Variation financial hardship arrangement
This explanation applies to you if:
- you are experiencing financial hardship and having trouble making credit account payments and
- you and your lender have agreed to vary your loan agreement to help you get through that hardship
- A variation financial hardship arrangement appears on your credit report as 'financial hardship information', together with your repayment history.
- Your repayment history will show that you have met your obligations if you make the reduced payments on time. This protects your credit report if you have experienced financial hardship.
- Financial hardship information does not exclude you from applying for credit in the future. It cannot be used in calculating your credit score, and will come off your credit report after 12 months.
- Talk to your lender if you still struggle to make the reduced payments.
What this means for your credit report
A variation financial hardship arrangement changes your loan agreement. This could include a short-term or long-term reduction to your loan repayments. Or it could include another type of change, like reducing the interest rate or moving to interest only repayments.
If you’ve agreed to a variation financial hardship arrangement, your credit report will include financial hardship information. This will be shown as a in the month that the change take effect.
This information reflects that your loan agreement was changed due to financial hardship. Your repayment history is based on the arrangement you agree to with your lender. That is, if you make the reduced payments on time, your repayment history will show as up to date (i.e., or ).
A repayment history is a 24 month view of how you manage and pay your loan and credit accounts:
or means you are up-to-date with repayments (and mean the same thing)
to indicates how many months your repayments have been overdue
means repayments are 7 or more months overdue
A good repayment history can help when you apply for credit in the future.
If you've missed a repayment, restarting your payments and getting back up to date as soon as you can will help improve your credit report. Repayment history stays on your credit report for 24 months.
Financial hardship assistance is recorded on your credit report as financial hardship information.
A variation financial hardship arrangement is shown as a together with your repayment history.
If you have agreed to a variation financial hardship arrangement with your lender, as long as you make the agreed repayments on time, the repayment history will show you are up to date (i.e., or and include a ).
reflects a permanent change and will be shown once in the month that the loan was varied.
Financial hardship information only stays on your credit report for 12 months.
From that point, it's not possible to tell that a financial hardship arrangement was in place.
Seeking financial hardship assistance does not exclude you from applying for credit in the future.
If your credit report has financial hardship information, a potential lender may need more information about your current financial standing and if you can afford the new loan.
No matter what has happened over the last 12 or 24 months, making your payments on time now will help you look better to other lenders.
If you are experiencing financial challenges, the National Debt Helpline offers a free, independent, and confidential service.
ASIC's MoneySmart website also contains a list of free counselling services.