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How To Fix Covid-19 Related Credit Report Errors – Forbes Advisor

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Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations.

The coronavirus pandemic has been a mental and physical drain for Americans. And during this global crisis, many consumers faced the added stress of dealing with financial services companies that didn’t always follow the rules or were slow to move when the federal government suspended certain loan payments during the pandemic.

The CFPB’s annual consumer response report reveals that credit report inaccuracies more than doubled during the pandemic, signaling dissonance between the laws that were introduced to help consumers during the pandemic, and how servicers reported suspended payments to the credit bureaus.

And it sometimes left consumers to deal with the consequences on their own.

Pandemic Forbearance Periods Caused Credit Report Headaches

The CARES Act, passed in March 2020, gave legal protection to consumers by providing loan forbearance periods on federal student loans and federally-backed mortgages.

Under the act, consumers were given the option of not making payments on their loans without suffering any credit-related consequences, like late payments and delinquencies (both of which can decrease your credit scores by dozens of points). These lapsed payments were to be treated simply as payment suspensions—or, in some cases, still count as payments, such as under the PSLF program with federal student loans.

Although the federal government created these new guidelines to protect consumers from negative credit implications during the pandemic, some servicers were slow to implement new processes for how to properly report the suspended payments. Wells Fargo, for one, went as far as providing blanket forbearance; some customers saw their loans marked as negatively impacted by Covid-19 and their credit scores drop even though they didn’t request the forbearance and continued making payments.

Credit reports are the official record of your credit history and include a detailed look at loan balances, credit utilization and payment history. These reports are used by credit scoring companies and lenders to determine your credit scores, which is a number that may be used by lenders (along with your reports and other factors, like your debt-to-income ratio) to determine whether they should lend money to you, and at what cost.

Your credit may be important for other big life decisions, too. Landlords may access a version of your credit reports when deciding whether to rent an apartment to you. Some employers may check your credit before offering you a job.

Before the pandemic, the CFPB handled approximately 350,000 consumer complaints annually. In 2020, the bureau received more than 540,000 consumer complaints.

The CFPB report says that consumer credit reporting complaints  increased a staggering 129% from the prior two years’ monthly average, for a 2020 average of more than 23,400 per month. Complaints specifically about credit report inaccuracies increased 147% from the prior two years’ monthly average.

The CFPB report also found that student loan borrowers and eligible mortgage borrowers both saw their credit scores drop during the pandemic, either for being automatically enrolled in forbearance without asking or for their continuing payments not being accurately counted during the forbearance period.

For consumers who opted into these forbearance programs but ended up with errors on their credit reports, inaccuracies like these could have a huge impact on their lives. In some cases, potential lenders view these marks negatively and may decline to lend to these consumers.

Some servicers, such as student loan servicers, corrected the inaccurate reporting on their own—but consumers should still review their credit reports to be sure.

Filing a dispute with a credit bureau can be a time-consuming task that doesn’t always guarantee having the error removed from a report. But when successful, doing so results in having the error removed, which can increase your credit scores.

The credit reporting industry refutes the CFPB report’s findings, stating they’re the product of third-party spam in the complaint portal.

“We do not believe the complaints in the CFPB database are an accurate reflection of consumers’ experiences with credit reporting agencies,” says Francis Creighton, president and CEO of the Consumer Data Industry Association (CDIA), which represents the major credit reporting agencies, in a statement emailed to Forbes Advisor. “Over the last year, America’s credit reporting agencies have seen an increase in complaints submitted by organizations like credit repair companies. Many of these companies misrepresent their ability to help consumers through unfair, deceptive and abusive practices. They essentially spam the complaint portal, making it difficult to help consumers with legitimate problems.”

The CFPB report, however, addresses third-party abuse of the complaint portal, stating “The Bureau takes steps to identify third parties who may be misusing the Bureau’s complaint process and, when appropriate, discontinues processing future complaint submissions from those sources.”

The CDIA continues to dispute the CFPB’s report, though, saying the credit reporting bureaus have processes in place to determine whether something is a legitimate dispute, including systems to examine IP addresses, the ability to determine spoofed email addresses, measures of the volume of complaints coming from the same fax number or the use of identical form language.

How to Check Your Credit Reports

The CFPB report’s findings signal how important it is to be aware of what’s on your credit reports. Though millions took advantage of automatic payment suspensions, their credit reports could portray a much different reality—and cause serious harm to their financial wellbeing.

Pulling your credit report used to be a once per-year, per-credit bureau privilege, as mandated by the Fair Credit Reporting Act (FCRA).  During the pandemic, however, consumers can now access their credit reports from the three main consumer credit bureaus—Equifax, Experian and TransUnion—once a week. The free weekly pulls are available now through April 2022.

