COVID-19 repayment amnesty over: how to avoid a bad credit rating


The COVID-19 loan deferral program and credit reporting amnesty is now over, which means banks will report any late repayments on mortgage or small business loans to credit agencies unless you’ve entered into a hardship arrangement.


The banks’ mortgage deferral program and subsequent credit score reporting amnesty officially ended on April 1.


The package was created during the peak of COVID-19 to provide loan repayment relief for almost one million home and business loan borrowers facing financial hardship.


Luckily, many people have since been able to resume their repayments – as of late February, just 2,803 small business loans (1.2%) and 22,480 housing loans (5%) were still deferred, figures show.


But, we’re not out of the woods yet.


The JobKeeper wage subsidy scheme has also just officially ended, which has the potential to put tens of thousands of households and businesses at risk once more.


If you think you might be impacted by JobKeeper, read on


Latest reports indicate up to 150,000 workers could lose their jobs this month due to JobKeeper ending.


If your ability to repay your home or small business loan might be affected in the months ahead, then it’s important to act now, rather than wait until after you’ve missed a repayment.


That’s because by then it could be too late and it might end up on your credit file.


Your most appropriate course of action, however, will depend on your individual circumstances, which we’ve broken up into two categories below.


Category 1: Repayments will be tight, but possibly doable


If your upcoming loan repayments are looking tight, but possibly doable, then get in touch with us today to discuss some financing options that might make your repayments more manageable.


These options might include:


– switching to interest-only repayments for a period of time, – renegotiating your rate with your current lender, – refinancing to another lender, – debt consolidation, or – a combination of these and other measures.


Category 2: You don’t think you’ll be able to make your repayments


If you’ve lost your job due to JobKeeper ending, for example, and the chances of making your repayments are looking a little grim, then it’s important to get in touch with your bank today to discuss entering into a hardship arrangement.


Not only will this potentially give you some breathing space on your repayments, but it will help keep any missed payments off your credit file, as the Australian Banking Association states below:


“For customers that enter into another form of hardship or forbearance arrangement with their bank, banks will not report the repayment history information. Instead, they will leave the field blank for the duration of the arrangement.”


If you’d like to discuss any of the above in further detail please don’t hesitate to get in touch today – we’re here to help any way we can.


Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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Disclaimer: Financial Solutions (ABN: 41 701 190 619) is a corporate authorised credit representative (Credit Representative Number 500747) of the Welfare Fund Ltd (Australia Credit Licence Number 423050 ABN: 25 155 698 105. Financial Solutions is also a referral partner of TJL insurance Pty Ltd (Australia Financial Services Licence Number 478959 ABN: 98 613 453). 

 

Financial Solutions has access to a panel of lenders through National Mortgage Brokers Pty Ltd (ACN 093 874 376 / Australian Credit Licence 391209), which is a fully-owned subsidiary of Liberty Financial Pty Ltd (ACN 077 248 983 / Australian Credit Licence 286596).  Financial Solutions has access to products including those from Liberty Financial.

The information on this website is of a general nature to give an indication of insurance products, financial services and mortgage products. It should not be considered financial advice and does not take into account specific and individual circumstances. Appropriate professional advice should be sought from accountants, solicitors and financial advisers before obtaining a product that takes into consideration individual circumstances.

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