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Mortgage deferrals appear on credit report


Blog by | September 15th, 2020


Financial Literacy: Mortgage deferrals appear on credit report
C. Holmes / Powell River Peak
SEPTEMBER 12, 2020 07:00 AM
 
If COVID-19 has negatively impacted your finances and you're currently deferring your mortgage payments, you should know that this will be visible on your credit report. Here is an example from a recent credit report (original Equifax image has been modified):
 
MORTGAGE          
Affected by natural or declared disaster          
Months reviewed is greater than 24                
Previous reporting: 02     
Portfolio type: M     
Payment frequency: Deferred  
                           
Previous reporting: 33     
Portfolio type: M     
Payment frequency: Monthly

In this scenario, it shows that the mortgage was paid as agreed monthly for 33 months before being deferred for the last two months. It also shows that mortgage payments are currently in deferral.
 
Some may consider the credit bureau reporting a deferred status as good news. As COVID-19 hit like a freight train, many financial experts wondered about reporting errors on credit bureaus as a result of deferred payments. The fact that there is a system in place to report deferrals is a good sign.
 
Deferring your mortgage payment wont lower your credit score, but reporting errors from deferrals might. Once youve resumed your payments, its a good idea to get a copy of your credit report to check for errors.
 
So, why does this matter to me now?
 
If you're considering a change to your mortgage, most lenders will be very hesitant to consider lending you new money when you aren't able to make your existing mortgage payments. This will be the case if you are looking to move into a new property, renew, or refinance your current mortgage.
 
So, if changes to your mortgage are on the horizon, it might be a good idea to resume your regular mortgage payments before seeking a new mortgage.