Credit Score Protections During The Pandemic

A new federal protection that applies to how insurance companies use a consumer’s credit history.

The federal CARES Act amends the Fair Credit Reporting Act and protects consumers during the coronavirus pandemic from any negative credit reporting as long as their accounts were in good standing before the pandemic started.

This protection also applies to how insurers use credit history to calculate how much consumers pay for auto and homeowners insurance.

The CARES Act:

• Prohibits a creditor from reporting an individual’s delinquent payments to a credit reporting agency if the individual was up-to-date on their payments before the pandemic started.
• If asked, a creditor may also allow an individual to defer one or more payments, make a partial payment, or modify a loan or contract.

The 120-day duration of the moratorium took effect March 27. It is likely to be extended until the federal administration declares an end to the current national emergency.

“The initial focus of the act was on stimulus payments, but it’s also important to alert people to new protections regarding credit scoring,” said WA Insurance Commissioner Mike Kreidler. “Millions of people have lost their jobs and are likely struggling to pay their bills during this pandemic. It’s critical that we do what we can to make sure they’re not further harmed during these financially devastating times.”