Phone: 1-844-627-2871
Contact Page: Contact
COVID-19 Site
Mastercard
Phone: 1-800-627-8372
Contact Page: Contact
COVID-19 Site
Morgan Stanley
Phone: 1-888-454-3965
Contact Page: Contact
N/A
Navy Federal
Phone: 1-888-842-6328
Contact Page: Contact
COVID-19 Site
Nissan Finance
Phone: 1-800-456-6622
Contact Page: Contact
COVID-19 Site
PNC Financial Services Group Inc.
Phone: 1-888-762-2265
Contact Page: Contact
COVID-19 Site
Quicken Loans
Phone: 1-800-769-6133
Contact Page: Contact
COVID-19 Site
Rocket Mortgage
Phone: 1-888-452-8179
Contact Page: Contact
COVID-19 Site
SunTrust Banks Inc.
Phone: 1-800-786-8787
Contact Page: Contact
COVID-19 Site
Toyota Financial Services
Phone: 1-800-874-8822
Contact Page: Contact
COVID-19 Site
U.S. Bancorp
Phone: 1-800-872-2657
Contact Page: Contact
COVID-19 Site
United Wholesale Mortgage
Phone: 1-800-981-8898
Contact Page: Contact
N/A
Visa
Phone: 1-800-847-2911
Contact Page: Contact
N/A
Wells Fargo & Co.
Phone: 1-800-374-9700
Contact Page: Contact
COVID-19 Site

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Additional Information

Below is a list of additional information and references for you to use.

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