New credit reporting laws a win for customers
Banks have agreed on a consistent and fair approach to credit reporting for customers that are approaching the end of their initial COVID-19 deferral period
In April 2020, ABA member banks agreed that customers who deferred their loans as part of a COVID-19 assistance offering would not have missed repayments reflected on their credit report. This was an industry first, ensuring customers were not unduly impacted because of the crisis.
As the initial loan deferral period comes to an end, and the next phase of support for those still experiencing financial difficulty begins, Australia’s banks have agreed a new set of credit reporting principles that may help reduce stress and give customers much-needed breathing space.
Will banks be reporting that I’ve had a loan deferral to the credit bureau?
No. Your credit report will not include a note that you have had a loan deferral.
What will happen if I need to extend my deferral?
Banks have agreed to not record missed payments on your credit report during the extension. This means your repayment history information will be reported as up to date or blank, depending on your payment status when you applied for the deferral.
What will my credit history be when I exit my deferral?
If you were up to date with repayments prior to your application for a deferral, you will exit with up-to-date repayment history information. This applies whether you recommence repayments or your loan is restructured.
What if I was in arrears prior to applying for a deferral?
Customers that were in arrears prior to applying for a deferral should contact their bank to discuss next steps.
This is important as otherwise there could be adverse repayment history information listed on your credit report that will impact your credit score. For example, banks have agreed to record customers as up to date if they catch up on their arrears before exiting the deferral, or if their loan is restructured.
What about if I need to enter a hardship arrangement with my bank?
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.
Principles for consumer credit reporting during COVID-19
ABA member banks agree to adhere to the following principles for loans reaching the end of their initial COVID-19 deferral period.
- Customers that were up to date with loan repayments prior to their application for deferral will exit with:
- up-to-date repayment history information if they recommence repayments, their loan is restructured, or they are granted an extension to their deferral period; or
- a credit report that begins to have no repayment information entered if they agree to another form of hardship arrangement.
2. Customers that were in arrears prior to their application for deferral will exit with:
- will exit with up-to-date repayment history information if they catch up their arrears prior to exiting or their loan is restructured;
- will exit with improved repayment history information where partial payments have been made prior to exiting;
- will exit with a credit report that continues to have no repayment information entered if they are granted an extension to their deferral period or enter another form of forbearance arrangement; or
- should contact their bank to discuss next steps if they are otherwise due to commence full repayments.
These principles apply until end of March 2021