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 loan 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: Loan 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.”
Here is the repayment calculator (student loan repayment calculator): https://www.ato.gov.au/calculators-and-tools/study-and-training-loan-repayment-calculator/
If you’d like to discuss any of the above in further detail please don’t hesitate to get in touch today – we at Premium Finance Group Australia are here to help any way we can.
To find out more, give us a call on 07 4720 8888 or reach out through our contact form at https://www.premiummortgage.com.au/contact-us.