The economic turmoil caused by the coronavirus has prompted a helpful — if temporary — change in the window that Americans have into their credit files.
You can now get free copies of your credit report from the three big credit bureaus each week. That’s right: weekly.
That’s an improvement over the one-free-report-a-year quota that prevailed before the pandemic. And while it won’t fix the potential credit woes that consumers are facing as millions lose their jobs or get pay cuts, it can be a helpful tool to stay on top of your finances.
“Checking your credit report is very important,” said Chi Chi Wu, a staff attorney at the National Consumer Law Center.
A brief refresher about your credit report: It is a summary of your debts and your payment record, as reported by lenders to the three bureaus — Equifax, Experian and TransUnion. The bureaus collect the information and apply a formula to distill it into a three-digit credit score (which they generally don’t provide free).
Lenders use the score as a snapshot to help them decide whether you are likely to repay a loan and what interest rate you should pay. Generally, you’ll have a better (higher) score if you pay on time and keep your balances low.
Even in good times, it’s wise to scan your credit report regularly to make sure that it’s accurate and that there are no suspicious accounts that could flag identity theft. These days, doing so is crucial — to make sure you are getting the benefit of consumer credit protections granted by Congress during the pandemic. The three bureaus have jointly urged consumers to review their reports “frequently.”
Federal coronavirus aid programs granted temporary payment relief for people with federally backed mortgages and some types of federal student loans. The programs included safeguards so that accepting help during the crisis, like postponed or temporarily reduced payments, wouldn’t mar your credit profile. With millions of people seeking help, and lenders responding on the fly, errors are bound to happen.
Even if an account is reported to credit bureaus with comments noting that payments are temporarily paused, the account must be marked “current” on your credit report, said Tom Quinn, vice president of business development at the Fair Isaac Corp., developer of the widely used FICO credit score.
FICO has heard from borrowers asking whether their scores fell because they had obtained special payment arrangements, Quinn said. But reviews generally found that the scores were not true FICO scores that lenders would use, he added. Rather, they were unofficial or “educational” scores that some companies offer to consumers.
“For a FICO score,” Quinn said, “there is no negative impact.”
FICO scores generally range from 300 to 850. Last year, after a decade of economic growth and low unemployment, the average hit a record high of 703, according to Experian.
It’s still too soon to see what impact the virus-induced economic slowdown has had on credit scores overall, Quinn said on Wednesday. “We don’t have the numbers just yet.”
Wu said the temporary relief for consumers didn’t go far enough to protect their credit because not all lenders were required to provide help. Most homeowners with mortgages are eligible to have payments postponed for up to a year, while payments on certain federal student loans are automatically suspended until the end of September.
But for other debts, like credit card bills and car loans, it’s up to lenders to decide whether to give you a break. Consumers must contact each one, explain their circumstances and ask for help, like extra time to pay or a reduction in the payment, Wu said. If even one creditor fails to provide extra time to pay, it could hurt your credit score, she said, adding that single late payment reported by any one lender can lower a score by up to 100 points.
While banks say they are being flexible, their responses vary widely, Wu said. Some are offering minimal help, like waiving annual credit card fees, while others are granting extra time to pay and waiving interest and late payment fees.
Crucially, Wu said, an account will be marked “current” only if a consumer is able to secure a reprieve from the lender before missing payments. If the borrower falls behind before getting the reprieve, she said, the account will be marked as delinquent.
“They have to call before they’re late,” she said, and getting through to lenders may be a challenge.
Millions of people are making those same phone calls, Wu said, so waits are long and people have reported being automatically disconnected. “You have to be persistent,” she added.
Rod Griffin, senior director of public education and advocacy at Experian, said it could still be helpful to get a payment accommodation for a late payment. If, for instance, you are 30 days late and get an accommodation from your lender, your record is, in effect, frozen at 30 days late during the agreed-upon period (say, three months). That keeps your account from being marked 60 days or 90 days late, which would mar your credit even more.
So while an accommodation doesn’t fix your credit, it doesn’t let it get worse during the relief period, Griffin said.
Equifax suggested that borrowers may want to add a brief “consumer statement” to their credit report to explain the impact of the pandemic. It suggested this language: “Be advised that the negative accounts on my credit report are related to the coronavirus. I intend to make these up as soon as I can.”
If you need help dealing with creditors, one option is to contact a reputable nonprofit credit counseling agency. Many offer free debt counseling, although expanded services carry fees.
Counselors can join consumers on a call to creditors to help them navigate their options, said Kristen Holt, chief executive of GreenPath Financial Wellness, a credit counselor in Michigan that serves consumers nationally. They can also help consumers plan ahead for when bills they have deferred come due.
“It’s hard to think straight right now,” Holt said.
Here are some questions and answers about credit reports:
How do I get my free weekly credit reports?
Visit annualcreditreport.com, the website run by the credit bureaus for providing free reports. You can get reports from all three bureaus every seven days through next April. You’ll need to enter your name, date of birth and Social Security number, and answer several security questions. Some may ask about information that may be several years old, so it helps to have financial records handy.
What if I find mistakes on my credit report?
You can typically dispute errors online while viewing your report. You can write a note about the problem and click a button to submit it. You may need to create an account with the credit bureau first, however, by choosing a user name and password. You should also dispute errors directly with the lender as well, GreenPath advises.
Be prepared to wait for a response. Credit bureaus and lenders usually must respond to disputes within 30 to 45 days, but consumers may wait longer during the pandemic. Citing the possibility of “significant operational disruptions,” the Consumer Financial Protection Bureau last month informally stretched the deadline, saying that longer response times are acceptable as long as companies make “good faith efforts” to investigate disputes as quickly as possible.
Does it matter if I have a security freeze on my credit report?
It might. Credit freezes, which block most outside inquiries to a consumer’s credit report, are a way to prevent someone from opening unauthorized accounts with your personal information.
Both Experian and TransUnion granted online access to a reporter’s frozen credit report via annualcreditreport.com. Equifax did not, instead directing the inquiry to a form for seeking the report by mail.
The reporter was able, however, to get the Equifax report online from the company’s own website. Even before the new weekly access was made available, consumers could get six free credit reports each year directly from Equifax. The company agreed to the offering through 2026 as part of a settlement with the Federal Trade Commission over its huge data breach in 2017.
Equifax said that the freeze might have been a factor and that “a ‘thaw’ increases the chance of delivering the credit report online.”
In short, if you have a freeze on your accounts and you have trouble viewing the free reports, you may want to try temporarily thawing the freeze.