But if you make an agreement for payment relief before you fall behind, the Coronavirus Aid, Relief, and Economic Security (CARES) Act requires that creditor to report your account as current on your credit reports.
The CARES Act, which was signed into law on March 27, 2020, Act amends the Fair Credit Reporting Act (FCRA) to stop adverse credit reporting during the COVID-19 crisis—but only under specific circumstances. (See 15 U.S.C. 1681s-2(a)(1)(F).)
Under the amended FCRA, if a "furnisher" makes an accommodation because you were affected by COVID-19 during the covered period (see below), that furnisher must report your account as current to the credit reporting agencies, so long as you weren't already delinquent on payments. (A "furnisher" is an entity, like a lender or creditor, that provides information relating to consumers to one or more credit reporting agencies for inclusion in a credit report.)
Specifically, the creditor has to continue to report your debt as current if you're up to date on the debt when the creditor agrees to:
You have to come to an agreement first to avoid harmful reporting. Don't unilaterally stop making your payments, delay your payments, or pay less than you're supposed to without talking to your lender or creditor beforehand. And you have to stick to the terms of the deal.
If you were already delinquent at the time of the agreement, however, the creditor can keep reporting the delinquent status unless you bring the account current. Also, in the case of a charge off, the creditor may continue to report it as a charge off.
But if your account is already delinquent and you make an agreement, the creditor can't report you to the credit reporting bureaus as more delinquent. So, the bureaus can't, for example, report you as 60 days delinquent if you were 30 days delinquent when you made the agreement. Also, if your account is already delinquent and you make an agreement, and you bring your account current during the covered period, the creditor has to report that you're current on your account.
The amendment defines "covered period" as the period starting January 31, 2020, until the later of 120 days after enactment of the CARES Act or 120 days after the end of the national state of emergency declaration.
If you aren’t able to work out an agreement with a creditor and you fall behind in payments on a debt, that creditor may report the delinquency to the credit reporting bureaus. As a concession, some creditors have said they’ll use a special code, one for natural disasters that adds a comment to the report, for delinquent debts during the pandemic.
This code might make a difference if a potential creditor actually reads the full report when making a lending decision. But any debt reported as delinquent still shows up as negative on reports and can hurt your FICO credit score. FICO doesn't factor this kind of code in when calculating credit scores, although VantageScore will disregard late payments for accounts with a disaster code.
If you review your credit reports and find that a creditor has added derogatory information after you missed payments due to COVID-19, you may add an explanatory statement to your reports.
Technically, the credit reporting bureaus are required to place a statement in your file only if you're disputing the completeness or accuracy of a particular item. Though, while the bureaus don't have to include a statement if you're only explaining extenuating circumstances or other reasons why you haven’t been able to pay your debts, they usually will.
Once you file a statement with a credit reporting bureau, the bureau must include the explanation—or a summary of it—in any report that has that information. If the reporting bureau assists you in writing the description of what happened, it may limit your statement to 100 words. Otherwise, there's no specific word limit.
But you should try to keep your comment to 100 words or less. That way, the bureau is more likely to use your unedited statement. If your explanation is lengthy, the bureau will probably condense your information to just a few sentences or codes. To avoid this problem, keep your statement clear and concise. For example, you might say something like, “The delinquent accounts showing on my credit report were because I lost my job due to COVID-19. I intend to make up the payments as soon as I can.”
Be aware, though, that you need to be careful about when and whether to use this kind of explanation. It could be an indication to potential future creditors that you didn't have the financial reserves to withstand a short-term cash flow problem, which could make you a credit risk in their eyes.
If you need advice about how to manage your debts so that you can protect your credit, consider speaking with a nonprofit credit counseling agency, like those affiliated with the National Foundation for Credit Counseling. A credit counselor can discuss strategies with you, as well as let you know about different ways to reduce your debt and other financial obligations. You should, however, avoid for-profit debt relief services.
If you need legal advice about how to respond to your creditors or need assistance dealing with them, talk to a knowledgeable debt settlement attorney in your area.
]]>On the other hand, rent payments usually won’t affect your main credit reports or credit scores because they don't get reported. But some national specialty credit reporting agencies gather and report rental histories. And all three major credit bureaus will include rent payment information in their reports if they happen to receive it, like from a debt collector your landlord hires to collect unpaid rent.
So, if you can't pay rent, working out a temporary arrangement to make reduced or no payments is a good idea.
