How do Deferred Payments from the Covid-19 Pandemic Affect Your Credit Report

How do Deferred Payments from the Covid-19 Pandemic Affect Your Credit Report

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Since March of last year, Canadians have withstood the effects of the Covid-19 pandemic. Many people jumped at the opportunity to defer their mortgage payments and credit card payments to help ease the pain of losing work and businesses being shut down. 

There were over 900,000 mortgage payments that were deferred and over 1.2 million credit card payments as well. A variety of debts qualified among varying lenders, like student loan payments, car loans, lines of credit, personal loans, business loans, and utilities. 

As the pandemic continues to charge forward, and with a hopeful end in sight with the vaccine plan moving along, the deferral programs are coming to an end, and regular payment schedules are resuming. 

The deferred payments were not intended to impact your credit score negatively, but it’s essential to keep a close eye on your reports in case your lender mistook a deferred payment for a late or missed payment. Equifax Canada worked closely with lenders to ensure deferred payments were coded correctly, but there is always the possibility of mistakes. 

Julie Kuzmic, the Director of Consumer Advocacy with Equifax Canada, said, “They were reporting them as paid as agreed because that’s technically what they were. The lender had made an agreement with the consumer that it was okay not to make a payment for some period of time.” 

The Equifax website states: “Equifax and TransUnion have worked closely with lenders, creditors, industry regulators and the Canadian government to develop updated credit reporting specifications in response to the Coronavirus/Covid-19 pandemic. In addition to the credit account rating described above, these specifications outline a number of data elements that must be reported in a certain way to neutralize any negative impact of deferred payments on the borrower’s credit standing. In other words, deferred payments should not harm the borrowers’ credit scores. We are working closely with lenders to help them meet the reporting specifications. “

While no widespread problems have occurred, there’s always the possibility that they marked a deferred payment as late. However, if you’re one of the few that this happened to, it could impact your credit score and have a lasting effect. 

Credit report mistakes are not isolated to the pandemic, and they can occur at any time. Keeping a close eye on your report each month can help prevent issues. If you notice a mistake, you should contact both Equifax and Transunion. Repairing mistakes on your credit can take time, and you should have the necessary documentation ready for proof. 

When you check your own credit information through Equifax, there is no impact on your score. 

Sources: 

https://toronto.ctvnews.ca/does-deferring-payments-during-the-pandemic-affect-your-credit-score-1.5386228

https://www.consumer.equifax.ca/personal/education/credit-score/how-deferred-payments-affect-credit-scores/

 

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