Top 3 Covid Credit Challenges and How To Resolve Them
Here are the top three credit challenges that we see consumers face during the COVID-19 pandemic.
Challenge #1: Covid Era Credit Advice Is Confusing
The headlines regarding credit scores during the pandemic are confusing and creating a high level of frustration for consumers. Because of that, we’d like to give some straight forward advice to clear the air.
#1. IF you went into forbearance on your mortgage, there is a good change that account may not report on credit until you resume payments. It’s important to stay proactive, because we’ve seen accounts that were deferred disappear from credit even after repayments were made. If this happens to you or your clients, the solution is to contact your creditor, obtain a recent statement that shows payment history, and send that information to the credit bureaus as a dispute requesting they fix the reporting error.
#2. IF you stop paying on your debt without some type of deferment agreement, your credit score will drop. In addition, payment history accounts for 35% or more of your credit score and those late payments can hinder your credit score for years, not months.
#3. IF you aren’t sure what options are available for your clients who may be struggling financially due to COVID-19, you can find government resources here.
Challenge #2: Overly Aggressive Collection Agencies
Collection agencies are operating at their peak of sleaziness and no one is holding them accountable. Because of this, it’s important that you know your rights as a consumer:
They can’t contact you before 8:00am or after 9:00pm.
After the initial contact, creditors are required to send you a validation of your debt in the mail.
You have the right to dispute the information directly with the creditor.
They are not allowed to use abusive, unfair, or deceptive practices.
Challenge #3: Credit Bureau Lag Times
Due to shortened staff and what I consider opportunistic timing, the credit bureaus have created more hurdles for consumers who need them the most. One example is the removal of dispute notations from credit reports. At a time where consumers are seeing major reporting errors on credit, the credit bureaus are not performing on removing dispute notations upon request of the consumer. What used to take 36-72 hours is now taking 30-45 days for some consumers. In addition, consumers disputing directly through credit monitoring sites such as Credit Karma are likely to not see a dispute placed at all. Unfortunately, like many challenges associated with the pandemic, the credit bureaus are requiring more persistence and patience to get things accomplished than ever before.
We hope you and your families are safe and healthy. As always, we’re here to help you and your credit challenged clients however we can and greatly appreciate your trust in our services.
Premier Credit Consulting