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Should I Add a Consumer Statement to My Credit Report Due to COVID-19?

You have a number of rights when it comes to your credit report, including what's on it and who can see it. One of those rights is the ability to add a statement to your credit reports explaining one or more of your credit report entries. This statement is commonly referred to as a "consumer statement," and it's sometimes used to provide context or explanation on late payments and other negative entries.

What Is a Consumer Statement?

Consumer statements can be added to your credit report at your request through each of the three major credit bureaus (Experian, TransUnion and Equifax). These statements are generally limited to pre-written options or up to 100 words you write yourself.

The reason you'd normally add a consumer statement to your credit reports would be to explain your side of the story as it pertains to entries on your credit reports. Potential lenders will see the statement when reviewing your credit report, and it may help them better understand any extenuating circumstances that led to late or missed payments. There's a chance they may take these statements into account when deciding whether to extend credit to you.

You can do this any time, but the ongoing COVID-19 pandemic may present a new reason to add a statement to your credit reports if it has caused you to get behind on payments.

Is Adding a Consumer Statement Helpful During a Crisis?

The purpose of adding a consumer statement to a credit report is to provide additional context about an item on your report. Such a statement could show potential lenders that negative items on your reports are due to circumstances beyond your control, such as being laid off due to the COVID-19 pandemic, and don't necessarily reflect poor credit habits.

When lenders access your credit reports, they have the ability to see and read the statement you've added there. To the extent they find the information informative and helpful, they may consider the content of the statement in their underwriting process.

Once the credit report item addressed in your consumer statement eventually drops off your report, the statement should be removed as well since it no longer applies. A statement that needlessly informs a lender of a mark against you will only be doing you a disservice.

It's also important to understand that consumer statements do not directly affect credit scores. Lenders may take the statements into consideration, but the statements are not included in credit score calculations.

What Is a Disaster Code?

You may have recently read or heard about a "disaster" code that can be added to your credit reports. This is partially true. There is a code that indicates you've been affected by a disaster. However, that code is added by your lender to specific accounts that appear on your credit reports, rather than a general statement meant to encompass all the accounts in your report.

This code, which has been a part of credit reporting for many years, reads, "affected by natural or declared disaster" when added to an account on your credit reports. When this code is present, any lender that accesses your credit reports will see that you've been impacted by a disaster as it pertains to the management of that particular account. With respect to credit scoring, however, a disaster code does not affect all credit scores.

FICO's credit scoring models do not treat the accounts with a disaster code any differently, nor does the code prevent FICO from considering other positive or negative aspects of any account.

With respect to VantageScore® credit scores, the newer versions of VantageScore (3.0 and 4.0) will ignore any negative aspects of an account while the disaster code is present. Once the disaster code is removed, any negative aspects of the account will again be considered in your score.

How to Add a Consumer Statement or Disaster Code to Your Experian Credit Report

There are two ways to have the disaster code added to your credit reports. You can contact your lender or lenders and let them know you've been impacted by COVID-19 and you'd like the accounts on your credit reports to indicate this. They may add the disaster code to your accounts the next time they report your information to the credit reporting companies, but are under no obligation to do so.

To add a consumer statement yourself, the first step is to contact the credit reporting agencies and get copies of your credit reports. Once you have your credit reports, review them to decide if you feel the need to add a statement and, if so, which type.

The process for adding a consumer statement differs at each bureau, and the following information will be helpful should you decide to add a statement to your Experian credit report.

First, it's important to understand that statements can be added to an Experian credit report at either the account level or the report level. This means you can attach a personal statement that speaks to your credit report as a whole if you've experienced hardship that's affected several accounts, or you can single out an account you may have had particular trouble with.

  • Account-specific statement: Through Experian's Dispute Center, you can either choose a statement from a list of pre-written options or write your own statement of up to 100 words. Account statements will be on your credit report as long as the account it's attached to remains on your report, even if the negative information in question has since fallen off.
  • Personal statement: You can choose one of several personal statements to add to your Experian credit report. If you've experienced financial hardship due to the COVID-19 pandemic and missed payments as a result, you may consider adding a statement that says "Delinquency due to natural or declared disaster." This type of statement will remain on your report for two years before automatically being deleted.

Once you have a statement added to your Experian credit report, it's important to monitor your credit to make sure the statement doesn't remain longer than necessary. Negative information will naturally fall off your credit report after seven to 10 years, so remove any statements that may allude to something negative that's since been removed from your credit report.

Protect Yourself; Protect Your Credit

COVID-19 has impacted not only U.S. consumers, but consumers globally. And while your credit reports and credit scores may not be your primary concern, it's important to take some time to explore your options for preserving your credit reports and credit scores.

Consumer statements are a free and easy way to ensure that information on your credit reports is explained in your own words. They are free to add, and lenders may take them into account when reviewing your credit reports.