Credit scores protected during mortgage payment holidays

Taking a break from mortgage payments won’t affect your credit rating, credit reference agencies have confirmed, providing peace of mind for those struggling financially due to the coronavirus outbreak. Many people are concerned about the possibility of seeing their incomes fall or even losing their jobs, but may be reluctant to take a mortgage payment holiday because they’re concerned about the impact it might have on their credit score. Usually missed debt repayments negatively affect credit scores, which can make it harder to borrow in future. The three major credit reference agencies, Experian, TransUnion and Equifax, have confirmed that they will protect people’s credit scores when they take a payment break through a new industry agreement. This involves implementing a special measure called an “Emergency Payment Freeze”, which ensures there won’t be any damage to credit scores during an agreed payment holiday. These holidays will not be recorded anywhere on your report. Jonathan Westley, chief data officer at Experian said: “These are challenging times. While everyone is rightly focused on staying safe and healthy, we know that many people are also concerned about the impact on their income. If you’re worried about meeting regular payments because of the pandemic, it is crucial that you speak to your lenders and other providers as soon as possible so they can help.”Expect delays

It’s crucial that you contact your lender and obtain their agreement to a payment holiday. Don’t simply cancel your direct debit, as this will be recorded on your credit file as a missed payment, and could affect your ability to borrow or remortgage in the future. If you’re trying to get in touch with contact your lender to arrange a payment holiday, bear in mind that they are currently inundated with calls, so it may take longer than usual for them to respond. Several lenders now allow you to apply for a payment holiday online, so it’s worth checking if yours will allow you to do this. Bear in mind though, that there may also be alternative options to taking a payment holiday which could help make your monthly costs more manageable. Find out more about how mortgage payment holidays work in our article 'Help with mortgage costs'.