Natural disasters such as hurricanes, floods, wildfires, and other major events can have a significant impact on consumers’ ability to meet their financial obligations. Recognizing this, credit reporting guidance—including Metro 2® standards—provides a clear process for flagging these accounts in a way that is both fair to the consumer and compliant with the FCRA.
Why Accurate Disaster Reporting Matters
When consumers are affected by federally declared natural disasters, they may:
- Lose access to income or banking systems
- Miss payments temporarily
- Require payment accommodations or deferrals
Proper credit reporting ensures that these temporary hardships do not cause long-term damage to a consumer’s credit profile, while also keeping credit records transparent for lenders.
Steps to Report Disaster-Affected Accounts
1. Apply the “Affected by Natural Disaster” Special Comment Code
If a consumer’s account is impacted by a disaster, furnishers should include the following Special Comment Code:
- “AW – Affected by Natural Disaster”
This comment must be used in conjunction with the Account Status code. For example, if the consumer is current but cannot make payments temporarily, the account status may remain current while still being flagged with “AW.”
2. Avoid Reporting as Delinquent if Payments Are Deferred
If you’ve made arrangements with the consumer (e.g., payment deferral or forbearance), do not report the account as late or delinquent during the agreed-upon period—even if no payment is received.
Instead:
- Keep the Account Status as “11 – Current”
- Apply the Special Comment Code “AW”
This approach helps avoid triggering negative credit score changes during the relief period.
3. Resume Normal Reporting Once the Arrangement Ends
Once the disaster-related accommodation expires:
- Return to standard reporting practices
- Resume updating the Account Status and Payment History Profile based on actual activity
- Do not retroactively report missed payments for the period covered by the disaster relief
FCRA and Regulatory Compliance
While the FCRA does not specifically mandate how to report disaster-affected accounts, it does require that furnishers:
- Report accurate and complete information
- Avoid reporting in a misleading or unfair manner
- Promptly update information if a consumer dispute arises regarding disaster-related reporting
The Consumer Financial Protection Bureau (CFPB) and credit reporting agencies also expect data furnishers to exercise flexibility and good faith when consumers are impacted by unforeseen emergencies.
Impact on the Consumer’s Credit Report
- Preserves Credit Standing
Using the “AW” code prevents a sudden drop in score due to disaster-related hardship. - Promotes Fair Lending Decisions
Lenders reviewing credit files will see that the consumer was affected by circumstances beyond their control. - Reduces Need for Disputes
Transparent reporting minimizes disputes and misunderstandings after the fact.
Conclusion
Natural disasters can disrupt lives and finances—but proper credit reporting can help protect a consumer’s credit profile during these challenging times. By using the “AW – Affected by Natural Disaster” code and maintaining accurate, non-delinquent reporting during deferral periods, furnishers remain compliant with Metro 2® guidance and the broader intent of the FCRA.