Here's a nice article from Bankrate, dated last April, about what forbearance means. First of all, somewhere, depending on the source, between 4,000,000 and 6,000,000 people (mortgages) are in forbearance now. Forbearance offers the opportunity to avoid foreclosure, a worse evil that the banks do not want to repeat from the last recession. But the consumer should be as informed as possible. The CARES Act covered some plans for forbearance, but just know that even though this Bankrate article says "No, mortgage forbearance does not appear on your credit report as a negative activity," some people are experiencing credit problems. They have found entries on their credit reports about having a forbearance, and as a result, some credit card companies are shrinking the amount of available credit for these customers. Others are having a hard time getting loans due to their credit reports. Nerdwallet advises consumers that unless the lender has agreed not to report forbearance (which can be a possibility) it will be reported to your credit bureaus. So if you are, or have, participating in a forbearance, you might want to make an inquiry first to find out what your lender's policy is. Having your credit cards impacted, and the ability to buy using them, is a difficult thing to undergo. Your FICO score is built on several factors, including your debt percentage to your overall available line of credit. If that available credit is pushed down, your debt ratio now goes up, and your FICO score could take a big hit as a result.
Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996
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