As the country and world faces the unprecedented threat of the COVID-19 virus, many consumers are facing financial hardship and risk falling behind on their monthly bills. The reaction to this financial challenge from many legislators is to remove any negative information from consumer’s files in order to have them avoid any further hardship. CDIA, our members, and financial institutions have shown that suppression is a far worse outcome for consumers than having lenders and creditors report consumers as “current” in a forbearance program or deferred payment plan.
To help consumers avoid the financial pitfalls that come with suppression of credit reporting, the CARES Act included a provision to keep reporting consumers as “current” during the public health crisis. This positive status will also reduce the amount of confusion and ultimate number of disputes that are filed during this trialing and confusing time.
This is why the CFPB and other federal agencies have encouraged continued reporting with codes that show consumers are in a forbearance plan, a deferred payment plan, or otherwise marked as current. If consumers’ data is not being reported to a credit bureau and for instance, a consumer was making partial payments, they would not be credited for doing so. Furthermore, if they were once delinquent in payments and they do achieve a zero balance on their debts this too is left off the report. These are the reasons we find the status “current“ as the most desirable to the consumer, lender and the bureaus.
Even though CDIA and our members feel that the credit reporting issues have been solved with the CARES Act, some members of Congress may still seek to do something to remove negative data. If and when that time comes, we will continue to help consumers navigate this financially perilous time.