Coronavirus has impacted financial matters across the UK and the government have provided several support packages to help support the economy. The measures put forward will be useful for people whose incomes have been affected but many have voiced concerns about long term ramifications.
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Some people are concerned about what impact these schemes may have on their credit scores.
This is understandable as several of the products offered support are usually key elements of credit ratings.
Mortgages, personal loans and credit cards can now have their payments frozen but consumers can rest assured that their credit scores will remain untouched.
The UK’s three major credit reference agencies recently announced that credit ratings for affected consumers will be protected.
In a joint statement, the following was detailed: “The three major credit reference agencies (CRAs), Experian, Equifax and TransUnion have, today, confirmed that consumer credit scores will be protected when people have put ‘payment holidays’ in place as a result of the COVID-19 pandemic.
“To help people applying for payment holidays, CRAs are implementing a special measure called an ’emergency payment freeze.’
“This ensures that an individual’s current credit score is protected for the duration of an agreed payment holiday.”
The FCA have also ensured that credit scores will not be impacted as changes to overdrafts and credit cards are enforced.
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While these announcements will be relieving for many consumers across the UK, there are still steps that could be taken to ensure that scores are kept in a healthy position.
James Jones, the Head of Consumer Affairs at Experian, provided advice for some of the best steps that could be taken:
Check your eligibility
“Use an eligibility service if you are looking to apply for credit, such as at Experian.co.uk.
“We can show you which deals you’re likely be accepted for, without affecting your credit score. “Based on your actual circumstances, this can include credit deals you are pre-approved for, guaranteed interest rates and, for balance transfer cards, if your required credit limit will be met – all greatly reducing the guesswork.”
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Limit your applications
“Don’t apply too often for credit, particularly if you are refused.
“Every application leaves a footprint on your report – too many and lenders may become concerned.”
Try to avoid missed payments
“We know that this is a very difficult time, but if you’re able to, it’s really important to pay all of your bills on time so you don’t damage your chances of getting credit in the future.
“If you can’t do this, try to pay at least the minimum amount due on your credit commitments.
“If you think you’re going to struggle to make any payments, due to the knock-on effects of the outbreak, please speak to your lender as soon as you can.”
Don’t cancel repayments without speaking to your lender
“Please don’t pause repayments, for example by cancelling Direct Debits, without first agreeing this with your lenders and providers.
“Missed payments not agreed with your lender could affect your chances of getting credit in the future.
“If you can’t get through to your lender by phone, you may be able to apply for support online.
“Several lenders have recently updated their websites to allow customers to apply for a payment holiday.”
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