If your lender has allowed you to defer payment on your credit card, car loan, or mortgage payments during the pandemic, you’ll want to check your credit reports for errors more frequently, perhaps once a month. Lenders are increasingly mislabelling accounts as late or delinquent, and it can cause a lot of damage to your credit score if you aren’t paying attention.
Why is this happening?
Errors in credit reports have been a growing problem in recent years, as borrowers frequently complain of paid-off loans appearing as unpaid, or of individual loans being reported multiple times.
With the pandemic, however, millions of people qualified for payment deferment on their loans, whether that was through the CARES Act (for federally backed mortgages and student loans) or via private lenders that adopted similar measures voluntarily. This has only made the issue of errors worse, with complaints about mistakes at an all-time high—up 86% over the last year.
And mistakes can be costly. Since a borrower isn’t expecting an error to affect their credit score, they might not notice until they next apply for financing or a loan. The timing can be a nasty surprise, as it forces the borrower to settle for less favorable interest rates when they’re needed the most. As credit expert Herb Weisbaum put it to ABC News:
“It is a nightmare, and in fact, if you have a good credit history and you miss one late payment, a single late payment that can make your score plunged by as much as 100 points, and it will take you a long time for that score to go back up.”
How to check and fix your credit reports
You can request credit reports from all three credit reporting agencies, Equifax, Experian, and TransUnion, through annualcreditreport.com. You can get these reports free every single week until April of 2022.
You’ll want to look line-by-line for errors. If you spot one, you’ll need to write a letter about the discrepancy to the relevant bureau, preferably via certified mail, with return receipt requested (for more advice on fixing errors, check out this Lifehacker post). Unfortunately, it will typically take credit bureaus 30 to 45 days to respond, if not longer, due to the pandemic.