Delaying Loan Payments? Watch Your Credit Score.
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What is the main topic discussed in this episode?
Here's your Money Briefing for Tuesday, June 9th. I'm J.R. Whelan for The Wall Street Journal.
What CARES Act relief allows people to suspend mortgage and loan payments?
People struggling to pay off their mortgage got a lifeline earlier this year. The Federal CARES Act lets people suspend payments on mortgages and other types of loans without hurting their credit score.
Why are lenders making more reporting errors as millions delay payments?
But with millions of Americans signing up for the program at once, lenders could be making more mistakes.
Consumer advocates are concerned that they, it's hard to know how lenders are going to report some of these payment suspensions. And there can be a different impact on credit scores depending on how they report this to the credit, the companies that compile credit reports.
So what should you do if you spot an error on your credit report? And who's eligible for credit protection under the CARES Act in the first place? Our reporter Ann Tergesen will have answers in a moment.
The CARES Act allows many people to skip payments on certain loans for months at a time without damaging their credit.
How can consumers get free weekly credit reports during the COVID crisis?
But consumers need to keep a watchful eye for mistakes made by lenders. And the rules protecting consumers are tricky. Our reporter Ann Tergesen is with us to explain. So, Ann, what should consumers do if they spot an error on their credit report?
Consumers need to know that basically over the next year, they can get free credit reports every single week from the three companies that compile credit reports that then the credit reports go to the companies like FICO that publish credit scores. So it's important.
What is the correct process for disputing inaccurate credit-report entries?
to monitor your credit reports and it's easier than ever because all you have to do is go to a website called annualcreditreport.com and you can sign up there for a free credit report every single week for the next year. If you notice a mistake, there's a certain procedure that you should follow. And basically, you should be sending written disputes to each of the credit reporting companies that's publishing inaccurate information.
Which loan types receive credit-protection under the CARES Act and how do protections differ?
You can also copy the lender that's involved. So if you notice something that's kind of amiss with your mortgage, you can send a written dispute to whichever of the credit reporting agencies is reporting the inaccurate information, but then also copy your mortgage provider.
Now, the ability to get a free look at your credit report every week, is that something new?
Yeah, it is. It's something that the credit reporting companies are doing in response to the COVID crisis.
But the government wants to see people emerge from this crisis with little damage to their credit scores.
If you suspend payments, how should your loan status be reported to protect your credit score?
consumer advocates are concerned that it's hard to know how lenders are going to report some of these payment suspensions. And there can be a different impact on credit scores depending on how they report this to the companies that compile credit reports. So I think the big issue is that consumer advocates say that consumers have to be very careful to check their credit and just make sure that nothing is being reported inaccurately in a way that would cause credit to be damaged.
How does the type of loan dictate how consumers are protected from damage to their credit score?
Yeah, it's kind of complicated. But, you know, due to the COVID crisis, Congress, in the laws that it passed in the wake of the COVID crisis, they directed certain loan servicers that take charge of student loans, they directed certain of them to suspend payments. for a period of time of about six months so both payments and interest are suspended and same with federal federally held mortgages people can call and request payment suspensions with those and when people have modifications like accommodations like that on their loans they have to get credit protection and it kind of varies depending on the loan so i guess it's really important to fix any errors because they can have a lasting impact
Problems with credit can stay there for up to seven years or even longer if you end up declaring bankruptcy. So if you see mistakes, it is important to try to get on top of that and file a dispute with the credit agency.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:10
2
What CARES Act relief allows people to suspend mortgage and loan payments?
0:10–0:21
3
Why are lenders making more reporting errors as millions delay payments?
0:21–1:08
4
How can consumers get free weekly credit reports during the COVID crisis?
1:08–1:40
5
What is the correct process for disputing inaccurate credit-report entries?
1:40–2:09
6
Which loan types receive credit-protection under the CARES Act and how do protections differ?
2:09–2:43
7
If you suspend payments, how should your loan status be reported to protect your credit score?
2:43–5:32
Speakers
2 identifiedMore from WSJ Your Money Briefing
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