Financial Fridays: Payment Processes and COVID-19

There are numerous financial assistance programs for individuals and families who are affected by COVID-19.  These programs, resources, and extensions do change day to day – check the resources for what you, or your friends, family, or clients need.

**last updated on 4/20/2020**

As individuals experience potential income loss with furloughs, layoffs, or unemployment, they are encouraged to speak to their lenders, banks, or creditors BEFORE missing payments.  Once payments are missed, options or willingness of creditors to work with you decline.

Possibilities to ask creditor for:

  • Having an account in forbearance usually means your lender has agreed that you can temporarily stop or reduce payments on that account for a certain amount of time. A forbearance can provide temporary relief during a financial hardship, but depending on the agreement, interest may still accrue.
  • deferred account means the lender has agreed that you can delay payment for a certain amount of time, but the account will generally still accrue interest with the exception of subsidized Federal student loans. Usually, this will show up on your credit report in the Remarks field with a comment that says “Payment Deferred.” Students frequently defer student loans while they are still full time in school.
  • Effect on some credit scoring models:
    • Vantage Score 3.0 – An account marked as “Payment Deferred” or in forbearance will not affect the score.
    • FICO® Scores do not consider the fact that a loan is in forbearance and would not impact the score.
    • All scores – 30/60/90+ day late payments, foreclosures, collections do effect credit scores.
    • An individual can add a personal statement to their credit report to explain their situation, but this will not affect any of the credit scoring models and the lender may or may not read it.
    • A person can also ask lenders to add a code to your credit report to indicate they were “affected by a natural or declared disaster.” FICO does not consider the codes when calculating credit scores, but VantageScore will disregard late payments for accounts with that code in effect.

The DWD website will be live on April 21st for newly-eligible individuals to apply. The DWD site is: