If you are one of the 800,000 federal workers affected by the shutdown, you may be weighing your financial options, like tapping into a savings account or borrowing money from a friend or family member to pay bills. With no safety net, you run the risk of being reported for late payments, which can negatively impact your credit scores and ability to borrow money in the future.
Is there a way around negative credit reporting and credit score damage? Being proactive is key.
When Can a Bill Be Reported as ‘Late’
For all credit card statements received, regardless of when, the due date will be at least 21 days AFTER the date of the statement date. This is a CARD Act requirement. For all other loans, the due date is set by the lender in accordance with its policies and state and/or federal regulations.
The lender CANNOT immediately report you as being delinquent to Experian, Transunion and Equifax unless you are already at least 30 days delinquent.
If your credit liabilities are not paid by the DUE date, the lender CANNOT immediately report you as being delinquent to Experian, Transunion and Equifax (AKA credit reporting agencies or simply CRAs) unless you are already at least 30 days delinquent.
The CRAs have a long-standing rule that only permits delinquency reporting by lenders AFTER the payment is a full 30 days past the due date. There is NO systemic way to accurately credit report someone as being “1 to 29 days late.” It doesn’t exist. Example: If your due date is April 15 and you do not make your payment, the earliest your lender can report you as being “late” to the credit bureaus is May 15.
Doing Your Part During the Furlough
If Possible, Make Minimum Payments
This will protect your credit reports and credit scores from any negative credit impact caused by the furlough. IF you cannot or chose to not make your payments, you may very well end up with late payments on your credit reports for the subsequent seven years, as allowed under federal law.
Call Your Lenders
Be sure to inform lenders that you are being affected by the government shutdown. At that point the lender can either chose to remove the late payment/s from your credit reports (this is called a “goodwill deletion”), or it can chose to continue to credit report the late payment/s, which would be completely legal.
Reach Out to Experian, Transunion and Equifax
You can make the case to the CRAs that the government shutdown is the reason you could not make your payments. At that point the CRAs will likely contact your lenders for guidance on how the account should be reported. This is and has long been a standard practice when a consumer challenges information on his or her credit reports. The lender can either chose to have the CRAs remove the late payment/s (“goodwill deletion”), or it can chose to have the CRAs maintain the late payment/s.
The Benefit of an Executive Order
President Trump could possibly issue an executive order to protect furloughed government employees from late payment credit reporting. This executive order could direct lenders and servicers to NOT credit report any late payments to the credit reporting agencies for their borrowers who are government employees.