Delay in paying bills – credit cards, car loans, rent, mortgages, utilities, etc. – often results in a black mark on your credit report. This can lower your credit score and haunt you for years to come, making it more difficult to borrow in the future.
Fortunately, there is temporary help for millions of Americans buried in the Coronavirus Aid, Relief and Economic Security Act (CARES). It is the $ 2 trillion federal stimulus bill passed by Congress and promulgated by President Trump.
Article 4021 (page 209 of this link) aims to protect your credit. If you fall behind in your payments due to financial hardship with the virus and come to an agreement with your lender, the bank must show that your account is still up to date – no black mark.
The process is not automatic, however. You must act. And we encourage you to do so as soon as possible. Call the bank or lender to explain your situation and make a deal. Keep detailed notes on when you called, who you spoke to, and what you discussed. Request a reference number related to your call. That way if there is a problem later you have a case.
Just telling your lender isn’t enough to protect your credit report. You need to make an agreement with your bank or credit union about when you will start making payments again and how you will make up for missed payments. A formal agreement is the only way to obtain the protection provided by the CARES Act.
Requiring families to take action is not right for some consumer advocates. The League of United Latin American Citizens (LULAC) is calling for a nationwide end to negative credit reports during the pandemic – without forcing borrowers to ask.
“Often we don’t even know our own rights,” said Sindy Benavides, group CEO. “We don’t know, sometimes, that we can even have these conversations with our own lenders.”
Benavides says LULAC sent a letter to Congress this week, calling for greater consumer protection during the health crisis.
“By adopting a moratorium on credit reports during COVID-19, Congress has truly [would] give our American community that wiggle room it desperately needs to make sure we survive this, ”she said.
Unless there is a new directive from Washington, protecting your credit report during the pandemic remains your responsibility. If you’re going to miss a payment, contact the banks that hold your mortgage, car loan, and credit card debt. Let them know you’re late. Ask for help. And, come to an agreement.