The Australian Banking Association (ABA) has made official its approach to credit reporting through the COVID-19 crisis, with the primary driver of its decision being alleviating stress for Australian customers.
Borrowers who are granted a six-month deferral on loan repayments will not have their credit rating affected as a result of the holiday, so long as they were up to date with repayments prior to the economic impact of COVID-19.
“If a customer is granted a deferral on their mortgage and other credit products because of COVID-19, banks will report customers as not having missed a repayment, provided they were all up to date when granted relief,” explained ABA CEO Anna Bligh.
“Australia’s banks are here to support customers who have lost their jobs or significantly lost income because of COVID-19… Customers in these circumstances should not have to worry about their credit rating as well.”
The approach for customers who were already behind on their repayments before being granted a COVID-19 deferral has yet to be decided. Banks will simply not report the repayment history information for the duration of the deferral period through leaving that field blank; once the deferral has ended, the institution will determine how to report for those customers retroactively.
“There may be other factors which can affect a customer’s credit rating, but customers accepting a COVID-19 loan repayment deferral can rest easy that the deferral will not be one of them,” said Bligh.
The Financial Rights Centre has “warmly welcomed” the ABA announcement.
CEO Karen Cox said, “People calling our advice services have so much to contend with right now: the stress of not being able to pay their bills, fears for their own health, and fears for loved ones. They should not have to worry about their ability to access credit when this is all over.
“We warmly welcome the ABA’s announcement that their customer’s credit reports will be quarantined from the impact of this crisis and we call on the rest of the finance industry to follow suit.”