If you lost your job and are struggling to make ends meet, it could be worth adding a note to your credit report
Your credit report is a snapshot of your finances, showing payment history and balances for all your past and current accounts. Whenever you apply for a loan or a new credit card, lenders will pull your credit — and the condition of your credit report can mean the difference between getting approved or denied for a loan, or between getting a high or low interest rate for a new account.
While your credit report can speak for itself, you do have the option to include a note, often referred to as a consumer statement, that adds further context about your financial situation.
Why add a consumer statement to your credit report?
If your finances are in great shape, you probably don't need to add a consumer statement, but if you're currently unable to pay all your bills — due to the economic impact of the coronavirus or otherwise — this could help explain why you fell behind on payments. If you need to apply for a loan or a credit card now, a note could help make it clear to lenders that you're dealing with circumstances beyond your control; you didn't simply become an unreliable borrower.
Beverly Anderson, president of Global Consumer Solutions at Equifax, recently spoke to Business Insider about steps you can take to protect your credit in an uncertain economy. In addition to recommending that you talk to lenders and insurance companies if you're unable to make your payments, Anderson said that adding a note to your credit report could be a good idea.
"Let's assume that you're going to have a late payment, or you're not going to be able to make payments for a period of time. You could easily go to your credit report, and there's a place to insert a statement," she said.
Note that a consumer statement is different than a credit report dispute, which you'd file if you found an error on your report, such as an account you didn't open or any incorrect personal information. A consumer statement doesn't address any potential errors on your report; instead, it provides background on any negative marks on your report that may make lenders less willing to extend you new lines of credit.
How to add a note to your credit report
To add a consumer statement to your credit report, you'll first need to access your report. Due to the coronavirus pandemic and its far-reaching economic consequences, the three major credit-reporting bureaus are currently offering Americans free weekly access to their reports (usually you only get free access once per year for each report, three times in total).
You can get started at AnnualCreditReport.com. You'll need to fill out a request for your report and select which reports you want to view (Experian, Equifax, or TransUnion, or all three). Since you have the option to get all three for free, you might as well.
Once you've filled out the requisite information, AnnualCreditReport.com will take you through your credit reports one at a time. Make sure you save them as a PDF so you can refer to them in the future. You'll want to review each credit report to make sure there are no errors or fraudulent accounts opened in your name — pay particularly close attention to the "accounts" section of your report.
To add a consumer statement explaining your financial situation to your Experian report, go to the Experian Dispute Center. You can also mail in your statement to:
PO Box 4500
Allen, Texas 75013
Make sure you visit Experian's website to see what information you'll need to include if you decide to mail in your statement.
To add a note to your Equifax credit report, you can either go to the Equifax Dispute Center, or mail your statement to the following address:
Equifax Information Services LLC
PO Box 740256
Atlanta, Georgia 30374-0256
To add a consumer statement to your TransUnion credit report, create a TransUnion account online, then navigate to the "New Investigation" tab. Scroll down to the "Consumer Statement" section to add your note. You can also mail your statement to TransUnion at:
PO Box 2000
Chester, Pennsylvania 19016
Keep your statement brief
Your statement must be 100 words or less, so keep it concise. Anderson even provided the following script that you can use:
"Please be advised that this negative information on my credit report is related to COVID-19, and I intend to correct this as soon as I can."
If your financial situation isn't related to the coronavirus pandemic, swap that wording out for an explanation of your specific circumstances.
Remove the statement once your financial situation improves
While adding a consumer statement to your credit card could be a good strategy when your finances are tight, you'll want to remove the note as soon as your situation improves. It's explained well on the Experian blog: "Once the negative information is removed, the statement may unnecessarily notify lenders that you had a payment issue in the past."
To remove the consumer statement from your credit report, contact the credit bureau following the same steps you did to add the note.