This offer is no longer available on our site: Capital One Spark Cash Select for Good Credit

Pros

• $0 annual fee
• Unlimited travel reward points
• Multiple ways to redeem rewards

Cons

• Strong credit needed to qualify
• Personal guarantee required
• Rewards boost for Preferred Rewards for Business members

From our partner

Bank of America® Business Advantage Travel Rewards World Mastercard® credit card

Bank of America® Business Advantage Travel Rewards World Mastercard® credit card

5.0 out of 5

1 reviews

From cardholders in the last year

Apply Now

Key features of the Bank of America® Business Advantage Travel Rewards World Mastercard® credit card

With so many travel cards to choose from, it’s often challenging to tell them apart.

While this one may not stand out from the competition at first glance, it’s worth a second look for its various offerings.

No annual fee

Some business travel rewards cards charge an annual fee, but you won’t find one with this card.

Simple rewards

Many rewards cards utilize rotating reward categories, which can make it confusing to keep track of how many points you’re earning. The Bank of America® Business Advantage Travel Rewards World Mastercard® credit card aims to simplify the rewards-earning process by offering you a set number of points for every dollar spent on any purchase other than travel.

The card offers 1.5 points for every $1 you spend on non-travel purchases for your business. And there’s no limit on how many points you can earn.

A broad definition of travel

The card offers bonus points that you can redeem for a statement credit to cover a wide variety of travel-related purchases. So if your definition of work travel includes more than airfare, you’re in luck.

Your statement credit will cover purchases such as airlines, hotels, motels, timeshares, trailer parks, motor home and recreational vehicle rentals — on top of other modes of transportation and lodging. This means you get more points for your dollar. But to earn those points, you’ll have to make those eligible purchases through the Bank of America Travel Center rather than deal with your favorite merchant directly.

If you’re wondering about the rewards-earning rate for those travel-related purchases: You can earn three points — which is 1.5 base points plus an additional 1.5 bonus points — for every $1 spent on purchases made through the Bank of America Travel Center. That’s double the rewards-earning rate of 1.5 points that you earn on your standard travel purchases.

You already have a business account

The Bank of America® Business Advantage Travel Rewards World Mastercard® credit card is best for business owners who already have a strong relationship with Bank of America, or those who are Preferred Rewards for Business Platinum Honors tier members. Depending on the tier of your Preferred Rewards status and the type of card you have, you can earn 25% to 75% more rewards with eligible bank accounts along with other benefits.

Are the perks worth it?

While the Bank of America® Business Advantage Travel Rewards World Mastercard® credit card doesn’t charge an annual fee, it doesn’t offer much of a reason to enthusiastically apply either. Unless you’re an existing Bank of America customer, you’ll want to carefully weigh some of the drawbacks of this credit card before deciding to apply for it.

Lackluster welcome bonus

As a new cardholder, you may be eligible to earn the card’s 30,000-point welcome bonus, which is worth $300 as a statement credit towards travel or dining purchases, if you spend $3,000 in qualifying purchases within the first 90 days after opening a new account. That’s quite a bit to have to spend in order to receive a few hundred dollars.

So if you’re considering the Bank of America® Business Advantage Travel Rewards World Mastercard® credit card for its travel rewards, you may want to look elsewhere.

Personal guarantee required

No matter how strong your business credit may be, one downside of this card is that it requires you to personally back any purchases should the business not be able to cover them.

While this is by no means unique to the industry, it’s worth considering whether you want to risk personal liability for purchases.

Minimum points needed

While earning travel points may be streamlined with this card, redeeming them is less so. Points are redeemable as statement credits to cover travel purchases made through the Bank of America Travel Center. You can also choose to redeem for cash back or gift cards.

It’s worth noting that you must earn a minimum of 2,500 points, which is worth $25, to redeem them. While that may not be an issue for business travelers who typically reach these thresholds quickly, it’s a restriction worth pointing out.

Other important details

Here are some other noteworthy features to know about if you are considering signing up for the Bank of America® Business Advantage Travel Rewards World Mastercard® credit card.

