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Credit Reporting During COVID-19

April 9, 2020

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Credit Reporting During COVID-19

As the U.S. tackles the COVID-19 pandemic, consumers have begun to experience financial hardship and lenders are having to navigate quickly to support your customers. Given the significance of credit bureau reporting relative to consumers’ financial health, legislators are focused on ensuring consumers are not adversely impacted during the declared emergency.

Here, Bridgeforce provides highlights of the reporting guidance from CDIA as well as operational tips and best practices to act on for credit reporting during a disaster situation.

The CARES Act and FCRA Apply Consumer Protections

On March 27th, 2020 the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law, and an amendment was added to the Fair Credit Reporting Act (FCRA) imposing credit bureau reporting protections.

To sum it up, the Act puts a “pause” in place. Lenders are encouraged to continue furnishing information to consumer reporting agencies despite the current crisis. Under Section 4021 of the CARES Act, lenders making accommodations to consumer accounts that have not been charged-off should:

  • Continue to report the account as current, or
  • Maintain the delinquent status for accounts that were delinquent before the accommodation, for as long as the accommodation is in effect unless the consumer makes payments which bring the account current.

Credit Reporting During COVID-19 Accommodations

How to Report Customer Accounts to Consumer Reporting Agencies

The CARES Act guidance protects impacted consumers by ensuring favorable reporting during the accommodation period.

Credit Reporting During COVID-19 AW code

Reporting Guidance

Based on the CDIA’s CARES Act Reporting Guidelines, here’s how furnishers should report to Consumer Reporting Agencies (CRAs) when a customer enters into and adheres to the terms of an accommodation.

1. Current Accounts

  • Account Status remains “11” (Current).
  • Payment History Profile reflects a “0” (Current) for the months correspondent with the accommodation period, or optionally increment the Payment History Profile with value “D” during the accommodation period.
  • Amount Past Due equals zero.
  • Scheduled Monthly Payment Amount reflects the terms of the accommodation, which may be zero.
  • Date of First Delinquency (DOFD) is blank filled.

2. Delinquent Accounts (non-charge off)

  • Account Status is frozen at the current level of delinquency.
  • Payment History Profile is frozen at the current level of delinquency for the months correspondent with the accommodation period, or optionally increment the Payment History Profile with the value ‘D’ during the accommodation period.
  • Amount Past Due is equal to the amount reported prior to the start of the accommodation period.
  • Scheduled Monthly Payment Amount reflects the terms of the accommodation, which may be zero.
  • If payments are made which bring the account current, the account is reflected as such during that reporting period.

Backdate the Payment History Profile for accommodations that apply retroactively.

For all other Metro 2® fields not listed above, follow the standard field guidelines described in the CDIA’s Credit Reporting Resource Guide.

3. Additional Reporting Scenarios

Furnishers may also elect to use the reporting guidance established in the CRRG FAQ 44 (Deferred), FAQ 45 (Forbearance) or FAQ 58 (Natural Disaster).  If deciding to follow any of this guidance, furnishers should do so in accordance with the CARES Act Amendment to the FCRA as described above.

Regression Testing Protects from Inadvertent Changes

Lastly, furnishers should conduct regression testing whenever a change is made to the reporting program for new CARES Act related accommodations to ensure changes in reporting logic do not impact residual fields.

Program Relief & Communication to Guide Consumers

During this period of uncertainty, financial institutions must be prepared to communicate effectively when advising consumers of the actions they need to take.

Customers expect their bank to proactively counsel them through a preferred method, accessible across all channels (e.g., online, mobile, or phone), and in a clear and user-friendly format.  Details should be specific with available solutions and provide insight on how to quickly engage to qualify for and finalize the relief program.

Communication Best Practices for Program Relief

1. Be specific regarding programs, offering individual payment accommodations related to the loan product.

  • Examples include deferrals, forbearance and hardship programs.
  • Document key details of how accommodations will be handled and include advice on loan maturity and extension of the original terms.

2. Establish an intake process for application tracking to resolution.

  • Inform customers on the process, including the timeline and final approval notification.

BENEFIT: Process clarity and communication will expedite customer program acceptance and reduce internal processing time by eliminating duplicate work effort.

Communication Best Practices for Consumer Credit Reporting

  • Be proactive and provide clear communication to customers explaining the actions taken to assist them.
  • Advise customers on how to connect, including the most effective methods (e.g., online, mobile, or phone) and confirm that all channels have consistent messaging.
  • Drive customers to online solutions with clear guidance of programs that are available, specifically for the customer’s account(s).
  • Be transparent and advise clearly on how credit bureau reporting will be impacted.

BENEFIT: Reduction in inquiries and call volumes to contact centers due to driving customers for online solutions.  Also, future dispute inquiries may be offset due to improved transparency.

Bridgeforce Helps You Tackle Credit Reporting During the COVID-19 Crisis

As you meet the requirements for credit reporting under the CARES Act, you can leverage our 20 years of experience managing credit reporting during various disasters and our industry-leading credit reporting accuracy solution, Data Quality Scanner. Bridgeforce can help design new consumer reporting approaches and strategies, assess existing documentation for change impacts, help with regression testing via new CARES Act and amended FCRA rules that we are building into DQS as well as any of your specific needs relating to the coronavirus pandemic and credit reporting and disputes handling. Contact us today.

 

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