Questions arise about the impact of a federal government shutdown on consumers’ credit histories. The Consumer Data Industry Association (CDIA) and our credit bureau members have systems in place to minimize or eliminate the negative impact of a federal government shutdown on consumers’ credit histories.
Consumers impacted by the government shutdown are encouraged to contact their lenders and creditors. Lenders and creditors have programs and plans to assist their customers in times of a financial crisis like this. Typically, lenders and creditors offer forbearance or deferred payments programs for their customers who need help.
What Should Consumers Do?
If a consumer is impacted by a federal government shutdown—either as an employee, contractor, spouse or otherwise—the very first thing that consumer should do is contact his or her lender or creditor. Lenders and creditors have a variety of tools in place to assist consumers, but these businesses can help only if they know that there is a problem. Lenders and creditors may defer some payments until employees get paid, or place consumers into forbearance programs.* Either way, credit reporting codes can be used to make sure that this is not treated negatively.
Reporting to the Credit Bureaus
CDIA and our credit bureau members are doing our part to help consumers impacted by a government shutdown. CDIA provides guidance for the approximately 15,000 lenders and creditors who report data to the nationwide credit bureaus to handle a wide variety of data reporting scenarios. To help lenders and creditors offer assistance to consumers affected by shutdown, CDIA has guidance for lenders and creditors who put an account either (a) into forbearance as a result of a consumer’s inability to make payments due to the government shutdown, or for other reasons, or (b) into a deferred payment status.**
The country’s leading score developers, VantageScore and FICO, note that forbearance and deferred payment scenarios have a neutral impact on a consumer’s credit score. So, consumers in one of these programs, as reported to the nationwide credit bureaus, should have no negative impact as a result of a government shutdown.
FICO has a blog posting, Protecting Your Credit If You Are Impacted by the Government Shutdown. Among other things, the blog says that, “The placement and reporting of an account in forbearance or a deferred payment plan in and of itself doesn’t impact a FICO® Score. However, any associated changes in balances or payment history that are reported on these accounts may impact the score.”
VantageScore has a posting on its website, Unable to make loan payments because of the government shutdown?
- As it relates to your VantageScore credit score, a loan in forbearance continues to positively impact your established credit history, while the related balance and payment obligations are not included in your score calculation during the forbearance period. Your prior payment and delinquency history related to that loan remain part of your score’s calculation.
The Government Shutdown and Your Credit Scores
– How to Protect Your Credit Score During the Government Shutdown
– Government Reopens, but Will the Shutdown Affect Your Credit Score?
Concerned about your credit because you’ve been impacted by the current government shutdown?
* On Jan. 11, 2019, five federal financial institution regulators and state regulators issued a press release encouraging financial institutions to work with consumers affected by the federal government shutdown. These five agencies are the Federal Reserve, the Conference of State Bank Supervisors (“CSBS”), the Consumer Financial Protection Bureau (“CFPB”), the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration (“NCUA”), and the Office of the Comptroller of the Currency (“OCC”).
** Forbearance is a period during repayment in which a borrower is permitted to temporarily postpone making regular monthly payments. The debt is not forgiven, but regular payments are suspended until a later time. As an example, forbearance may be granted if a borrower is experiencing temporary financial difficulty. The consumer may be making reduced payments, interest-only payments or no payments.