The effects of the Coronavirus pandemics have been far-reaching, resulting in various containment measures responses from various governments around the world. As a result, the federal government passed the Coronavirus Aid Relief and Economic Security (CARES) Act.
The federal government affected some protections, which changed how creditors report information to the credit bureaus. These changes aim to protect consumers who have been impacted by the coronavirus and have altered their payment schedules.
CARES Act Guided Credit Scores and Reporting
Different lenders have come up with various relief mechanisms in response to the impact of the COVID-19 outbreak. This has provided room for various consumers assess several options that would enable them come up with a near-steady payment plan.
The typical aspect of the CARES Act is how the creditors will furnish information to the credit bureau about the consumer account’s status.
This act allows for relief measures upon the negotiation between the creditors and consumers.
Creditors must report as ‘current’ the accounts with accommodation payments where the loan is current at the time of the payment schedule negotiations.
Where the loan is due at the time of negotiating with the creditors, the account shall be reported as due up until the account is remedied.
The CARES Act ‘covered period’ has been in place since January 31, 2020 and shall cease to be in effect when the national emergency declaration is made. As such, consumer will still be eligible for the protection 3 months after the declaration.
When can the CARES Act not protect Your Credit Scores and Reports?
Creditors are not required to report accounts as current when: –
- The account was already charged off before the beginning of the CARES covered period
- The account was already due before the consumer went for a special agreement with the lenders and did not make any efforts to change the account to a current status.
- The cardholders did not make an effort to reach lenders modify the payment schedule, and the account is a month late.