From people a world over to those in Mississippi, the coronavirus pandemic has exacted a devastating physical, emotional, and financial toll.
On that last one, mass unemployment coupled with businesses either shutting down for good or operating at reduced capacity has forced budgets to shrink and finances to become desperate for many consumers.
And according to a new report from LendEDU, consumers have been dealing with an unusually high number of financial issues during the pandemic.
LendEDU’s research looked at the Consumer Financial Protection Bureau’s (CFPB) consumer complaint database, which gives aggrieved consumers an avenue to file complaints against the banks, lenders, or other financial institutions they do business with.
Specifically, LendEDU looked at the number of consumer finance complaints filed between March 13, 2020, (when President Trump declared a national emergency due to the coronavirus pandemic) and July 17, 2020, and then compared those figures to those from the same period a year ago.
Nationally, there was a 44% year-over-year (YOY) increase in the number of consumer finance complaints filed, going from 97,008 in 2019 to 140,042 during the pandemic in 2020. When it came to what the complaints were regarding, there was an 84% YOY increase in credit reporting complaints and a 29% YOY rise in credit card grievances.
Mississippi alone experienced a 71% YOY surge in its number of consumer finance complaints as 579 were filed between March 13, 2019, and July 17, 2019, and 991 CFPB complaints were recorded during that same period in 2020.
The trends in The Magnolia State were similar to those seen for the entire U.S., as there was a 108% YOY increase in credit reporting complaints and a 124% YOY uptick in credit card disputes.
It appears the reason for this huge rise in consumer finance complaints during the coronavirus pandemic is due to a lack of communication between consumers, financial institutions, and credit reporting agencies.
With the pandemic tightening budgets, many folks were able to agree to reduced minimum payments or temporary forbearance periods with their lenders for things like a mortgage or credit card.
However, those new terms have struggled to get confirmed with credit bureaus as consumers have seen negative marks on their credit reports for missed or insufficient payments, which explains the big surge in credit reporting complaints.
As a consumer, the best way to prevent this from happening to you is to maintain clear and constant communications with both lenders and credit bureaus to confirm any changes and easily manage any mistakes.
Additionally, staying on top of your credit score to quickly catch any negative marks or sudden drops can help you resolve the issue in a more timely manner. This can be done by signing up for a near-instant credit monitoring service like CreditWise or Credit Karma.
Staying on top of your credit score and financial health is always recommended, but it appears it has become necessary during the coronavirus pandemic as the unprecedented situation has led to newfound difficulties when it comes to financial institutions and credit bureaus managing consumer accounts.
MIKE BROWN is the Director of Communications at LendEDU. He can be reached at [email protected]