One of the uncertainties facing consumers is how to manage the household budget and debt during the coronavirus (COVID-19) pandemic. The fear, for many, is the loss or reduction of wages, expiration of unemployment benefits and the impending due dates for important necessities like rent, mortgage, water, utilities and medication.
In terms of credit card debt, the Consumer Financial Protection Bureau offers guidance on coronavirus credit card relief programs and how to communicate with your creditors. While it’s important to keep a clean credit report and maintain payments as best as possible, CFPB stresses it’s even more important to reach out to creditors and tell them help is needed during a difficult time. Most credit card companies are offering programs to help manage debt.
Help was initially provided through the CARES Act, requiring lenders to report to credit bureaus that consumers are current on their loans only if the consumer has reported that they needed the help during the pandemic.
The CARES Act also allowed homeowners with federally backed loans who are affected by the pandemic to request a forbearance of their mortgage for up to 180 days.
If you're behind on student loans, the CARES Act automatically suspended payments on federally-held student loans through December 31, 2020 (an extension of the original date of September 30).
In addtion, the CARES Act requires lenders to voluntarily provide payment relief to consumers and accurately report this to the credit bureaus as it relates to the pandemic, and there is some flexibility in the timing of investigating disputes. This means the CFPB will not bring enforcement action against firms who exceed an investigation deadline, if the disputed company is making a good faith effort to resolve the situation.
There are ways to protect your credit rating during a pandemic, aside from maintaining a good payment history and having an excellent debt to credit ratio. More information can be found in CFPB's Credit Reporting Guidance.
If you are looking for a loan, see BBB's advice on Looking for a Loan? Know Your Rights.
For more information:
- See BBB.org/coronavirus for recent scam information and consumer tips.
- See BBB.org/smallbusiness for information to help business owners.