Stimulus Bill Forbids Credit Agencies From Issuing Negative Marks For Certain Deferred Payments

Many banks and other companies are helping those who can’t pay due to pandemic to delay or defer payments. The new stimulus bill, which will soon be signed into law, provides some protection for consumers from getting negatives on their credit report due to such a late payment. (sec. 4021)

The bill requires banks and companies to report all bills as ‘current’ in the event that the consumer reached an agreement with the company on a deferred or partial payment. For example, if a credit card company agrees to allow you to pay nothing for a full statement, they can not legally report it as a negative to the credit reporting agencies.

The law remains for the longer of the following two: 1) 120 days from when it gets signed into law, and 2) 120 days after the coronavirus pandemic is officially over. The measure falls short of a bill which some lawmakers introduced last week which would have put a 4 months hold on any negative credit reporting marks.

Payment delays on federal student loans are also sanctioned by the massive stimulus bill, and thus should not result in any sort of ding on your credit either.

This is pretty common sense stuff which probably would have happened anyway. People can feel more comfortable requesting the kind of assistance they need, knowing that their credit report is protected if you keep up your end of the bargain.

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    Chuck
  • On March 27, 2020, 16:28

View Comments (43)

  • Citibank is a big fat NO, they wont do anything for us, kinda funny since they were bailed out by us.

    BOA will issue 2 month defer on personal cards, 3 months on business.
    BOA also waives any clover merchant fees for 60 dats.

    US bank very stingy only 30 days.

    Amex, does everything for you, defers, waives interest etc etc.

    TD bank is 90 days defer.

    On the phone with Chase now and will be calling PNC later.

    Im going to remember what citibank is doing when im back on my feet.
    Will be cancelling all there cards.

    Anyone with student loans is also eligible for deferrments.

    In NJ all rents and mortgage payments have been put off for 90 days.

  • So the bureau can't issue a negative mark due to say a deferred payment, but I'm wondering if the banks could sus this out another way in a scoring model. I understand our credit files now contain month by month payment information. So couldn't a bank create a model where if the balance > 0 and no payment for these particular months and there was a payment due then it's likely some sort of deferment?

    • I was thinking the same thing. Banks can infer from current and past information if the borrower has likely been making payments. Also, they can see if your monthly balance has been significantly increasing which is generally viewed as a bad sign. And the cards still accrue interest. This whole thing won't help borrowers as much as they think.

  • All I can think of from every post I read is how I can make some money out of this. I am kind of ashamed but..... whatever.

  • I can see how this is a "nice" thing to do but considering the whole point of a credit score is to determine a person's ability to repay, it seriously handicaps financial institutions from making a reasoned decision. If a person is one paycheck away from default, that should be taken into account by the agencies. National emergencies certainly don't happen often but people do lose their jobs daily for other, unrelated reasons on a much smaller scale. This is obviously a tragedy, but it's exposed a lot of Americans up to their necks in debt that might not have been uncovered otherwise. It sounds heartless but it's a matter of creditworthiness. Either you're responsible enough to build an emergency fund and weather difficult times, or you're not. A good credit score should not be a reward for being a nice person.

    • The flip side of that is that it's precisely because it's a national emergency that we need to go beyond "normal circumstances". A credit score should reflect how you perform with debt in normal circumstances, not whether you can weather once-in-a-generation disasters. Additionally, there's the issue of, on a macro level, whether it's really a good idea to paint lower-class people or victims of circumstance into a corner, because that'd be what you'd do if you docked people for being affected by a disaster.

      Lastly, fairness. If we can have a conversation about lending large companies money to bail them out in turbulent times, then we sure shouldn't be taking the same away from individuals suffering those same turbulent times.

      • The virus is irrelevant. Anyone who's one paycheck away from financial disaster would have eventually suffered a calamity that'd wreck them anyway. It's not like people with FICO 600 never existed before February 2020. They've always been around, and now they're being exposed all at once instead of gradually.

        • It’s not necessarily one paycheck though. Many were laid off in February and won’t work until June, or July. Many were self employed who can’t work due to COVID-19 and won’t work for months. So it’s not just one paycheck it’s months of paychecks.

          Additionally what about small retail store owners who have lost tens of thousands in revenue unexpectedly?

          The people living paycheck to paycheck likely don’t have 700+ FICO scores and thus aren’t a big issue. But yes, there are some who have fallen on hard times due to this pandemic who should not be rated negatively for it.

          Should banks/lenders tighten up due to this?

          Maybe.

          It depends, though someone’s FICO score may not decrease for postponing a payment a prudent bank/lender would look deeper to see the last payment date, amount and all of that information for all credit accounts. Not to mention it typically takes 30+ days or more for activity to even show up. If I make a purchase today for $5,000 and my statement date is on the 26th of every month that charge isn’t on my next statement until April 26th. From there it takes a week or two to get reported and has a payment due date of May 23rd (typically 3 days before the statement date). If I make a payment on or before May 23rd it’s reported on my statement and to the credit bureaus who can see and report that payment and my current balance to prospective lenders.

          It’s not all cut and dry.

  • Any idea how to request deferred payments? (From Wells Fargo, Chase, Citi, USBank all the big ones).

  • There are also some significant benefits for federal mortgage borrowers and renters. Sec. 4022 allows borrowers with federally backed mortgages to request a 6-mont forbearance and there is a 2 month prohibition on foreclosures. Sec. 4023 allows for 30 day forbearance for multifamily homes with federally backed mortgages. During the forbearance, owners cant evict renters. Sec. 4024 also has a 6 month prohibition on eviction filings for owners of properties backed by federal mortgages and certain government assistance programs.

  • what bout credit card fees? will they defer those for few months if i ask them nicely i wonder? would be nice to not have to pay $500 for few months

    • Each bank/company will negotiate a different structure. Apple card has already made it easy to get one month with no interest at all, as I recall.

    • Fees are negotiable... interest, generally, is not. No mention of waiving that. You can ask if they will adjust the interest rate, but that would be case by case and depends on the type of debt.

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