{"id":134697,"date":"2023-09-16T12:19:26","date_gmt":"2023-09-16T12:19:26","guid":{"rendered":"https:\/\/finbestnews.com\/?p=134697"},"modified":"2023-09-16T12:19:26","modified_gmt":"2023-09-16T12:19:26","slug":"are-the-hard-times-hurting-your-credit-score-how-to-check","status":"publish","type":"post","link":"https:\/\/finbestnews.com\/markets\/are-the-hard-times-hurting-your-credit-score-how-to-check\/","title":{"rendered":"Are the hard times hurting your credit score? How to check"},"content":{"rendered":"

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We are struggling pretty hard to make ends meet at the moment. Missing some bills, already unable to make our car repayments. So we have applied for, and been granted, a repayment holiday for six months. I\u2019m sure you can imagine how much stress this is all putting on us but my question to you is what damage it is doing to our futures? What will our credit scores look like after all this is over and the mortgage is not so expensive anymore? <\/strong>Thank you, Sylvia<\/strong><\/p>\n

Oh Sylvia, it\u2019s so tough right now. Inflation is flowing through to every aspect of everyone\u2019s budget and the pain is, in some cases, acute.<\/p>\n

<\/p>\n

\u201cFinancial hardship\u201d arrangements can no longer affect your credit score.<\/span>Credit: <\/span>Matt Davidson<\/cite><\/p>\n

To your question: recent changes mean you are able to access your credit report and score direct from any of the three credit bureaux in Australia: (Equifax<\/b>, https:\/\/registration.my.equifax.com.au\/eligibility-reason
Experian <\/b>https:\/\/www.experian.com.au\/consumer\/order-credit-report
Illion <\/b>https:\/\/www.illion.com.au\/#illion-for-individuals), once every three months. (Or in between if you\u2019ve been declined credit in the last 90 days or had an item corrected on your credit report.)<\/p>\n

And know you are not alone in being worried about it. The Equifax website notes there is heavy demand from Australians checking their credit scores and Experian tells me they\u2019re at a record number, up 42 per cent from 2022.<\/p>\n

You see, you are instantly able to see what damage has been done.<\/p>\n

On what you\u2019ve told me, though, there is good news and also potentially some bad.<\/p>\n

The good news \u2013 and a development post-COVID-19, when financial institutions basically made up how they recorded them \u2013 is that \u201cfinancial hardship\u201d arrangements can no longer affect your credit score.<\/p>\n

Crucial to your whole situation is that a record is kept for two years of whether you have made your repayments on time. Only payments that are for credit are treated this way. I will get back to utilities and other bills shortly.<\/p>\n

As of July 1 last year, provided you agree to and adhere to the terms of a hardship deal, your provider must now say every month that you have paid on time<\/i>.<\/p>\n

The only thing that will appear in your credit report is that you have<\/i> a financial hardship deal. No detail, no further disclosure.<\/p>\n

Better still, this designation will disappear from your file just one year after your arrangement has ended.<\/p>\n

On your other debt repayments, though, it\u2019s vital to realise you have only 14 days\u2019 grace before it will instead be recorded on your file that your repayment was late.<\/p>\n

Any such transgression will factor into your credit score calculation \u2013 repayment history is said to account for about 35 per cent, depending on the credit bureau \u2013 and push it down.<\/p>\n

And don\u2019t forget the record hangs around for two years, so you can expect your score to be suppressed for that long.<\/p>\n

So what about other bills?<\/p>\n

With these, you have a much longer 90 days before it goes on your report and is factored into your score.<\/p>\n

But the damage will be done for five years, which is an awfully long time.<\/p>\n

Here\u2019s some food for thought, though, Sylvia: you are not meeting repayments on your car\u2026 is it an expensive one? Is it a second car? Is it time to embrace austerity and sell it?<\/p>\n

You also mentioned the strain of your mortgage repayments. Know that the most competitive quality lender on the market is charging just 5.69 per cent (Tic Toc, backed by an authorised deposit-taking institution, which is important:<\/b> Bendigo and Adelaide Bank).<\/p>\n

No, you would probably not qualify for that new lender with a hardship designation on your file. But your existing lender can\u2019t look at that file unless you apply for a product change.<\/p>\n

So go to your existing lender: don\u2019t<\/i> mention you are struggling too hard but do<\/i> tell them you know they are charging over the odds based on the \u201cbest in market\u201d\u2026 and see if they extend you a discount.<\/p>\n

Finally, I recommend you give the National Debt Helpline<\/b> https:\/\/ndh.org.au\/ a call on 1800 007 007. They will put you in touch with a free financial counsellor in your local area, who will take a forensic look at your finances, identify where you could make savings and even advocate for you for better deals with your other creditors.<\/p>\n

You\u2019ve got this.<\/p>\n

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me. Follow Nicole on Facebook, Twitter or Instagram.<\/strong><\/p>\n