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How The Pandemic is Affecting Credit Scores

has almost been a full year since we heard the phrase “Two weeks to slow the flatten the curve” and the effects of the current pandemic had reached everyones lives in one way or another. For many Americans, this past year has tested the metal of their financial practices; providing questions without answer to their current credit state.

 

A Fractured System

A study done by the Federal Trade Commission in late 2012, found that 1 in 4 consumers had at least one error listed on their credit report. Now, the  COVID-19 crisis has worsened the situation, raising that number to almost a 50/50 ratio. We all have the right to dispute these discrepancies with the bureaus to attempt to right these wrongs for an accurate credit report. With Covid 19 taking a toll on many businesses, the credit bureaus have taken a heavy hit to their work practices and processes. With an increase in disputes, the 30 day response regulation being lifted along with a limited support team has left the bureaus over inundated. Where receiving responses to disputes would take 35-45 days, now customers are waiting anywhere from 50-70 days  for a response that may not have even led to the investigation of the items.

How Does This Affect Me?

Credit affects many aspect of your life besides making it easier to aaquire financing or a loan. Landlords, cell phone, cable, car insurance and even potential employers will look into your credit when deciphering eleigiblilty and rates. Even minor errors in your report can have a substantial impact on your report and in turn, your livelyhood. These errors can be anything from an incorrect date, to adress errors to even the manner of payment being false. It is beneficial to have access to your reports and to keep a vigilant eye over the items being reported. Sites like Credit Armor allow anyone to access all three bureau reports, provide monitoring, payment alerts, budgeting plans and constant updates to better control their reports!

What Is Being Done To Fix These Issues?

As the pandemic wears on, many creditors and lenders have opened up ways to provide assistance to the average consumer and have provided options to assist in managing accounts. Anything from providing a consumer statement on your report to explain your current situation, payment negotations and financial forgivness tactics all have been implimented to lighten the credit stain.

Over 20 states along witrt Washington D.C. and Puerto Rico have reached out to the CFPB to discuess reconcideration of the relaxed 30 day response regulation. Thought the CEO of the CPFB has stated that the deadline has been made, many states have disputed otherwise. This dispute along with muliple bills situated by Congress could provide relief to these hardships we consumers are currently facing. One bill passed states that athe full social security number must match the number on the creditors claim and the the second deals with disputing decisions, CFPB accountability and credit restoration to victims of identity fraud.

At this time, the best way to adress these issues would be general credit monitoring and alerts to catch these errors as soon as they appear on the report. This is especially important for those who have negotiated special terms  and arrangements with lenders or collectors.

 

 

Are you making mistakes on your Credit Report? Check out our blog; 5 Common Credit Mistakes You Could Be Making

Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors  and complete a free consultation please give us a call at 1-800-994-3070 we would be happy to help.

If you are hoping to dispute and work on your credit report on your own, here is a link that provides you with a few ideas on how to go about DIY Credit Repair.

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A note from the author:The opinions you read here come from our editorial team. Our content is accurate to the best of our knowledge when we initially post it.

Article by Joe Peters

 

 

 

 

 

 

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