Unable to make loan payments because of the government shutdown?

Date: January 15, 2019

The government shutdown is impacting an estimated 800,000 government employees as well as hundreds of thousands of government contractors. Without a steady income, it can be difficult to meet loan obligations. Missed payments, if not corrected fast enough, may negatively impact your credit history.

If you are impacted, the first step is to contact your lender or your loan servicer as appropriate. Lenders may have several options for helping you cope with the financial hardship caused by the shutdown. One of those options might be what’s called a loan “forbearance.” In a forbearance, the lender may agree to temporarily suspend required payments.

As it relates to your VantageScore credit score, with a forbearance you will continue to receive the benefits from the presence of the loan, but the payment status and the amount owed on the loan are not included in your score calculation during the forbearance period. That way, your score isn’t impacted if you miss payments as a result of difficulties due to the government shut down.

In other words, so long as your payments are current, then entering into a forbearance agreement with your lender will have no adverse impacts. If you are currently delinquent on that loan, your score will likely improve as a result of the payment status being ignored.

One additional consideration to take note of: previously missed payments on that loan will continue to be factored into your score’s calculation.

Be sure to first talk to your lender or loan servicer to understand your options.

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