Again, unpaid rent probably won’t show up in the credit reports Equifax, Experian, and TransUnion produce. That’s because unpaid rent isn’t usually directly reported to these credit bureaus—especially if you rent from a landlord with few units or properties. Because a landlord would need to become a member with the bureaus and have a minimum number of active accounts to report unpaid rent, only high-volume landlords typically report overdue rental payments.
Because unpaid rent usually isn’t reported, it probably won’t affect your credit scores. But if you regularly pay your rent on time and want it to help your credit, you might consider signing up for a rent-reporting service (see “Can I Put Rent on My Credit Report?” below). People usually join these services to improve their credit scores by ensuring that rent payments are included in their credit history.
Specialty credit reporting agencies gather and report only particular types of information on consumers, such as tenant histories, check writing histories, employment histories, and insurance claims. These agencies, similar to the main bureaus, collect information about consumers from a variety of sources, compile reports, and sell them to businesses.
So, if you rent from a landlord with just one or only a few properties and haven’t signed up for any rent-reporting options, the three main credit reporting bureaus (again, Equifax, Experian, and TransUnion) probably won't find out if you miss some rent payments. But the delinquency might affect a specialty credit report.
If you’re applying as a tenant for a residential property, the landlord or management company might use a specialty reporting company (a tenant screening company) to screen you.
This kind of report could list your previous addresses, rental payment history, evictions, and other information obtained from previous landlords and court records. A specialty tenant screening report that contains negative information about you might result in a future rejection of a lease application. Or you might get approved, but you’ll have to pay more or comply with additional lease conditions, like paying rent in advance.
Managers of multi-unit buildings are more likely to request a tenant history report than the landlord of a single-family home or a landlord with just a few units.
You can check your specialty reports to ensure the information the various agencies have about you is accurate. The Fair Credit Reporting Act gives you the right to get free copies of specialty consumer reports once every 12 months.
See the Consumer Financial Protection Bureau's website for a list of most specialty credit reporting agencies, including tenant screening companies. There, you can find contact information for various Consumer Reporting Agencies.
Overdue rent might appear on your credit reports if the landlord sends the debt to a collection agency. The agency might report the collection account to the credit bureaus. Also, if an eviction appears in the public record, the credit reporting agencies will likely include it on your credit reports.
Your best bet to avoid damaging your credit is to negotiate an amendment to the terms of your lease or rental agreement, getting your landlord to agree to reduce or suspend your payments for a while.
If you rent from a large organization and need a rent reduction or suspension, inquire whether the company reports unpaid rent to the credit bureaus. If so, you can ask them not to report you as delinquent and, if they agree, even write it into the terms of the amendment.
If your rent currently isn’t showing on your credit reports, but you make regular, on-time payments, you might want to add this information to your credit history by signing up with a rent-reporting service. (Generally, your landlord must sign up too.) Once you sign up for a rent-reporting service, the company provides information about your rent payments to one or more of the major credit bureaus.
However, the major credit reporting bureaus don't share information, so rent payments reported through some services won't necessarily appear on all three of your main credit reports.
Various rent-reporting services are available. Zego, for example, reports rent payments to Experian and TransUnion. With Zego, only positive, on-time rental payment data is submitted—missed payments aren't reported.
Turbotenant will automatically report your on-time rent payments to TransUnion if your landlord signs up for their services.
Fannie Mae has a program to help renters improve their credit when making timely rent payments. The landlord can enroll in the program if you live in a Fannie Mae-financed multifamily building.
The program connects the property owner with a financial technology (fintech) provider, and when you make on-time rent payments, the landlord then shares that data with the provider. The provider reports the positive rent payments to Equifax, TransUnion, and Experian. Only positive information gets reported. If you miss a payment, the property is removed from the program. So you won’t suffer any harm to your credit.
Read Fannie Mae’s press release and Equitable Housing Finance Plan to learn how Fannie Mae can help renters improve their credit.
If you sign up for Experian Boost, your rent payments could help improve your credit score. If you connect your bank, credit card, or another service provider to Boost, the service will look for a positive history of utility, telecommunications, and rent payments you can add to your Experian file.
But this service also has downsides, such as your personal information being potentially vulnerable to a data breach, and the service might not actually help your score. Also, when you apply for credit, like a car loan or credit card, that lender might not use the score that Boost affects when evaluating your creditworthiness.
Depending on the service you sign up for, rent-payment reporting can potentially help you if you have a not-so-good credit history, a thin credit file (not much credit history), or you’re credit-invisible (you don’t have a credit history). When your landlord or a rent reporting service reports your regular, on-time rent payments to the credit bureaus, your credit scores will increase.