• No foreign transaction fee — You can use this card anywhere in the world where Mastercard is accepted without paying any currency or foreign transaction fees.
• Travel coverage — If your trip is canceled or delayed, or if you run into trouble along the way, the card may cover the cost with travel accident insurance, lost luggage reimbursement, trip cancellation coverage, and trip delay reimbursement benefits.
• 0% introductory period — This card offers an introductory 0% purchase APR for the first 9 billing cycles after opening a new account. After that, the variable purchase APR will be 17.99% - 27.99%, depending on your credit history.

Who this card is good for

This credit card is best for business owners who already have a strong relationship with Bank of America. The rewards rate on most purchases is equivalent to 1.5% back for travel, which is a fair rate but nothing all that exciting. But adding 25% to 75% more, depending on your Preferred Rewards tier, makes this card more of a consideration.

If you’re already a part of the Bank of America Preferred Rewards program, or are eligible to join, you should seriously consider this card. If you don’t already bank with Bank of America, this business credit card is relatively basic in its offerings.

Not sure this is the card for you? Consider these alternatives.

• Ink Business Preferred® Credit Card: This card is ideal for business owners who want premium travel rewards at a minimal annual fee.
• Capital One Spark Cash Select for Good Credit: Consider this card if you’re looking for a simple cash back rewards program for your business.
• The Business Platinum Card® from American Express: This is a card for business travelers who expect luxury travel experiences and don’t mind paying a premium for a high-end rewards card.

ERC Collections is a debt collection agency representing a wide range of creditors.

If you’ve seen ERC Collections on your credit reports or the company is contacting you, it might be trying to recover a debt on behalf of a utility company, a bank or financial institution, or a student loan lender, among others.

• What is ERC Collections?
• How to remove ERC Collections from your credit reports
• Next steps: What to do if there’s an account you don’t recognize on your credit reports

What is ERC Collections?

ERC Collections, also known as Enhanced Recovery Company or Enhanced Resource Centers, works on behalf of other companies or banks to collect on debts people have defaulted on.

You may have seen ERC Collections listed on an account that went to collections after your original account got charged-off. In some cases, you won’t see ERC Collections on your credit reports even if the company has contacted you about an account.  

There are a number of possible reasons — legit and not — for getting a collections call that you don’t recognize from your credit reports. So whatever the situation, the first thing you should do after you’re contacted by a debt collector is make sure that the debt is yours — and that the debt collector is entitled to collect on that debt.

Dealing with a debt collector can be stressful and intimidating, and the extra layer of confusion about whether a debt collection agency is legit or not just can add to the stress. But don’t let that stop you from standing up for your rights when it comes to debt collection, as laid out by the Fair Debt Collection Practices Act.

To determine whether the debt is legitimate, ask the debt collector to provide written proof. This must include: the debt collector’s information, the amount you owe plus any additional fees, what the debt covers, and the name of the original creditor.

How to remove ERC Collections from your credit reports

If you’ve determined that you don’t owe a debt that ERC Collections is trying to collect on, you should reach out to the three major consumer credit bureaus to dispute the debt.

Once you file an official dispute, the credit bureaus are obligated to investigate. They’ll also forward information you send them to the debt collection agency, which will be required to report any inaccuracies it finds to all three of the credit bureaus.

Keep in mind that you often have only 30 days to respond to initial contact by a debt collector to request key information regarding the debt — so time is of the essence.

If you’re looking for additional support, the Consumer Financial Protection Bureau has resources including letter templates you can use to deal with common issues that come up with debt collectors.

Next steps: What to do if there’s an account you don’t recognize on your credit reports

Finding out that you have an account in collections could be an unwelcome surprise. If the debt is legitimate, it will take seven years, plus 180 days from whenever you missed your first payment, for the derogatory mark to fall off your reports. But there are steps you can take to build your credit back up.

If the debt isn’t legitimate, you’ll want to keep a close eye on your credit. To help spot potential identity theft early and flag other mistakes, it’s a good idea to check your credit reports regularly. You can periodically access free credit reports on annualcreditreport.com.

THD/CBNA may appear on your credit reports if you have one of three retail credit cards from The Home Depot.

The Home Depot cards are issued by Citi, which also goes by CBNA or Citibank North America. Here’s why THD/CBNA may be on your credit reports and what to do if it’s showing up but you’ve never had a Home Depot credit account.

• What does THD/CBNA stand for and why is it on my credit reports?
• What other retail credit cards are issued by CBNA?
• What to do if there’s an account you don’t recognize on your credit reports  

What does THD/CBNA stand for and why is it on my credit reports?

