Study: Half of homeowners in forbearance had incorrect strikes on their credit

54 percent of homeowners in forbearance reported to credit bureaus

A recent study found that more than half of homeowners in forbearance had incorrect strikes against their credit.

HOUSTON - More than four million homeowners took forbearance on their mortgage payments when the pandemic shutdown threw so many people out of work. But a new survey finds 54% of respondents say it was negatively reported on their credit when it shouldn't have been.

The CARES Act passed by Congress not only allows homeowners to pause mortgage payments, it required lenders not to report them as late on your credit report. But a LendEDU study found 54% of 1000 homeowners surveyed said these paused or reduced payments hurt their credit anyway.

"We're seeing a lot of consumers had their credit score take a hit for something like a missed payment or for an insufficient payment. But that's because they made that agreement with their mortgage lender," said Mike Brown, spokesperson for LendEDU.

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If that happens, the first step is to check your credit. Through next April, all three credit bureaus, Experian, Equifax, and TransUnion, will let you check your credit for free weekly, rather than just once a year. Go to www.AnnualCreditReport.com. You might even consider signing up for credit monitoring.

"There are a lot of nearly instant credit monitoring services, like Credit Karma or Credit Wise, where you can see your credit score in two to three minutes," suggested Brown.

Then refute the error with both your lender and the credit bureau. The credit bureaus provide forms on their websites to refute mistakes.

"Best thing to do is reach out to your mortgage lender in addition to the credit bureau where you got your credit report from, and see how you can resolve the issue," said Brown.

When interest rates dropped this year, many people jumped into the housing market and bought houses. But the LendEDU study found 55% of them now have buyer's remorse.

"Now they're struggling because we are in a recession and finances are tight for a lot of people. So I think there are a lot of struggles and a lot of regret," said Brown.

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But even new homeowners can ask their lenders for forbearance. Just follow-up with your credit report to make sure it's not negatively reported.

And if you're thinking of refinancing a mortgage, LendEDU found 90% were successful in getting a lower interest rate.