If you need help preparing an amendment to your lease or rental agreement, Nolo’s Every Tenant’s Legal Guide provides an Amendment to Lease or Rental Agreement form. If you need further assistance, consider talking to a Landlord-Tenant attorney.
]]>If someone violates your rights under the FCRA, you have some remedies available. Those remedies might include actual damages, punitive damages, attorneys' fees, and costs. The type of remedy will depend on whether the violation was intentional or negligent.
The FCRA governs the behavior of consumer reporting agencies, also called "credit bureaus," and the businesses or individuals that report information to the consumer reporting agencies (CRAs). The CRAs compile this information into your credit report. Creditors, landlords, and employers may rely on information in your credit report in making decisions to extend credit to you, give you a job, or rent a home or apartment to you.
The FCRA provides rules about who can access your report, what can be reported and for how long, and what CRAs and information suppliers (also called "furnishers") must do if you dispute information. If a CRA or another entity violates the FCRA, you might suffer harm. For example, inaccurate information in your report could lead a creditor to deny you a car loan or credit card, an employer to refuse to hire you, or a landlord to decide not to rent to you. You could suffer other harm as well.
If an FCRA violation happens, you can sue in court. Here are the remedies that are available.
If you can show that the CRA, information furnisher, or entity using the information willfully violated its obligations under the FCRA, then you may be entitled to recover up to all of the following damages:
-Basic Damages (pick one):
-If the violator was an individual who lied to get your credit report, or used it for an improper purpose, then the greater of:
-Punitive damages, as decided by the court.
-Attorneys' fees and costs. (15 U.S.C. § 1681n).
You are also entitled to damages if you can show that the CRA or other entity negligently failed to comply with its obligations under the FCRA. Damages here include:
The FCRA has a penalty for filing any lawsuit or subsequent court papers that are later determined to have been filed in “bad faith or for purposes of harassment.” You (or the defendant) might have to pay the other side's attorney fees if you (or they) file bad faith papers and lose. (15 U.S.C. § 1681n, 15 U.S.C. § 1681o).
You can file a complaint in either federal court or your state's court, subject to a time limit—called a "statute of limitations." Your suit must be filed no later than the sooner of:
To learn more about filing a lawsuit for FCRA violations, talk to a consumer protection lawyer or debt settlement lawyer.
]]>It's important to recognize when the FCRA has been violated so you can take action and prevent harm to your credit.
The FCRA governs consumer reporting agencies, also called "credit bureaus," and the businesses or individuals that report information to the consumer reporting agencies. The agencies compile this information into your credit reports.
Your credit reports serve an important purpose. They can determine whether you can obtain a mortgage, car loan, job, and even an apartment.
The FCRA tells credit reporting agencies, creditors, and other authorized persons what they can and can't do with your credit information.
Here are some of the more common ways that creditors, collectors, and credit bureaus violate the FCRA.
Credit reporting agencies and the creditors who supply information to them must provide and keep your credit information current. When your credit circumstances have changed, and the information in your credit report isn't updated to reflect these changes, this failure might be a violation of the FCRA.
Some examples of violations include:
Your creditor must not supply information to a credit reporting agency that it knows (or should know) is inaccurate. That kind of information includes:
Credit reporting agencies can also run afoul of their obligations to report accurate credit information about you. In many instances, this violation happens when a credit bureau mixes your file with that belonging to someone else with similar background information.
Some common cases of mixed files include:
When you submit a written dispute about the accuracy of an item on your report, the credit bureaus and your creditors must take certain actions in response. Their duties include conducting a reasonable investigation of your dispute, correcting any inaccurate information, or even removing the disputed debt from your credit reports.
A credit reporting agency or creditor can also fall short of its duties in a number of other ways.
Some common violations by credit reporting agencies include failing to:
Some common creditor and furnisher violations include failing to:
Credit reporting agencies can't release your credit reports to just anybody. They can only give them to authorized persons. The agencies may disclose your report only to persons or entities that have a valid need, such as:
Even though your employer, creditor, or landlord might be allowed to pull your credit report, they must still have a permissible purpose to do so. If someone pulls your credit report for an impermissible purpose, then it might be a violation of the FCRA.
Some examples of impermissible purposes include:
You're entitled to notices concerning the reporting, handling, and use of your credit information. Notice violations under the FCRA might occur when:
If any of these three types of entities (credit bureau, creditor, or information user) violated your rights under the FCRA, you might be able to sue them in state or federal court for damages. To learn more about your rights and remedies, talk to a lawyer.