THD/CBNA stands for The Home Depot/Citibank North America. It could be on your credit reports as a hard inquiry if you’ve applied for a credit card from The Home Depot or if you’ve been added as an authorized user on one of these accounts.

Hard and soft inquiries

Citi offers three The Home Depot retail credit cards.

• The Home Depot® Consumer Credit Card
• The Home Depot Commercial Revolving Charge Card
• The Home Depot Commercial Account

If you’ve applied for one of these and authorized the bank to check your credit, you may see a hard credit inquiry on your credit reports. A hard credit inquiry can stay on your reports for up to two years, so it may be showing up even if you didn’t recently apply for the card.

Alternatively, if you tried to prequalify for a credit card from The Home Depot, you might see a soft credit inquiry on your credit reports. A soft inquiry is only visible to you and doesn’t affect your credit scores.

How to remove a THD/CBNA hard inquiry from my credit reports

If you applied for one of the three The Home Depot cards, you probably won’t be able to remove the hard inquiry from your reports. It should fall off your reports after two years from the inquiry date.

But what happens if you spot THD/CBNA on your credit reports and you didn’t authorize the credit pull? Dealing with an unauthorized hard inquiry on your credit can be stressful and scary.

There are steps you can take to help protect yourself and your credit if you find yourself in this situation. Consider these five tactics.

1. Get proof. Contact the company that pulled your credit and ask for proof that you authorized the inquiry.
2. Report the suspected fraud. Head to the Federal Trade Commission’s identitytheft.gov website to document and report the suspected ID theft. You may also want to consider filing a police report.
3. Freeze your credit. To prevent identity thieves from further abusing your personal financial information, you may want to freeze your credit. Contact each credit bureau separately. Keep in mind that you won’t be able to be approved for new financial products while the freeze in in place. And while this won’t retroactively protect your credit, it can help stop identity thieves from opening accounts in your name while the freeze is in effect.
4. Speaking of contacting the credit bureaus, you can request a free fraud alert from them.
5. Dispute the unauthorized inquiry with the credit bureaus. The credit bureaus are required to investigate and remove any information that turns out to be inaccurate.

Authorized users

You may also see THD/CBNA on your credit reports if you’ve been added as an authorized user on any of The Home Depot’s credit cards.

As an authorized user, the account activity is reflected in your credit reports as well. Getting added to an account as an authorized user is one way you can build credit (especially if the primary accountholder has stellar credit). You’re allowed to make purchases up to the primary accountholder’s credit limit, but you’re not officially responsible for repaying the debt.

The downside is that if the primary cardholder misses a payment or has a high utilization rate, there could actually be a negative impact on your credit.

If you were added incorrectly as an authorized user to someone else’s THD/CBNA account, you should contact the credit card issuer and ask it to remove you from the account.

What other retail credit cards are issued by CBNA?

Citibank issues retail credit cards to approximately 83 million people. If you carry a retail card from one of the following brands, it’s likely issued by Citi, and you’ll probably have CBNA listed somewhere on your credit reports:

• Best Buy
• L.L. Bean
• ExxonMobil
• Shell

What to do if there’s an account you don’t recognize on your credit reports

It’s important to routinely check your credit reports to watch out for mistakes or even outright identity theft.

You’re entitled to a free copy of your credit reports from all three major consumer credit bureaus periodically through annualcreditreport.com.

Whether you decide to keep an eye on your credit with Credit Karma or use another service, consider adding credit monitoring to your financial routine. Credit monitoring can be a useful tool in helping you identify and take action on certain errors or report suspected fraud you might spot on your credit reports.

When it comes to any suspicious activity, the sooner you take action, the more likely you are to minimize any lasting damage to your credit profile.

If you see JPMCB Card Services on your credit reports and wonder what it’s doing there, don’t be alarmed. You may just need to take a look in your wallet for the answer.

Chase, which also does business as JPMorgan Chase Bank, provides a broad range of financial products such as credit cards, auto loans, mortgages and more.

If you have credit cards, there’s a chance one of them is from Chase even if it isn’t in the name of the card — which will appear on your credit reports as “JPMCB Card Services.”

• What does JPMCB stand for and why is it on my credit report?
• What to do with an unauthorized hard inquiry from JPMCB?
• What credit cards are issued by JPMCB?
• Next steps: Checking your credit reports for suspicious activity

What does JPMCB stand for and why is it on my credit report?

