We at FICO recognize the significant challenges faced by both borrowers and lenders in these extraordinary times. We've been working closely with lenders as well as our Credit Reporting Agency (CRA) partners throughout the COVID-19 pandemic to provide awareness of the various reporting options open to data furnishers, as well as how those reporting options can impact consumers' FICO® Scores.
Many lenders are offering multiple options to consumers, including temporary deferred payment plans and/or placing loans in forbearance.
We have emphasized to data furnishers that while special comment codes (like AW for natural disasters or CP for forbearance) are an additional option for reporting a borrower's situation, these are temporary codes that will only be reflected in the credit file for as long as they are being furnished, which is typically only while the extraordinary circumstances are in effect. There is an alternative approach that can better protect COVID-19-impacted consumers' FICO® Score over the long term.
Therefore, as lenders are assessing how customers have been impacted by the COVID-19 pandemic, and how to report all key credit data fields in a manner that best reflects each customer's situation, using special comment code alone should not be viewed as providing consumers relief with respect to the FICO Score. Placing borrowers in a temporary deferred payment plan or in forbearance, along with reporting an account status as "current" instead of as "delinquent", will permanently ensure that a borrower's FICO® Score won't be impacted by late payments related to the effects of the COVID-19 pandemic.