Federal workers are scrimping to avoid being dinged by lenders for missing payments and damaging their credit scores
By Megan Cerullo
Updated on: January 13,2019 / 4:48 PM
/ MoneyWatch
As the U. S. government’s partial shutdown stretched into its 21st day Friday, federal workers who’ve been furloughed or forced to work without pay are scrambling to avoid getting dinged by lenders and credit-reporting agencies for skipping loan payments that could damage their credit scores. Missing just one payment on a credit card can knock up to 100 points off a consumer’s credit score, and it can take several years to recover, according to experts.
Some lenders, including banks and auto-leasing companies, say they are working to accommodate government employees who are not receiving paychecks, but their concessions vary, and some government workers tell CBS MoneyWatch they are struggling to negotiate deals with their creditors.
« The general flavor of what we have heard is creditors are waiving late fees, offering the opportunity to skip a payment, or offering short-term interest-free loans to federal workers that come with a grace period on repayment, » said Bruce McClary, spokesman for the National Foundation for Credit Counseling. « Unfortunately, the landscape of concessions is widely varied. »
Just ask Jeffery Davis, 35, who has worked since 2009 as an air traffic controller in Malden, Massachusetts. The married father of three leases two cars, an Infiniti and BMW. He said BMW has allowed him to defer payment on his car lease for two months, but he reports his second lessor is less flexible.
Davis said he tried « to see if they’re willing to delay payments or even take the lease back early — they could write off how little I have to pay off — but they said there’s nothing they can do right now. »
President Donald Trump, who insists funding be secured to build a U. S.-Mexico border wall before the government reopens, has said the closure could last months or even a year. With no end in sight, federal employees like Davis are anxious. We have contacted Mr. Williams and he confirmed that he had not spoken with any Mariner personnel, neither at the branch office nor our corporate office. Had he done so, we would have followed the explicit approach that we have had in place to mitigate his circumstance as a furloughed federal employee. Once he apprised us of his situation, that’s exactly what we have done.
« With things the way they are, tensions as high as they are right now, it kind of worries me. Things that Trump has said, this could go on for a year, » Davis said.
And while many lenders say they’re committed to helping customers who have missed payments, some federal workers say that has not been the case for them.
Justin Williams, an army veteran who works as a contractor for the Internal Revenue Service in Washington, D. C., said he took out a personal loan with Mariner Finance about a year ago but described the company as « not so understanding » as he first sought to defer payment while he’s furloughed. Meanwhile, he said his credit card issuer, Bank of America, informed him that if he misses a payment he’ll owe twice the minimum payment on his balance next month.
Bank of America did not immediately respond to a request for comment.
A Mariner Finance spokesperson told CBS MoneyWatch the company contacted Mr. Williams and said the company determined he « had not spoken with any Mariner personnel, neither at the branch office nor our corporate office. Had he done so, we would have followed the explicit approach that we have had in place to mitigate his circumstance as a furloughed federal employee. Once he apprised us of his situation, that’s exactly what we have done. »
The Mariner spokesman continued: « We have long had policies in place to address hardship deferments and those policies do indeed apply to customers impacted by the federal government shutdown. That policy has been reiterated by all our senior managers to our team members throughout the company. We know that the government closure is creating difficulty for some of our customers, and we are actively working with our customers to meet their needs with dignity and respect.