JPMCB stands for JPMorgan Chase Bank. It might be on your credit reports for a variety of reasons, including an expected hard or soft inquiry, the result of being an authorized user, or related to an unauthorized hard inquiry.

Hard and soft inquiries

Hard inquiries: If you’ve applied for a Chase credit card and you authorized the bank to check your credit, even if you didn’t know it was a Chase card at the time, you may see a hard credit inquiry from JPMCB card services on one or more of your credit reports. A hard credit inquiry, which can negatively affect your credit scores, can stay on your credit reports for up to two years, so even if you didn’t recently apply for the card, you may still see the inquiry on your report.

Soft inquiries: Alternatively, if you tried to prequalify for a credit card offer, you may see a soft credit inquiry on your credit report. A soft inquiry doesn’t affect your credit scores, but you’ll still be able to see it on your credit reports.

Authorized users

You may also see JPMCB on your credit reports if you’ve been added as an authorized user on any of its credit cards.

Being an authorized user means that the primary cardholder has added you to their account and has approved the credit card issuer to extend most of the terms of use to you. This means that you’re allowed to make purchases up to the primary accountholder’s credit limit, but you’re not officially responsible for repaying them.

If you’re an authorized user, one potential benefit is that the account and its activity will be reported on your credit. This means that factors like on-time payments and a low credit utilization rate (how much of the available credit being used at any one time) could help you build your credit. But beware that if the primary cardholder doesn’t keep up with payments, your credit may be negatively affected.

If you were incorrectly added as an authorized user, you should be able to remove yourself from an account by calling the credit card issuer.

What to do with an unauthorized hard inquiry from JPMCB?

Unauthorized hard inquiries: What happens if you spot JPMCB on your credit report and you don’t recall authorizing the hard credit pull in the past couple of years? It can be unsettling to realize you may have an unauthorized hard inquiry on your credit report.

If you find yourself in this scenario, consider these five tactics.

1. Check with the company that performed the inquiry. Ask for proof that you authorized the inquiry. If the bank can’t provide it, request that it remove the inquiry from your credit report. (Learn more about how to remove erroneous hard inquiries.)
2. If you suspect fraud, report it using the Federal Trade Commission’s IdentityTheft.gov website. You may also want to consider filing a police report.
3. Freeze your credit. To prevent identity thieves from further using your personal financial information, you may want to consider putting a freeze on your credit. You’ll have to contact each credit bureau separately to do this, and you probably won’t be approved for new financial products while the freeze is in place. A credit freeze won’t retroactively protect your credit, but by preventing any new hard inquiries, it can help stop identify thieves from opening a new account in your name while your credit is frozen.
4. Place a free fraud alert on your credit with the major credit bureaus.
5. Dispute the unauthorized inquiry with the credit bureaus. The credit bureaus are required to investigate all disputes and remove or update any information that turns out to be incorrect.

What credit cards are issued by JPMCB?

You might have one of JPMorgan Chase Bank’s credit cards in your wallet without realizing it’s a Chase card. In addition to its Chase-branded credit cards, the bank also issues the following cards:

• Amazon Prime Visa
• Southwest Rapid Rewards® Priority Credit Card
• Southwest Rapid Rewards® Plus Credit Card
• Southwest Rapid Rewards® Premier Credit Card
• United Club℠ Infinite Card
• United℠ Explorer Card
• United Gateway℠ Card
• United Quest℠ Card
• Marriott Bonvoy Boundless® Credit Card
• Marriott Bonvoy Bold® Credit Card
• World Of Hyatt Credit Card

Next steps

Now that you are familiar with JPMCB card services you won’t be surprised the next time it appears on your report. Additionally, keeping an eye on your credit report — and adding credit monitoring when possible — is always a good way to try and avoid mistakes and fraud. Approximately one in five people find a mistake on their credit reports, according to a 2013 study from the Federal Trade Commission. These errors can end up costing you in terms of loans, credit cards and other financial products you may miss out on, which is why it’s important to routinely check your credit reports.

You can get a free copy of your credit reports from all three major credit bureaus periodically from annualcreditreport.com. You can also always access your credit reports and check your credit scores for free using Credit Karma.