]]>These laws allow only certain entities to access your credit reports in specific situations. They also restrict how your credit information can be used. Still, quite a few businesses and entities, beyond the usual credit card issuers and other lenders, are allowed to order your reports.
According to the FRCA, the following people and entities can request your credit reports.
These people and businesses can review your report when you apply for credit or to monitor your credit once they've given you a loan or credit, subject to some restrictions. For example, for a new transaction, you must have made an offer or initiated a credit transaction before the creditor can review your report.
If you're seeking to borrow $150,000 or more, mortgage lenders can see some information—in particular, older information—that wouldn’t be provided to other creditors.
Landlords might get a report from a specialty consumer reporting agency that tracks rental histories, including evictions.
However, state rules often prevent utility companies from denying you service in many circumstances, even if you have bad credit. To learn about programs and laws that can help you avoid utility disconnections, see this article on preventing a utility shut-off.
As of July 1, 2010, the government makes federal student loans directly; private lenders don't offer them. Generally, you can't be denied a direct federal student loan based on your creditworthiness. But credit will be checked for PLUS loans. Also, you can't get a new federal loan if you're in default on another federal loan unless you've made satisfactory arrangements to repay it.
Lenders of private student loans (those not offered by the government) can use credit reports to make loans or monitor existing loans.
These companies can look at your reports if you apply for a policy. Usually, they're not interested in your credit history but instead may ask about your medical history or any insurance claims you have filed. A credit reporting agency can't provide an insurance company with a credit report that contains medical information unless you consent.
If you're seeking life insurance for $150,000 or more, the insurance company can see older information that wouldn’t otherwise be included in your credit reports.
These companies often use credit information to help determine how much to charge when offering a new policy.
Tens of thousands of employers review credit reports to evaluate job candidates. Employers use this information to judge financial honesty and integrity and the risk of bribery of people with a lot of debt.
And, once you’re hired, employers can use the report for just about anything related to the job, including promotion and reassignment decisions.
Government agencies can request your credit report for several reasons:
Collectors look at your report to locate you or learn more about your assets.
Judgment creditors trying to collect a debt based on a credit transaction involving a regular creditor can look at credit reports to decide whether to begin collection efforts against you. They can also use reports to locate you or your assets.
At least one court has said that individuals who don't regularly offer credit can't get credit reports to attempt to collect a judgment, but other courts disagree. So, in some districts, individuals may also be able to get a credit report to collect on a judgment (for example, a judgment for alimony or child support).
Even if a person, agency, or business does not have another permissible reason to get your report, if it can get a court order (not easy to do), it can get your report. For example, the IRS might get a summons that allows access to your credit report. Generally, you would have notice and a chance to oppose the request for a court order.
Apart from those listed above, most other people and businesses can't legally request copies of your credit reports. For example, your credit report may not be used in divorce, child custody, immigration, and other legal proceedings. Nor can district attorneys look at your reports to investigate civil or criminal cases.
Also, just because the FCRA allows creditors, employers, landlords, and others to pull your credit reports doesn't give them, or anyone else, an open license to review your reports. In all instances, that entity must have a "permissible purpose." If it doesn't, that entity must have your permission before pulling a report.
As described in more detail above, the FCRA lists permissible purposes for pulling a credit report, which include the following:
If the person requesting your credit report doesn't have one of the “permissible purposes,” then your credit reports are off-limits. Period. If your neighbor, ex-girlfriend, co-worker, relative, or complete stranger pulls your credit report, you can be relatively certain they've probably violated the FCRA.
It gets tricky, though, when a potential creditor, employer, landlord, or another person you have some colorable relationship with overreaches and grabs your report without a permissible purpose.
Here are some common scenarios when an individual or other entity pulls a report without an impermissible purpose:
It's not always easy to find out if someone who shouldn't have access to your credit reports has requested and received one anyway. One way to detect unauthorized users is to order your credit reports from AnnualCreditReport.com and look for unfamiliar names or businesses in the list of inquiries.
If someone has requested your report illegally, you might be able to sue them for violating the FCRA. Your state's laws might offer additional relief and remedies. Talk to a lawyer for more information on filing a lawsuit.
You can also complain to state and federal government agencies.
]]>The FCRA requires these agencies and the entities that report your credit data to them and others to ensure that your information is fair, accurate, and kept private. The FCRA protects your right to access and correct any inaccuracies in your credit reports.
