COVID-19 & Credit

The first thing you should do is to contact your lender and find out what your options are. Many lenders have hardship provisions in place and are offering ‘payment deferrals’ for periods of up to six months. As many contact centres have been inundated with calls, a good starting point is to check your lenders’ website for more information, most have specific COVID-19 support sections.

The four big banks have support packages for both consumers and businesses to help those affected by the COVID-19 pandemic:

• ANZ
• Commonwealth Bank
• National Australia Bank
• Westpac

The impact of COVID-19 on an individual’s credit report and score depends on the way information is reported by credit providers to Equifax and other credit reporting bodies.

Loan repayments are reflected in consumers’ credit reports as part of the repayment history information (RHI). If repayments are made on time each month this is reflected in a credit report and considered as part of an Equifax Score. Making repayments on time each month has a positive impact and several missed repayments can have a negative impact on an individual’s Equifax credit score.

Lenders and industry are working together to ensure consumers are supported and treated appropriately so their credit standing is not adversely impacted by COVID-19. Here are a couple of examples of how a ‘payment deferral’ arrangement due to COVID-19 could be reported:

• If a consumer is up to date with payments and enters a ‘payment deferral’ lenders may supply RHI as 0, or up to date. In this situation there will be no impact to the consumers’ credit report, it will be invisible as the information supplied to a credit reporting body will look as if the account is up to date (provided all other factors remain the same).
• If an individual is behind in repayments when they request a ‘payment deferral’ a lender may supply the information as ‘blank’ or RHI not reported. In this situation the Equifax Score will remain neutral or there may be some improvement in the score over time (provided all other factors remain the same).
• If an individual is up to date with payments and enters a ‘payment deferral’ and a lender supplies RHI information as ‘blank’ or RHI not reported there will be a slight reduction in the score over time (provided all other factors remain the same).

Equifax has put together these tips to help consumers manage their credit report during this time:

• If you are experiencing financial hardship contact your lenders and credit providers. Find out what your options are if you are unable to pay on time, or the full amount due, and ask if there is any assistance available.
• Pay what you can. To avoid having late payments show up on your credit reports, try to make at least the minimum payment on accounts, or pay any amount you and the lender or creditor agree upon.
• Stay up-to-date with your credit report. You are entitled to a free copy of your credit report every 12 months.

No, in Australia we do not have the ability to add a file note to a credit report.

Yes, you can get your free Equifax credit report at www.equifax.com.au