You may be seeing an inquiry on your credit reports from COAF if you recently purchased a car or applied for prequalification from Capital One Auto Finance.

You may also see it on your reports if you’re a co-applicant on an auto loan from this lender. Here’s what you need to know about COAF on your credit reports.

Why is COAF on my credit reports?

Capital One offers new, used and refinance auto loans through its auto finance arm, Capital One Auto Finance.

If you applied to COAF for your car financing needs, you’ll likely see the activity reflected on your credit reports as a credit inquiry (also known as a credit pull). You could also see COAF on your credit reports if you co-signed on an auto loan through Capital One Auto Finance.

Hard and soft inquiries

If you applied for prequalification with COAF, you’ll probably see a soft credit inquiry show up on your credit reports. Though a soft credit inquiry will appear, it won’t affect your credit scores.

If you liked the estimated auto loan terms you saw via prequalification and took a trip to a participating dealership, you may have completed your auto loan application, resulting in a hard credit pull. A hard credit inquiry can negatively impact your credit scores and can stay on your reports for about two years.

It’s possible that those final terms were less than attractive and you decided to go with a different financing option — you’ll still see one or more credit inquiries on your reports.

So even if you didn’t open an auto loan with Capital One Auto Finance, both prequalification and full application with the lender would cause “COAF” to appear on your credit reports.

If you didn’t apply for an auto loan from Capital One Auto Finance and you have a hard inquiry from COAF on your reports, you may be dealing with a case of identity theft. There are some steps you should take right away if you spot an unauthorized hard inquiry on your credit reports.

You’re a co-applicant on a COAF auto loan

Capital One Auto Finance allows you to apply for a car loan with a co-applicant. This can come in handy if you have less-than-stellar credit and your co-applicant has a stronger credit history.

If you agreed to be a co-applicant on a COAF auto loan, you can expect to see the inquiries on your credit reports. Keep in mind that being a co-applicant can affect your credit, too.

What to do if there’s an account you don’t recognize on your credit reports

Seeing COAF show up unexpectedly on your credit reports could be confusing and stressful. Once you understand that COAF is Capital One Auto Finance, it might ease your mind, assuming you recently applied for a car loan through COAF.

But if you didn’t, and you believe COAF on your credit report is an error — or, worse, it was an unauthorized inquiry — it may be a sign of identity theft.

That’s just one of several reasons it’s a good idea to regularly check your credit reports. You can request access to your credit reports from all three of the major consumer credit bureaus for free every week on annualcreditreport.com. You can also check your free credit reports from Equifax and TransUnion anytime on Credit Karma.

When student loan or mortgage payments become overwhelming, you may be able to turn to loan deferment or loan forbearance for a temporary break on making payments.

The first thing to know is that deferment and forbearance have somewhat different meanings, and function differently, for student loans versus mortgages. 

And factors like how to qualify, interest accrual and what happens when you resume payments can depend on the type of loan you have and the particular lender. 

Here’s how it breaks down. 

Let’s look at how loan deferments versus forbearances typically work for student loans and for mortgages.

• Student loans: Deferment versus forbearance
• Mortgages: Deferment versus forbearance
• How deferment and forbearance affect credit
• Deferment or forbearance alternatives

Student loans: Deferment versus forbearance

Both deferment and forbearance can help you get temporary relief from your student loan payments. But there are differences between the two in how to qualify — and in costs.

How student loan deferment works

With federal student loans, the government determines deferment eligibility requirements and the loan servicer determines if you’ve met those requirements. If you meet the requirements, the loan servicer will allow you to temporarily stop payments on your student loan.

If you have a subsidized federal student loan, the primary benefit of deferment over forbearance is that interest stops accruing during the deferment period. When the deferment period is over, your standard student loan payments resume.

Unsubsidized federal student loans don’t qualify for the same break on interest during deferments.

With private student loans, not all lenders or loan servicers offer deferments. Among those that do, qualifying requirements and terms (including if you’ll accrue interest during the deferment period) vary. You can check with your lender or loan servicer directly to find out if it offers deferment, and whether you’ll accrue interest during the deferment period.

How do I qualify for student loan deferment?

For federal student loans, you’ll have to submit an application for deferment with your loan servicer. You’ll typically have to meet one of the following criteria to qualify for student loan deferment.

