Forbearance is a temporary arrangement where a lender agrees to reduce or suspend a borrower’s required payments for a set period due to financial hardship. It is not a forgiveness of debt—payments are merely delayed or reduced. As with deferment, proper reporting of accounts in forbearance is essential for ensuring transparency, fairness, and compliance with the Fair Credit Reporting Act (FCRA).
Understanding Forbearance
Forbearance agreements are commonly used in situations such as:
- Job loss or income reduction
- Medical emergencies
- Natural disasters
- Student loan relief (especially during federally authorized forbearance periods)
In all cases, the key point is that the borrower remains contractually obligated to repay the debt, but the repayment timeline is modified temporarily.
Steps for Reporting Accounts in Forbearance
1. Maintain the Account Status as “Current” If No Delinquency Exists
If the consumer was current at the time forbearance began and remains in compliance with the terms of the agreement, report the account as “Current.”
This ensures no negative payment history is generated for a delay that was lender-approved.
2. Apply the Appropriate Special Comment Code
Use Special Comment Codes to clearly indicate the account is in forbearance. Common codes include:
- CP – Account in forbearance
- AW – Affected by natural or declared disaster
- CN – Loan modified under a federal government plan
- D1 – Payment deferred
These codes provide context to credit bureaus and lenders reviewing the account.
3. Set the Scheduled Monthly Payment Amount to Zero (if applicable)
If the forbearance agreement allows for a full suspension of payments, the Scheduled Monthly Payment Amount should be reported as $0.00.
This indicates the borrower is not expected to pay at this time, avoiding confusion around non-payments.
Additional Considerations
- Continue Reporting the Current Balance: Even during forbearance, the account balance should be reported as usual.
- Preserve Payment History: Do not alter the pre-forbearance payment history. On-time payments and delinquencies should remain intact.
- Avoid Reporting as Delinquent: As long as the borrower complies with the forbearance agreement, do not report the account as late or past due.
FCRA Compliance Requirements
To remain compliant with the FCRA, furnishers must:
- Report accurately: Do not misrepresent the borrower’s status or payment expectations.
- Ensure completeness: Include all relevant fields—account status, balances, history, and comment codes.
- Submit updates promptly: Changes in forbearance status (start, end, or extension) should be reported within the standard update cycle.
Impact on the Consumer’s Credit Report
- Preserves Credit Score During Hardship
When reported properly, forbearance does not negatively affect a consumer’s credit score. - Supports Long-Term Credit Health
Forbearance protects borrowers from accruing delinquencies while they navigate financial recovery. - Enables Transparency for Future Lenders
Special Comment Codes clarify why payments were temporarily paused or reduced, reducing the likelihood of misinterpretation.
Conclusion
Accounts in forbearance must be reported with precision to reflect the borrower’s compliance with the agreement and to uphold FCRA standards. By maintaining a “current” status, applying appropriate Special Comment Codes, and continuing to report accurate balances and history, furnishers help ensure that credit reports remain fair, complete, and trustworthy—especially during times when consumers need support the most.