CFPB Issues Guidance for Credit Reporting During COVID-19 Pandemic

The Consumer Financial Protection Bureau (CFPB) recently released a policy statement detailing credit reporting companies and furnishers’ responsibilities during the COVID-19 pandemic. The statement emphasizes that when lenders report accurate information that takes into account current payment flexibility plans, consumers benefit via more accurate credit scores.

“During this time of uncertainty, we are providing clarity to ensure the consumer reporting industry can continue to function,” said Bureau Director Kathy Kraninger in a press release accompanying the policy statement. “Consumers rely on their credit report to purchase a new car, their new home, or to finance their college education. An effective consumer reporting system is critical in promoting fair and efficient access to credit in the consumer financial services market.”

“Many furnishers are or will be offering consumers affected by COVID-19 various forms of payment flexibility, including allowing consumers to defer or skip payments, as required by the CARES Act or voluntarily,” the statement reads. “Such payment accommodations will avoid the reporting of delinquencies resulting from the effects of COVID-19. The Bureau supports furnishers’ voluntary efforts to provide payment relief, and it does not intend to cite in examinations or take enforcement actions against those who furnish information to consumer reporting agencies that accurately reflects the payment relief measures they are employing.”

The Bureau’s statement also provides flexibility for the time lenders take to investigate disputes. The CFPB noted that due to operational disruptions, as long as firms make a good faith effort to investigate any disputes, it will not bring enforcement action or cite an examination against them. Under the Fair Credit Reporting Act (FCRA), reporting agencies and furnishers must generally investigate disputes within 30 days of receipt, which may be extended to 45 days if a consumer provides additional relevant information during that 30 day period.

Lastly, the statement informs lenders that they must comply with the recently-passed CARES Act, requiring lenders to report that consumers are up-to-date on their loans if they sought relief during the pandemic. Reporting accurate payment relief information generates benefits for not only consumers, but the economy as a whole.