Payment holidays won't affect credit scores

Friday 3 April 2020

Banks have quashed speculation that payment holidays will affect customers' credit scores and their ability to borrow in the future.

Banks rolled out six-month payment holidays for borrowers affected covid-19 this week. Owner-occupiers, investors, and business owners can take a payment holiday on principal and interest payments, but their loans will accrue interest over the period.

The payment deferrals are part of a huge intervention by the Reserve Bank to prevent a financial catastrophe, as covid-19 takes a stranglehold on the New Zealand economy. 

However, some advisers have expressed fears those taking payment holidays would be referred to credit agencies, or face difficulties obtaining financing in the future. 

Banks have moved to allay those concerns. 

Westpac says customers who are not in arrears will be marked with a 'payment not required' flag, which will be reported to credit agencies, but will not impact borrowers' ability to get new credit in the future. 

Only borrowers who are in arrears before their payment holiday will be marked with a 'hardship' flag, a Westpac spokesman said. 

BNZ also confirmed its payment holidays won't affect credit scores: "Other banks will build their credit models differently so I cant speak on their behalf, but if a customer does take a deferral, it doesn’t impact their internal credit rating for us."

ANZ echoed the same line: "A home loan repayment deferral alone won’t impact a customer’s credit rating. However, if they’ve already missed repayments for any reason, even if we later give them a repayment deferral, this may have impacted their credit rating."

A Kiwibank spokeswoman said payment holidays would not affect credit scores "if they apply due to covid-19". 

Comments from our readers

No comments yet

Sign In / Register to add your comment

Property News

Weak sales, resilient prices

Auckland’s housing market saw another slump in sales volumes in May but prices are holding steady, according to the city’s largest real estate agency.

House Prices

House price drops are short-lived - Alexander

Periods of house price decline are rare and "short-lived", says economist Tony Alexander, amid forecasts of a drop of 10%-15% this year.

Commercial

Bright spots in commercial outlook

Nearly 60% of commercial property investors think that opportunities lie ahead but they are also believe there are changes in store for the sector.

Mortgages

Bank LVR limits on hold

Banks have not relaxed loan-to-value ratio limits for investors, despite the Reserve Bank's move to scrap LVR rules.

Site by PHP Developer