In the wake of Australia’s devastating bushfires, a spotlight has fallen on the aftermath natural disasters can silently wreak on people’s credit rating and financial well-being.
The impact of a disaster, especially if you are not prepared, can prove to be a recipe for short-term financial hardship and have long-term consequences limiting your access to finance in the future.
If you have been affected or could be, a few key steps will help protect your credit:
With the broad adoption of Comprehensive Credit Reporting (CCR) a sudden interruption to regular income and personal cashflow due to a natural or personal disaster can drag your credit rating down. CCR requires the repayment performance by individuals on credit facilities (e.g. credit cards, car loans and mortgages) is reported to credit bureaus and as a result, arrears drags your score down.
It’s not surprising repayments are not possible or are deprioritised following “…the destruction of, or severe damage to, the home of the individual…” and this is why ‘Financial Hardship’ legislation was implemented by the Government and is a requirement that credit providers must follow as part of their licencing conditions.
Importantly, once you have been recognised as being in ‘Financial Hardship’, repayment information is not shared with the credit bureaus, so your score should be maintained until you come out of hardship and resume normal repayments.
(Note, utility providers do not report this repayment information, but they do have hardship processes people can access).
So, with our recent bushfires in mind, what can you do before and after to be disaster ready, and how might lenders be able to help?
At Fair Go Finance we are committed to helping our customers impacted by natural disasters and during any time of financial stress.
We encourage affected customers to contact us as soon as possible so we can discuss options such as:
As we’ve recently seen, natural disasters hit with little warning. Being prepared as best you can and planning ahead not only positions you to recover, it will help protect your financial wellbeing and credit score, preventing a short-term event from having long-term consequences.
*Financial Advice Disclaimer
The information in this article and the links provided are for general information only and should not be taken as constituting professional advice from the website owner – Fair Go Finance Pty Ltd.
Fair Go Finance is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances.
Fair Go Finance is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this information.