Forbearance and Your Credit Reports

Highlights:

• Forbearance allows the borrower to delay or suspend loan payments for an amount of time.
• Forbearance and deferred payments are available for several types of loans.
• Forbearance will show on your credit reports and can hurt your credit scores if you are not careful.

Throughout our lives we are likely to have financial challenges. They can leave us struggling to keep up with bills, like rent, utilities, and insurance. In these times, talk to your creditors and lenders about debt repayment options. One of your choices may be forbearance. This allows the borrower to delay or suspend loan payments for an agreed upon amount of time. Continue reading to see if you could qualify for forbearance.

How do I talk to my lenders and creditors about forbearance?

You can't miss a payment without communicating with your lender first. You need to work out an agreement with your lender before stopping payments. Otherwise, your credit standing could fall. Eligibility requirements vary depending on the type of debt you want forbearance for. Each lender and creditor has its own programs and rules. Contact your lender or creditor for more information on setting up forbearance. They can also discuss other options available, including choices outside of forbearance.

Forbearance may allow you to deal with your short-term financial challenges. It can help you get back on your feet without jeopardizing your credit scores. But it doesn't come without its drawbacks. If you enter into a forbearance agreement, you're not getting “free money”. Depending on the agreement, you may need to repay the accrued interest. Late fees may still apply. Ask your lender if they will still charge you late fees. You should also ask how and when they will apply those fees. Be sure to ask how they report forbearance to the three nationwide credit reporting agencies (NCRAs) — Equifax^®, Experian^®, and TransUnion^®.

What is the forbearance process for mortgages?

Mortgage forbearance is a program that many mortgage providers offer. It allows you to stay in your home while you regain your financial stability. This helps you to avoid foreclosure. It is usually a short term program and may include a temporary stop or decrease of your payments. Each lender has different programs and qualification requirements. It is important to pay close attention to the terms. While it may provide a decrease or pause in payments, interest and late fees may still apply. If you are struggling and will be unable to make your full mortgage payments on time, contact your lender.

What is the forbearance process for auto, personal and student loans?

Many auto lenders offer forbearance to customers facing temporary financial hardship. This includes options for existing customers and those looking to buy a new vehicle. Contact your lender to learn more about their specific deals. If you are able to continue making your payments, you should pay what you can when you can. You'll help to chip away at your debt. This can help set yourself up better once you regain your financial stability.

What is the forbearance process for credit cards?

Every credit card company has different options and requirements for forbearance. Some may allow you to defer payments while interest continues to build over a set period of time. Others may offer a temporary reduction in your interest rate or principal payments. Go to your credit card issuer's website to learn what options are available and what you have to do to get help. Even if your credit card company isn't offering a plan that works for you today, it might add new options. Check back often for updates.

What is the forbearance process for utilities and property taxes?

Many cities across America offer relief options for utility bills and property taxes. You must be able to prove that you are experiencing unforeseen economic hardships. This may include forbearance or deferred payments. Call your local municipality or utility provider for details.

Keep track of your credit after forbearance with Equifax

Make sure your credit reports reflect any forbearance or deferred payment agreements. With Equifax Complete™ Premier, you can review your Equifax credit report at any time. Your annual Equifax 3-bureau credit report will give you an in-depth way to assess your credit. You can also get free credit reports from the three NCRAs at AnnualCreditReport.com. If you see something that appears incorrect, you can dispute the information.