Banks wipe away credit history

AUSTRALIANS who have placed loans on hold due to the coronavirus pandemic will not have their credit ratings affected until at least the end of March next year.

The Australian Banking Association has eased credit rating guidelines until March 31, 2021, to allow customers to extend repayment deferrals.

It means banks will not refer borrowers to credit-rating agencies when they miss payments, something that would traditionally downgrade someone’s credit score.

Negative credit scores make it harder for borrowers to attain future loans.

At the beginning of the health crisis, the banking industry implemented sixmonth deferrals on home and personal loans for Australians facing financial hardship due to COVID-19.

According to the ABA, 900,000 loans have been deferred. Banks are in the process of contacting customers to see if further support is needed.

Banks are able to grant a further four-month loan deferral or move home loan repayments to interest only. ABA member banks will ensure customers reaching the end of the deferral period will restart loans with a repayment history that does not show missed payments.