Credit score drop? How to diagnose why, and what to do next | Smart Change: Personal Finance

Check your credit reports and review possible reasons for a score change.

As the pandemic hits the economy hard, lenders and credit card issuers are offering payment modification programs such as forbearance and deferrals.

The coronavirus relief package enacted March 27 requires that accounts that were in good standing before modification be reported as current as long as the consumer abides by the agreement.

But for many consumers with federal student loans, relief over a 6-month automatic pause on payments turned into dismay as credit scores plummeted. Consumers complained on social media that their accounts were wrongly reported as delinquent or in non-payment status.

That’s not how it was supposed to work, says credit expert John Ulzheimer, who has worked for credit bureau Equifax and scoring company FICO. He says student loan servicers are working to address problems, and he hasn’t heard of similar issues involving other types of lenders or credit card issuers.

If your credit score drops, here’s how to diagnose what’s going on and what to do next.

First, check your credit reports

Whether you have payment modifications or not, it’s a good idea to regularly check that your credit activity is being reported correctly.

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Through April 2021, consumers can access free credit reports weekly from each of the three major credit bureaus — Equifax, Experian and TransUnion — by using