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The Pandemic May Have Inadvertently Messed Up Your Credit Score — Here’s How to Fix It


Have you looked up your credit score recently and thought the number was low since you’ve made all your payments on time? It might not be because of anything you did wrong! And if you haven’t, you may want to check it ASAP. Problems with typos and mislabeled receipts on the part of your lenders could be what’s causing a discrepancy — and if you don’t get it resolved quickly, you may have issues with your credit score down the line.

Why are payments being mislabeled in the pandemic?

This issue with credit scores comes down to problems with lenders. A lender is any financial institution that offers you money to help you pay for something and expects to eventually be paid back, often with interest. Many people use lenders to afford down payments on houses, buy or lease cars, use credit cards, and attend colleges. Of course, lenders expect you to pay them back within a certain period of time, hence why you’re required to make payments regularly, like how you pay a monthly minimum credit card bill.

However, in the pandemic, given how many Americans are struggling to just to make ends meet, many federal lenders as well as many private lenders offered to defer payments. That means that you won’t be penalized for not paying back the lender at your typical frequency for the time being. For example, many federal student loan companies told people who owe loans that they don’t need to start paying their monthly bills again until October 2021 and won’t suffer any financial or legal consequences for waiting until then.

The problem, however, is that many lenders’ systems are labeling these perfectly acceptable deferred payments as “late” or “delinquent,” which leads to a lower credit score.

What happens if a deferred payment is mislabeled as ‘late’ or ‘delinquent’?

Having a late or delinquent payment notice is bad news for your overall credit score, where making on-time payments is an important part of keeping that number high. In fact, financial experts say you could see a credit score plunge as much as 100 points due to a single late or delinquent payment. Because any negative payment information stays on your report for seven years, it could spell disaster for you down the line if you’re trying to apply for a new credit card, a mortgage, and other large financial transactions. Just imagine how frustrating that is if you deferred your payment correctly and did nothing wrong!

Lenders already had problems with mislabeling payments before the pandemic, with roughly one in four Americans having at least one mistake on their credit report. But with more Americans deferring payments for everything from student loans and mortgages to credit card bills and car loans over the past year, there are greater numbers of transactions to keep track of than ever before. That also means more room for error.

In fact, lender report mistakes have gone up 86 percent since the pandemic began, according to the U.S. Public Interest Research Group. In other words, your chances of having something mislabeled as late or delinquent on your credit report when you’ve actually deferred it properly are higher than you think.

How do I fix my credit score?

Luckily, there’s an easy way to ensure that your credit score stays accurate. Head to Annual Credit Report, where you can get free weekly credit score reports now through April 2022. The program lets you go through line by line to make sure that your credit reports are correct across the three major credit reporting agencies, Equifax, Experian, and TransUnion.

If you find an issue with a bureau’s report, you’ll have to use old-school snail mail to get it fixed. Reach out to that bureau via certified mail, and feel free to use one of the templates created by the Consumer Finance Protection Bureau to make your case. Along with the letter spelling out the error, send in evidence that supports your claim; receipts or payment records can often do the trick. Bureaus typically try to get back to people within 30 to 45 days, but that may be even longer due to processing issues in the pandemic.

When it comes down to it, checking your credit score regularly is the most important thing you can do to avoid a problem down the line. After all, surprises aren’t necessarily a good thing when it comes to your personal finances!

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