MY MONEY

Why your credit score should be the least of your worries right now

By

There are many things to worry about during the coronavirus crisis, but your credit score isn't one of them.

"The credit score should be the least of their worries right now," says Mike Laing from the Australian Retail Credit Association.

"Credit scores at the moment aren't all that meaningful, lenders have never relied on them totally anyway. Lenders do not make a lending decision solely based on that scores - they add a lot more to it."

credit score credit report phone bill

The best thing to do if you're worried about your credit score is contact the bank or lender to get the ball rolling on a hardship arrangement.

While there's no time like the present to do this, you won't be disadvantaged if it takes some time to organise due to the backlog currently facing banks and lenders - the arrangements will be backdated.

"Everyone worries about defaults - if you're receiving hardship help from the bank, by law no lender can start the default process," says Laing.

"No one will be knocking on your door. If you're getting help from your bank, nothing bad is going to happen like a default."

Six months down the track, if you apply for a loan you'll be asked how coronavirus impacted your finances, but it won't be a black mark against your name.

"Consumers should be assured that help from lenders will not have an impacted credit report for missed payment. Lenders are reporting them as current, or the lenders will cease reporting. There definitely won't be numbers there to reflect missed payments."

So as always, the best thing to do is speak up if you're experiencing hardship. You're far from alone, and it won't put you behind the eight-ball when we reach the other side of this nightmare.

"Look after yourself and don't worry about your credit score."

We're cutting through the confusion to help you manage your money during the coronavirus outbreak. Click here for more on how COVID-19 could affect your job, budget, super and investments.

RELATED STORIES

David Thornton is a journalist at Money magazine. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.
Post a comment
Link to something 135ElAgi