Protecting credit rating in the eye of the pandemic storm

The Coronavirus Aid, Relief and Economic Security (CARES) Act includes a provision to protect one’s credit report even if they can’t pay their debts. This includes credit cards, mortgage, car loans and other agreements.The provision and protection is triggered when the creditor of the debt approves an “accommodation” for the consumer. The accommodation can be a payment agreement or deferral, partial payment, forbearance, loan modification or any other relief granted to a consumer during COVID-19. Accommodations can also include a state’s legislature or emergency order. The duration of the protection is 120 days after the termination of the emergency order by President Trump.

Once the accommodation is obtained, the CARES Act provides the following:

  • If the consumer was current on the debt prior to approval of the accommodation, then the Credit Reporting Agencies (CRA) must report the account as current;
  • if the consumer was delinquent prior to receiving the accommodation, then the CRA must only report the earlier delinquency status;
  • if the consumer is able to get current on the debt then the CRA must report the consumer as current.