There are two major contributing factors that can quickly reduce your credit score.

  1. Payment Defaults
  2. Late Repayment History

You can ask for assistance from your credit provider under financial hardship grounds to prevent these factors from having an adverse affect on your credit file and credit score.

Some examples of financial hardship may be due to the following;

  • you become ill and couldn’t earn an income
  • you lost your job
  • you had a family breakdown or you have unexpected expenses

Depending on your circumstances, you and your lender may agree to a financial hardship arrangement.

For example, this may be that you stop making repayments for a few months to get a bit of financial relief, or you continue to make smaller repayments to reduce the total balance you owe.

Hardship Assistance and Credit Defaults

If you are experiencing hardship, you can ask your credit provider to help you. This is known as a request for “hardship assistance”. Once you have asked for hardship assistance, the credit provider must respond to you in writing. The credit provider shouldn’t list a default while this request has been made and you are awaiting an outcome and for 14 days after advising you of the outcome. You may be asked to complete and return a statement of Financial Position, it’s important to return this information as quickly as possible so that the credit provider can assess your circumstances and provide you with a response. To fix your credit afterwards is always much more of a hassle than to ensure that you keep up the communication with the credit provider, and the record of your contact with them in the event of an erroneous credit listing will greatly assist you.

It’s important to act quickly is you receive a default notice and are not able to make the payment immediately, contact the credit provider and explain your circumstances. Keep a note or record of your call and where possible send an email as this is a great way to track your communication.

If the credit provider listed the default before 14 days had passed, then it may be removed. We Fix Credit can assist you with the process of removing these credit default listings, and build your credit score to improve your chances of obtaining finance.

Late repayment History and how to prevent this from affecting your score

Your repayment history stays on your credit report for 24 months.

Financial hardship information – both temporary or permanent arrangements – only stays for 12 months.

During this time the Credit provider has a obligation to:

  • not show missed payments during a financial hardship arrangement (as long as you make the repayments agreed as per the arrangement)
  • not include the reason for the financial hardship arrangement
  • not show any information about your financial hardship arrangement after twelve months.

Credit reporting bodies are prohibited from including any financial hardship information when calculating your credit score

  • a lender cannot close or reduce your credit card limit just because you have received financial hardship assistance
  • if your lender gets your credit report for the purpose of collecting overdue payments it will not include information about the financial hardship arrangement
  • only licensed lenders can view the financial hardship information on your credit report. Unlicensed entities cannot supply or access this information e.g. energy providers or telcos.

If you take no action, your credit report and credit score can be negatively impacted and affect your borrowing capacity in the future. Credit reporting bodies do not use financial hardship information to calculate your score, however, missed repayments do impact your credit score significantly.

If you took out the loan with another person (a joint loan), you can still ask the lender for a hardship variation. You can do this even if the other person does not agree or you cannot contact them.

Often the credit providers make errors and do not follow the correct guidelines with reporting late credit payment history and listing default listings prematurely.

We Fix Credit provide you with a free assessment of your circumstances and are able to help you through what is possible to have removed from your credit report to elevate your credit score. This credit repair process of removing credit default listings is an efficient process and we have helped many Australians over the last 16 years regain their financial dignity. We can provide credit fix solutions tailored for your individual needs.