• Unemployment — People currently out of work or working less than full time
• Rehabilitation — People enrolled in approved rehabilitation training programs 
• Economic hardship — For example, if you are receiving welfare benefits or have earnings below the poverty line
• In-school or grace period deferment — Recent graduates or students attending at least half-time (applies to certain federal loans); the grace period for deferment is six months after a student has graduated or left a school program   
• Military active duty — If you are doing military service in connection with a war, military operation, or national emergency, for example 
• Cancer treatment — People currently diagnosed with cancer and receiving treatment

Check out Federal Student Aid’s complete list of qualifying criteria for federal student loan deferment. Keep in mind that deferment periods may vary depending on your circumstances. 

For private student loans, contact your servicer to see if deferment is an option, how to qualify and what the terms are. 

How student loan forbearance works

With federal student loans, forbearance means lowering your payments or suspending them altogether for a period of time. Forbearance terms may be in increments of up to 12 months at a time, for a total of up to three years. 

But generally, interest won’t stop accruing during the pause. And that will add to the total cost of the loan.

For example, say you start off with a loan balance of $60,000, and your interest rate is 6%. Excluding any potential fees or charges, if you put your loan in forbearance right away, for 12 months, $3,600 in interest would accrue on your loans. If that additional cost gets tacked onto your total owed, it could mean bigger monthly payments once your payments resume. 

Private student loans may or may not have a forbearance option — you’ll have to reach out to your loan servicer to find out if there is, and how it works.

How do I qualify for a student loan forbearance?

For private student loans, forbearance availability — and any terms and rules — will vary based on what your loan servicer offers.

For federal student loans, there are two types of forbearance options — general forbearance and mandatory forbearance — and eligibility depends on the type of federal loan you have.

General forbearance

A general forbearance is currently only available for federal Direct Loans, Federal Family Education Loan program and Perkins loans. 

With a general forbearance, a federal student loan servicer or lender will typically consider you if you’re experiencing financial hardship, such as dealing with medical expenses or unemployment, or any other reason the lender accepts — but there are no exclusive categories of hardship required. If approved, your loans may be in forbearance for up to 12 months. At the end of a forbearance, you may ask for an extension, but you can only extend general forbearance for up to three years. 

Mandatory forbearance

Mandatory forbearance applies only to certain types of federal student loans, and qualifying factors are stricter and more specific, compared to general forbearance. But if you qualify by meeting at least one of the following circumstances, your federal student loan servicer must approve your forbearance:

• You’re currently serving in an AmeriCorps position for which you received a national service award. Request forbearance.
• You’re employed by the U.S. Department of Defense and qualify for the military student loan repayment program. Request forbearance.
• You’re a medical or dental resident or intern and you meet further qualifications. Request forbearance.
• You’re on active duty with the U.S. National Guard. Request forbearance.
• Your monthly student loan bills are more than 20% of your monthly gross income. Request forbearance.
• You’re a teacher and qualify for the Teacher Loan Forgiveness Program. Request forbearance. 

Mandatory forbearances are available only for federal Direct Loans and FFEL Program loans, unless otherwise noted in the linked info listed above.

Both student loan deferment and forbearance might be able to help you better handle your finances during a difficult time, but you’ll want to make sure you understand all that’s involved — including whether you have other options. 

Mortgages: Deferment versus forbearance

When it comes to mortgages, the definitions of deferment and forbearance aren’t as clear cut or consistently used as they are with student loans. The way a deferment or forbearance works — including the terms and how to qualify — varies among mortgage lenders. 

Mortgage ‘deferment’

There’s no set definition for what some mortgage lenders may offer as a mortgage “deferral” or “deferment” — and the term is not common in the context of mortgages. 

In some cases, deferment may refer to a special repayment plan that you work out with the lender to give you a chance to regain your footing. In these arrangements, you may repay the missed amount over time, for example, or possibly add the total of any deferred payments to the end of the loan period. Typically, interest does not stop accruing. 

Mortgage forbearance

Forbearance is the much more common way that mortgage lenders refer to temporarily pausing or adjusting payments. You can typically request a financial hardship forbearance that will get your mortgage payments reduced or put on hold altogether for some period of time. 

How mortgage forbearance works

How mortgage forbearance works will depend on the type of loan you have and your lender. The first step is calling your loan servicer as soon as possible to discuss your situation and find out what your options are — including how long your forbearance may be. Terms may be anywhere from one to three, six or even 12 months.

