Recent events have placed many Australians in financial uncertainty and impacted their ability to maintain regular loan repayments.
While lenders have taken steps to support borrowers through this difficult time, you might be wondering whether a late payment could affect your credit score.
When does a late payment become a default?
Loan repayments over $150 and sixty days past due can be noted on your credit report as a default.
Having a default listed on your credit report can impact your ability to borrow in the future, so it’s important to avoid this outcome wherever possible.
Talk to your lender
Talking to your lender proactively about any difficulties you may be experiencing in meeting your repayments is an important first step.
Most lenders are keen to work with you to get better outcomes. Depending on your circumstances, you may be able to arrange to reduce or even pause your current repayments.
A request for help and varying or pausing repayments will not affect your credit report, although this is expected to change during 2021.
Get into good habits
As more lenders move to adopt comprehensive credit reporting (CCR), it’s a good idea to build a habit of paying your loans on (or before) the due date.
Under CCR, your financial behaviours, both positive and negative, are included in your credit report. This can include missed payments, once they are more than 14 days late.
Building up a strong credit repayment history can serve you well and help counter the impact of any unexpected late payments.
To find out more how your repayment history may affect your credit report, speak to a Liberty Adviser today.