The Consumer Lawyer

Covid-19: Payment holidays will not affect your credit rating

Lenders are allowing consumers to take a payment holiday of up to three months during the Covid-19 pandemic. However, consumers are writing to me concerned that if they ask for a payment holiday it will affect their credit rating. I’m pleased to say it won’t, here’s what you need to know:

Credit Reference Agencies

The three major credit reference agencies, Equifax, Experian, and TransUnion have confirmed that consumer credit scores will be protected when they have agreed ‘payment holidays’ as a result of the COVID-19 pandemic. To implement this protection, the credit reference agencies are classifying payment holidays as an “emergency payment freeze”. This ensures that an individual’s current credit score is protected for the duration of an agreed payment holiday.

What you should do?

When you ask for a payment holiday, ask your lender to confirm in writing that they agree to an ‘emergency payment freeze’ and ask them to confirm that the status of your account will be changed to reflect this.

To be certain that your credit rating will not be affected, you should also write to the main three credit reference agencies to inform them about the emergency payment freeze agreement and enclose a copy of the lender’s letter/email confirming this. Then, check that this has been properly noted on your credit file two weeks later.

How many emergency freeze agreements can I enter into?

There is no limit and my advice is to ask all your lenders

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