If you enter into a financial hardship agreement with your lender, information regarding that arrangement must be shared with the credit bureaus alongside your repayment history information for the account. This applies for any mortgage, credit card, vehicle finance or personal loans you may hold.
Previously, when a customer entered into a hardship arrangement with their lender, the report they sent to the credit bureaus would show a series of blanks during the period of hardship. Blanks can signal red flags for some lenders.
Now, instead of blanks, a period of hardship will be recorded with a specific code depending on the type of arrangement: 'A' to reflect a temporary arrangement or deferral and 'V' to reflect a permanent variation to the loan. This letter will also be shown alongside repayment info. For example, if your repayments are on-time, your credit report might display ‘A 0’. If you’re late with a repayment, you might see ‘A 1’ to represent one late payment.
When the arrangement comes to an end, and the customer returns to their regular repayment schedule, their repayments will be reported as normal. After 12 months, the period of hardship is wiped from the record, giving customers a clean slate.
If, instead, a customer simply stopped making payments and fell into arrears, this would:
Impact their credit scores.
Remain on their credit report for 24 months.
Likely result in a stack of late payment fees.