It also provides legal remedies if a credit reporting agency or information furnisher violates your rights.
Again, the FCRA regulates consumer reporting agencies. A "consumer reporting agency" is any entity that collects and furnishes credit information about consumers. A common type of consumer reporting agency is a credit reporting bureau, such as Transunion, Equifax, or Experian.
A company that collects and sells your credit information, often in the form of background checks, is also considered a consumer reporting agency. These companies often sell data to landlords, employers, or anyone else making a credit decision about a consumer.
Under the FCRA, a credit reporting agency must:
To learn more about your FCRA rights, see "What Are Your Rights Under the Fair Credit Reporting Act?" below.
An “information supplier” or a “furnisher” is any entity that submits your credit information to a credit reporting agency. Creditors are furnishers.
A furnisher might also be a third party with whom you have a loose credit relationship, like a government entity to whom you owe taxes, costs, or fines.
Under the FCRA, your creditor and any other information supplier:
If you dispute the inaccurate information with your creditor in writing, it can't continue to report the wrong information to a credit reporting agency until it investigates. It must also notify the agency of your dispute.
In addition to credit reporting agencies and your creditors, the FCRA governs anyone who uses your credit information for employment, credit, or insurance purposes.
These users of your credit information must:
The FCRA provides consumers with various rights. For instance, you have a right to make sure that the information in your credit files is correct. You also get specific privacy rights and the right to find out what’s in your credit files.
Under the FCRA, you have the right to dispute the accuracy and the completeness of items in your file. The distinction between accuracy and completeness can be significant.
For example, your credit report might state accurately that a creditor sued you. But this information could be incomplete. Say you later paid the debt or weren’t actually liable for it. You can dispute the information about the lawsuit because it’s incomplete.
Inaccurate, incomplete, or unverifiable information usually has to be removed or corrected within 30 or 45 days.
In most cases, a consumer reporting agency may only report negative credit information for up to seven years. Bankruptcies can stay on your credit reports for seven years (Chapter 13 bankruptcies) or up to ten years (Chapter 7).
You have the right to get all the information about you contained in the file that a consumer reporting agency prepared, again, called a “file disclosure.” Usually, the file disclosure is free.
Under the FCRA, you can get one free credit report every 12 months upon request from each nationwide credit reporting agency (Experian, Equifax, and TransUnion). However, during the COVID-19 pandemic, the agencies started providing free weekly credit reports online, a service that's now permanent. To get your free reports, go to annualcreditreport.com.
You can also get a free file disclosure in some situations, such as if:
Specialty credit reporting agencies must also give you a free report every 12 months if you ask for it.
You may ask for your credit score from consumer reporting agencies that create or distribute scores. But you’ll usually have to pay a fee for it.
However, you'll get your credit scores from the lender for free in certain mortgage transactions.
If someone uses your credit report or another type of consumer report to take some other adverse action against you—like denying your application for credit, insurance, or employment—they must let you know. They also have to give you the name, address, and telephone number of the agency that provided the information.
A consumer reporting agency generally can’t give your file to your employer or a potential employer without your written consent.
The FCRA provides certain rights for victims of identity theft and military personnel. For example, identity theft victims may ask businesses for a copy of transaction records relating to the theft.
Military personnel may place a year-long active duty alert on their credit files with the three major credit bureaus. If you put a fraud alert on your files, a creditor has to take extra steps to verify the identity of a person applying for credit under your name before going ahead with the transaction.
If any of these three types of entities (credit reporting agency, information supplier, or user) violates the rules in the FCRA, you might be able to sue them in state or federal court for damages.
The FCRA lets you sue a credit reporting agency (or another person or entity that violates the law) for negligent or willful noncompliance with the law within two years after you discover the harmful behavior or within five years after the violation, whichever is sooner.
Learn how credit freezes can help protect your credit data from fraudulent use in What's a Credit Freeze and When Should I Use One?
Read Most Common Violations of the FCRA to find out how creditors and consumer reporting agencies often violate the FCRA.
Find out why you should avoid credit repair companies in Don't Use a Credit Repair Clinic.
For more information about the FCRA, contact your state or local consumer protection agency, state Attorney General, or a local attorney.
Also, many states have laws similar to the FCRA. Some of these laws provide even more protection for consumers than federal law. Talk to a consumer protection lawyer or debt settlement attorney to learn more about protections under state law and potential remedies for violations.
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