You’ll also want to find out how your lender expects you to catch up on those reduced or paused payments once your forbearance is up.

It could mean making a lump sum repayment, making additional partial payments to catch up, making bigger monthly payments, or making other modifications to your loan.

It’s important to know that interest will likely still accrue during any pause or reduction in your mortgage payments, adding to the total cost of your loan. 

Bottom line: Asking for all details about how a deferment or forbearance program works is essential to understanding what you’re getting into, including what the costs will be and whether you can afford the terms of catching up.

How do I request a mortgage deferment or forbearance?

Typically, to request a deferment or forbearance on your mortgage, you’ll need to contact your mortgage lender as soon as possible. It helps to be prepared for the call. Explain the nature of your hardship and be prepared to talk about how much you can afford to pay each month.

How deferment and forbearance affect credit

When it comes to student loans, both deferment and forbearance should have a neutral effect on your credit. The keys are to be proactive — reach out to your lender as soon as you think you need help — and to make sure you understand and follow all terms.

But with mortgages, deferment or forbearance may be reported to the major consumer credit bureaus. In those cases, the deferment or forbearance will be visible on your credit reports, so lenders may take them into consideration when deciding whether to extend credit to you — even if you’ve abided by all the lender’s terms as agreed.

Is a mortgage deferment or forbearance on your credit reports worth it?

If a break in payments buys you time to get on your feet and avoid losing your home, you may decide the answer is yes. The alternative could be a foreclosure, which would mean losing your home and investment and a negative mark on your credit reports that remains for seven years.

Deferment or forbearance alternatives

You may have some options other than deferment or forbearance if you’re having trouble keeping up with loan payments. Here are a few to research.

For student loans: Income-driven repayment

Depending on how much you owe on your student loans compared to your income, an income-driven repayment program may be an option. This is typically only available for federally funded loans.

With income-driven repayment programs, you may be able to get your loan payments reduced according to changes in your income. In some cases, you may not have to make a monthly payment until your financial situation improves.

To learn more about the four income-driven repayment programs, check out the Education Department’s federal student aid website.

For student loans and mortgages: Refinancing

Whether it’s for your student loans or your mortgage, refinancing may be an avenue that’s more cost-effective than a deferment or forbearance — if you can secure a lower interest rate and/or a longer repayment term than you have with your current loan. The result could be lower monthly payments, which could relieve some pressure on your monthly budget. 

But remember, even if you have healthy credit and get a good refinancing offer, there’s usually a cost to pay in fees and interest. A longer repayment term, even with a lower interest rate, typically means you’ll pay more over the life of the loan.

For mortgages: Loan modification

Loan modification is another alternative that may work for you. Modifying your mortgage is different than refinancing in a key way: When you’re refinancing your mortgage, you replace your original home loan with a new one. If you qualify for a loan modification, you and your loan servicer agree on ways to change your existing loan so that it’s more manageable for you (but it is technically the same loan).

That could mean extending the term of the loan, a lower interest rate or changes to other terms. The goal is a workable solution that keeps you in your home and making on-time mortgage payments — a compromise that works for both you and your lender.

You can check out the Federal Trade Commission’s resource page for people struggling with their mortgage payments to learn more about different options.

Next steps

Now that you have an idea how deferment and forbearance work with student loans and mortgages, you can consider your options.

With qualifying student loans, deferment may offer the most benefit if you can get a break on payments and avoid piling up interest. But before you put your loans on hold, consider talking to your student loan servicer about whether you qualify for income-driven repayment options.

With mortgages, a deferment or forbearance is an option that may allow you to pause or adjust your payments, but the terms can vary from lender to lender. The most important step is to reach out to your lender as soon as possible to find out what your options may be.

Be sure to get all details about what happens with interest and how your lender expects you to catch up once the deferment or forbearance is up. And you may want to check with your mortgage lender about a loan modification, instead — even if you’ve been turned down before. 

In addition, you might want to consider student loan or mortgage refinancing. If your credit is solid and you can get a lower interest rate, it may be a good way to lower your payments and create a little more breathing room in your monthly budget. Just remember that refinancing can also mean additional fees and lengthening the term of your loan, which could cost you more over the longer term.