Can the CARES Act Deferment Help or Hurt My Credit?

Can the CARES Act Deferment Help or Hurt My Credit?

When you asked for a deferment during the COVID 19 pandemic, mortgage lenders and other creditors will report this status on your credit report. If you are not seeking new financing but used the CARES Act to assist you during the pandemic to help your credit rating, ultimately the program will protect your credit scores and stabilize your overall credit. During these uncertain times, it is recommended to monitor your credit, which allows you to see how the creditors are reporting your accounts.

Difference between Selecting a Forbearance versus Selecting a Deferment

Forbearance accrues interest, even when you are not making payments for a certain amount of time, the total lump sum is due at the end of forbearance period. A deferment may accrue interest, however, the amount owing after the deferment expires is paid when you sell, refinance or pay off your home, automobile or boat. It is always best to initiate a call with your lender and explain your hardship. Fannie Mae and Freddie Mac have step by step options assisting homeowners who have been affected by the pandemic, such as a new deferment program that starts July 1, 2020 besides a 12 month forbearance option and relief of any late payment fees. If you have a positive cash flow in your business or household, it is unnecessary to utilize deferment programs with your lenders. Deferment or forbearance programs reporting on your credit will subsequent to credit declinations because creditors require your accounts to be current.

COVID 19 Deferments Affects Your Loan Approvals

When applying for new credit, lenders will seize the application process once they review your credit and identify accounts that are in deferment by your lenders. SBA, mortgage lenders and auto lenders will require you to exit out of your deferment before you proceed with new financing.  SBA will not approve your business loan, if your mortgage lender states “deferment” on your mortgage account, even though you have impeccable credit.  For example: A client has impeccable credit, he decides to take advantage of the CARES Act deferment program but immediately changed his mind and opted out of the arrangement and made his mortgage payments, all on time, current. Yet, the mortgage lender continued reporting the account in deferment status. As a result, he contacted our company and provided documentation to his mortgage lender and the credit bureaus that he was out of deferment, this resulted in removing the deferment status off his credit report and allowed him to finance his SBA loan.  Furthermore, mortgage lenders are imitating SBA and conforming business lending, they will not proceed with financing your home loan if your current mortgage or mortgages state “deferment” in the comment section of your trade line.

Now, it is your turn to experience our unmatchable quality service that no credit restoration can compete with.

For more information on how we can locally help you with business credit restoration and personal credit restoration in Palm Beach FL and Palm Beach Gardens, FL please fill out the online contact form about your concerns or give us a call at 855.477-9007. Read what our valued clients have to say about First Pro Capital and Credit Consulting Professionals on our Testimonials page.

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