Covid 19 and impact on credit rating - HSBC

Robmo61

Got an email offering mortgage holiday but an added note saying that my credit rating will be affected, probably in a negative manner, if I took up their offer. Why can't they give a credit rating holiday in this environment to customers who otherwise have impeccable payment records?

[Deleted User]

Ask them how they will report it.

nyermen

I got an email yesterday from HSBC that clearly stated under "mortgage payment holidays" the words "with no risk to your credit rating". Check - you may have a new email?  Otherwise I'd call if you need it and clarify (Id think thats a good reason to call).

D3xt3r5L4b

Robmo61 said:

Got an email offering mortgage holiday but an added note saying that my credit rating will be affected, probably in a negative manner, if I took up their offer. Why can't they give a credit rating holiday in this environment to customers who otherwise have impeccable payment records?

Surely it's down to the lender - after all they are reporting correct and factual events

SnowTiger

Robmo61 said:

Got an email offering mortgage holiday but an added note saying that my credit rating will be affected, probably in a negative manner, if I took up their offer. Why can't they give a credit rating holiday in this environment to customers who otherwise have impeccable payment records?

Presumably your credit files will show your account balance didn't decrease and you made payments of £0.  A payment holiday.  I can't see a way around that.

However, I suspect after this is all over lenders will be very forgiving about how they interpret this period on credit files.

I also suspect credit at decent rates will be quite hard to come by for a while.

Mr87

SnowTiger said:

Robmo61 said:

Got an email offering mortgage holiday but an added note saying that my credit rating will be affected, probably in a negative manner, if I took up their offer. Why can't they give a credit rating holiday in this environment to customers who otherwise have impeccable payment records?

Presumably your credit files will show your account balance didn't decrease and you made payments of £0.  A payment holiday.  I can't see a way around that.

However, I suspect after this is all over lenders will be very forgiving about how they interpret this period on credit files.

I also suspect credit at decent rates will be quite hard to come by for a while.

I keep seeing people saying credit at decent rates will be hard to come by once the crisis has abated. I really don't understand why. Unless lenders all collectively turn irrational. Why do you think so (as a matter of interest?) 

SeanG79

Mr87 said:

SnowTiger said:

Robmo61 said:

Got an email offering mortgage holiday but an added note saying that my credit rating will be affected, probably in a negative manner, if I took up their offer. Why can't they give a credit rating holiday in this environment to customers who otherwise have impeccable payment records?

Presumably your credit files will show your account balance didn't decrease and you made payments of £0.  A payment holiday.  I can't see a way around that.

However, I suspect after this is all over lenders will be very forgiving about how they interpret this period on credit files.

I also suspect credit at decent rates will be quite hard to come by for a while.

I keep seeing people saying credit at decent rates will be hard to come by once the crisis has abated. I really don't understand why. Unless lenders all collectively turn irrational. Why do you think so (as a matter of interest?) 

Because lenders will face increased levels of defaults. At the moment granting payment holidays, but once those end, the world has been "reset" and business wont simply progress as it did before, so there will ultimately be increased levels of default. To counter that and ongoing uncertainty, rates will inevitably increase in the short term.

I know of banks (not on the High Street), who have already increased their lending rates. 

Under_the_Radar_2

When this first started kicking off in February I looked into mortgage payment holidays and all advice pointed to adverse effects on credit rating. As soon as the government announced payment holidays a lot of banks / finances places changed their wording to say it would not affect credit rating. It all comes down to how the finance company reports the payment holiday, given the current situation I don't think you will be adversely affected, and even if so, most lenders for the next few years will probably expect to see a dip in your rating for this time period and probably ignore it. I think it is more the wording is outdated for some websites though. Just my unprofessional observation.

Mr87

SeanG79 said:

Mr87 said:

SnowTiger said:

Robmo61 said:

Got an email offering mortgage holiday but an added note saying that my credit rating will be affected, probably in a negative manner, if I took up their offer. Why can't they give a credit rating holiday in this environment to customers who otherwise have impeccable payment records?

Presumably your credit files will show your account balance didn't decrease and you made payments of £0.  A payment holiday.  I can't see a way around that.

However, I suspect after this is all over lenders will be very forgiving about how they interpret this period on credit files.

I also suspect credit at decent rates will be quite hard to come by for a while.

I keep seeing people saying credit at decent rates will be hard to come by once the crisis has abated. I really don't understand why. Unless lenders all collectively turn irrational. Why do you think so (as a matter of interest?) 

Because lenders will face increased levels of defaults. At the moment granting payment holidays, but once those end, the world has been "reset" and business wont simply progress as it did before, so there will ultimately be increased levels of default. To counter that and ongoing uncertainty, rates will inevitably increase in the short term.

I know of banks (not on the High Street), who have already increased their lending rates. 

So I agree with short term rates, this has already happened to a degree as you say. This is against a backdrop of a fall in base rates so lending margins have already been increased to insulate against payment holidays / arrears / defaults. This could persist for a few weeks once crisis has abated, but as life returns to a reasonable level of normality, people will need haircuts, people will buy TVs, children will return to school, people will return to employment - it would quickly be unsustainable for individual lenders to keep rates high without losing business. This is not the same as the financial crisis where the underpinnings of domestic demand was unsustainable. So, touch wood, there should be bounce back.