Read more: Free Credit Reports Extended Until April 2022—Here’s How To Get Yours

Though it might sound like a tedious and stressful process, obtaining your credit reports can be simple—if you know the correct information.

After heading to AnnualCreditReport.com, click “Request your credit reports.” You’ll then be directed to a new screen to fill out a form for one, two or all three of your credit reports. Each bureau requires its own request form/process.

You’ll need to provide information including your Social Security number, current address (and a previous address if you have not lived at your current address for two years or more), and then choose which report you wish to pull, if not all three. The credit bureaus will then ask questions about loans or credit accounts you may have opened to verify your identity.

You cannot access the report you viewed after closing your browser, so make sure you save it to your desktop.

Be sure to read each page carefully. An Equifax report, for example, breaks down credit history by revolving accounts (such as credit cards), then mortgage, installment and other types of accounts. You’ll want to review each account to make sure your payments have been recorded correctly and that accounts have not been closed without your consent.

It’s also important to take a close look at hard and soft inquiries: Soft inquiries occur when lenders review your credit report for preapproval, but they don’t affect your credit score (it’s also what a service like Credit Karma does when you check your scores and reports through its platform). Hard credit inquiries are the official check when you apply for credit, and usually drops your credit score a few points.

If you see something unfamiliar, it could be a sign that someone has obtained your personal information and is conducting fraudulent activity by opening accounts under your name.

No, Your Credit Scores Won’t Be on These Reports

The most important thing to keep in mind, though, is that you want your credit report to be completely accurate so your credit scores are accurate, too. A credit score is a rating of your creditworthiness, which is how lenders determine what type of loan terms you may qualify for.

While reviewing your credit reports, you might be flipping the pages wondering, Where is my credit score?

The answer is a bit counterintuitive: Your credit scores aren’t recorded on your credit report.

Equifax, Experian and TransUnion are private companies that collect and maintain information about consumer credit. This information is then used by credit score modeling companies, such as VantageScore and FICO, to determine your credit scores. You can have multiple credit scores, and each company has their own way of calculating scores, so not all of your credit scores will be the same (although they typically use the same underlying information on your reports to calculate your scores).

Lenders may also have their own credit scoring models.

How to Fix Errors On Your Credit Reports

Errors relating to pandemic forbearance programs include incorrect recordings of missed payments or deferments, which can be found in each account section of a credit report. Some forbearance programs started as early as March 2020 and are still applicable, including federal student loan forbearance.

If you find an error on your credit report, get ready to roll up your sleeves: Errors can be tough to remove. The FCRA gives consumers the right to dispute incorrect or incomplete information on their credit reports, and requires bureaus to correct it.

The FCRA makes credit reporting companies and information providers responsible for correcting inaccurate or incomplete information on a credit report. The Federal Trade Commission lists the steps consumers can take to correct credit report errors:

Write a dispute letter to the credit reporting company. Include the information you think is inaccurate on your credit report, such as a recording of a missed payment during the forbearance period. This information will be found on your credit report under the payments section for the specific loan or credit account. The FTC provides a sample dispute letter template here and advises consumers to include copies of any documents that support your dispute, while also explaining why you dispute the information and explicitly request that it be corrected.

Be sure to send this letter by certified mail with a return receipt requested so you know exactly when the credit reporting company received it. All three of the major credit bureaus also have online options to file credit report disputes, and third party credit monitoring apps including Credit Karma sometimes allow you to file disputes directly through their platform.

The credit bureau must investigate the items in question, usually within 30 days, unless it considers your dispute to be “frivolous”—meaning it’s not a serious or real dispute. The credit bureau is also required to forward your information about the inaccuracy to the organization that provided it, such as a credit card company or loan servicer. If that organization finds the disputed information is in fact incorrect, it must notify all three bureaus so they can fix the information in your credit report.

Obtain results from the credit bureaus investigation. Credit bureaus are required to give you the results of their investigation in writing, as well as a free copy of your credit report(s) if your dispute results in a change.

Request notices of correction. If your dispute is successful and a change to your credit report is made, you can request the credit reporting company to send notices of any corrections to anyone who received your credit report in the past six months. You can also request a corrected copy be sent to anyone who received a copy during the past two years for employment purposes.

Request a statement of the dispute be included in your file and future report. If your dispute is unsuccessful, meaning the credit reporting company doesn’t resolve the error, then you should request a statement of dispute to be included in your file and future reports. This statement will indicate that you do not agree with the recorded information and you made an attempt to have it removed from your report.

Write a dispute letter to the information provider. In addition to the steps listed above, be sure to inform the information provider (such as a credit card company or loan servicer) that you’re disputing incorrect information on your credit report. Use the same sample letter as the one used to inform the credit reporting companies. The process of investigation will be the same, and the information provider will have to inform the credit reporting company of your dispute if it’s found to be correct, and it will also be required to tell the credit reporting company to update or delete the inaccurate item.

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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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