You don't need to miss a payment to get help

Financial hardship doesn't always begin with a crisis. Sometimes it's the gradual squeeze of everyday expenses that leaves Australians struggling to keep up. But support is available, and you don't have to wait until you've missed a payment to ask for it.

For many Australians, managing household finances has become an increasingly difficult balancing act.

Between mortgage repayments, groceries, energy bills and other essentials, there's often little room left in the budget for unexpected expenses, let alone another interest rate increase.

When money gets tight, the natural response is often to cut back. We compare prices, cancel subscriptions, reduce discretionary spending and look for ways to stretch every dollar further.

But what happens when cutting back is no longer enough?

Recent research commissioned by CreditSmart found that 43% of Australians experienced financial stress in the past 12 months.

Of those, 65% had taken steps to improve their financial situation, including reducing spending and comparing prices. Yet just 9% had reached out to their lenders for support.

These findings highlight something important: Australians are taking proactive steps to manage financial pressure, but many may not realise help is available beyond how they manage their own household budgets.

Financial hardship doesn't always look like a crisis

When we think about financial hardship, we often associate it with major life events such as losing a job, becoming seriously ill or experiencing a relationship breakdown.

While these circumstances can certainly create financial difficulties, hardship can also develop gradually.

For some households, the cumulative impact of higher mortgage repayments, increasing grocery bills, insurance premiums and everyday expenses can eventually make it difficult to manage existing financial commitments.

You might still be employed, earning a reasonable income and paying your bills on time, but finding that there's increasingly little left over each month.

This is where it's important to understand that financial hardship isn't necessarily about how much you earn. It's about whether your current circumstances allow you to meet your financial commitments.

Recognising those warning signs early is important.

Your lender can help before you miss a payment

One of the biggest misconceptions about financial hardship assistance is that you need to have already fallen behind on your repayments to qualify.

That's simply not the case.

Lenders have financial hardship assistance programs designed to support customers experiencing difficulty meeting their credit repayments.

Depending on your circumstances, assistance might include temporarily reducing repayments, deferring payments or pausing repayments for an agreed period.

These arrangements aren't one-size-fits-all. Your lender will need to understand your individual circumstances to determine what options are appropriate.

It's also important to understand the terms of any arrangement, including whether interest will continue accruing and how deferred repayments will be managed.

The key is to make contact early, ideally before a missed payment creates additional financial pressure.

What does financial hardship mean for your credit report?

Another important consideration is how financial hardship assistance affects your credit history.

The good news is that financial hardship information cannot be used to calculate your credit score, so entering into a financial hardship arrangement won't, in itself, affect your score.

A financial hardship arrangement will be recorded on your credit report, but this information is removed after 12 months. Your credit report won't disclose why you needed assistance.

During the arrangement, your repayment history will reflect whether you've met the agreed hardship repayments, rather than your original repayment schedule. As long as you meet those agreed obligations, your repayments will be recorded as up to date.

This means you can seek support without worrying that the hardship arrangement itself will damage your credit score. However, it's important to keep up with your agreed repayments and let your lender know if your circumstances change.

Four steps to take if repayments are becoming difficult

1. Contact your lender early

Don't wait until you've missed a payment. Explain that you're concerned about meeting your upcoming repayments and ask about hardship assistance.

2. Be open about your circumstances

Whether your expenses have increased or your income has changed, explaining your situation will help your lender identify appropriate options.

3. Understand what's being offered

Ask how any repayment changes will work, how long they'll last and what happens when the arrangement ends.

4. Know where to find free, independent support

CreditSmart.org.au provides free, unbiased information about financial hardship assistance and credit reporting.

If you need more personalised assistance, the National Debt Helpline (ndh.org.au or 1800 007 007) offers free, confidential and independent advice from qualified financial counsellors, who can help you understand your options, manage debts and access additional support services if needed.

Financial hardship can affect anyone, and seeking assistance is a responsible step towards managing your financial wellbeing.

If there's one thing Australians should remember, it's this: you don't need to exhaust every other option or reach a breaking point before asking for support. Sometimes, the most important financial decision you can make is simply starting the conversation.

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