With the ever-increasing impact of the COVID-19 pandemic, the CFPB issued guidance that encourages lending institutions to provide timely and accurate information to credit bureaus about any forbearance they are offering to consumers during the crisis. In response to the coronavirus, many lenders are being flexible when it comes to consumers making payments. The bureau’s statement underscores that consumers benefit if lenders report accurate information about these arrangements to credit bureaus so that the credit reports of consumers are accurate.
“It’s encouraging that the CFPB has put out this policy statement to ease concerns of lenders who may fall behind in their Fair Credit Reporting Act because of general uncertainty in these confusing times or because of staff shortages during the pandemic,” said Michael Lee, LSCU director of regulatory advocacy. “And while few credit unions are directly supervised by the CFPB, they have reiterated that good faith efforts at compliance will be considered in light of the unusual circumstances surrounding the pandemic. This view seems to be shared by the other financial services regulators, including NCUA. So while there is still a great deal of uncertainty surrounding other issues (like legal risk), it is helpful that the regulators are encouraging credit unions to do what they do best, help their members in times of financial stress. It is in these times of fear and confusion that credit unions can shine and reinforce to the public which financial institutions truly have their best interests at heart and provide them with security in times of trouble.”
As lenders continue to offer struggling borrowers payment accommodations, Congress last week passed the CARES Act. The Act requires lenders to report to credit bureaus that consumers are current on their loans if consumers have sought relief from their lenders due to the pandemic. The bureau’s statement informs lenders they must comply with the CARES Act. The bureau’s statement also encourages lenders to continue to voluntarily provide payment relief to consumers and to report accurate information to credit bureaus relating to this relief. The continuation of reporting such accurate payment information produces substantial benefits for consumers, users of consumer reports, and the economy as a whole.
In addition, in response to staffing and resources constraints on lenders and credit bureaus due to the pandemic, the bureau’s statement also provides flexibility for lenders and credit bureaus in the time they take to investigate disputes. The bureau specifically states that it does not intend to cite in an examination or bring an enforcement action against firms who exceed the deadlines to investigate such disputes as long as they make good faith efforts during the pandemic to do so as quickly as possible.
Earlier this month, the bureau provided consumers with resources to protect their credit. The bureau’s blog outlines the steps consumers should take if they cannot make a payment, how to dispute inaccurate information on their credit report, and how to obtain a free copy of their credit report. The blog can be found here. Click here for the letter.