Storm-Related Financial Difficulties Must Not Be Allowed To Harm Sandy Victims' Credit Scores

Cuomo Administration Demands Credit Bureaus Take Immediate Action To Ensure Sandy Victims Don't Get Hit With Unfair Black Marks On Their Credit Scores

For Sandy Victims, Blemishes on Credit Score Can Mean Higher Costs for Home, Auto, and Business Loans, Greater Difficulty Finding Employment

Governor Andrew M. Cuomo today announced that his Administration has asked the credit scoring and reporting bureaus to take immediate action to stop the lowering of credit scores for Superstorm Sandy victims who may be enduring storm-related financial difficulties beyond their control. Unless the credit reporting agencies act, thousands of Sandy victims could face higher costs for home, auto, and business loans.

At Governor Cuomo’s direction, Superintendent of Financial Services Benjamin M. Lawsky today sent letters to FICO, TransUnion, Experian, Equifax, and the Consumer Data Industry Association (CDIA) requesting that they promptly move to protect Sandy victims and that senior executives from those organizations meet at the New York State Department of Financial Services (DFS) as soon as possible to resolve this issue.

“Hitting Sandy victims with an unfair black mark on their credit scores would add insult to injury for the thousands of New Yorkers fighting to rebuild and recover after this devastating storm,” said Governor Cuomo. “The credit reporting agencies must take swift action so that Sandy victims don’t have their credit scores unjustly tarnished.”

Superintendent Benjamin M. Lawsky said, “No Sandy victim should face a hit to their credit history simply because they caught a bad break from Mother Nature and got caught in the path of this destructive storm. This issue is critically important to Governor Cuomo because a person’s credit score can impact everything from the rate they pay for a mortgage to their prospects for getting a new job.”

The financial challenges that many New Yorkers are facing due to Superstorm Sandy could negatively impact their credit scores for reasons that are unrelated to their creditworthiness. For example, many homeowners missed mortgage payments due to Sandy or were forced to seek forbearance of their mortgage payments in the face of mounting recovery-related expenses. Many other citizens were unable to make timely rent payments when their homes became uninhabitable and they were forced to pay for alternative housing. Homeowners and business owners also found themselves taking out loans for equipment essential to the rebuilding of their homes and businesses.

The Administration has demanded credit bureaus to take the following four actions:
1. Take immediate action to ensure credit scores are not lowered for Sandy victims;
2. Reset any scores that were already lowered;
3. Work with banks and other lenders to red flag any negative information that comes from disaster victims;
4. And meet with the Department of Financial Services to permanently change procedures to prevent credit scores from going down for disaster victims.

An unfair black mark on a person’s credit history can have serious, long-term financial consequences. It can mean higher costs for a mortgage, a car loan, or a small business loan for many years in the future – pinching the budgets of Sandy victims who are already struggling to rebuild and recover. Even worse, some Sandy victims could get shut out of the job market since many employers screen and deny applicants based on blemishes in their credit histories – regardless of whether that blemish is caused by a bank-error or occurred through no fault of the applicant’s own.

Superstorm Sandy had a devastating impact on thousands of families in New York and across the Northeast. Residents were forced to secure temporary housing when their homes became uninhabitable; costly home repairs created unexpected and unbudgeted expenses; and many businesses closed temporarily or permanently, leaving their owners and employees facing significant losses of income. To help struggling New Yorkers recover, Governor Cuomo and the Department of Financial Services have been working with these families and their financial institutions in a number ways, including expediting insurance claims processing, easing restrictions on banks’ disbursement of insurance proceeds to homeowners, and facilitating mortgage relief for struggling homeowners. These measures were taken to help ensure that no one faces foreclosure, bankruptcy, or other financial devastation simply because of Sandy’s calamitous consequences.

To read a copy of Superintendent Lawsky’s letter to the credit reporting agencies, please visit http://www.governor.ny.gov/assets/documents/FICOLetter.pdf.

Victims of Sandy who think their credit score has been unfairly impacted should contact DFS at 1-800-339-1759.

NYPIRG Consumer Advocate Andy Morrison said, “The credit reporting agencies weren't responsible for Superstorm Sandy – that was an act of God. But they can refrain from punishing New Yorkers for being late or missing bill payments and jeopardizing their ability to get mortgages, credit or even a job. Human decency and fairness dictate that the credit agencies don't punish New Yorkers for what is beyond their control. NYPIRG applauds Governor Cuomo and DFS Superintendent Lawsky for intervening with the credit reporting industry on behalf of New Yorkers.”