Credit Score being impacted when it shouldn't?

Alecorn

Hi there
I have 2 loans, on both of them I have agreed to reduced the payment instead of holiday/freeze as I still can afford to make a partial payment. To my surprise today I have received the following notification "A Unsecured Loan account will be changed to a negative status on your next credit report" . My understanding was that the Credit Agencies were meant o protect our score during the lockdown period?
I have email the lender and this was their reply:

I've looked into this for you with regards to your credit file and how your account is reported.

As you're in a payment arrangement with us, this information will be reported on your credit file as being in an arrangement, and I apologise if this was not explained to you when going through the set up of this.

Being in an arrangement on your credit file does not have the same impact as a missed payment would have, had that been the case.

bradders1983

Be honest: if you were told it would impact your credit rating from the start, could you have afforded to have maintained the payments anyway to avoid it?

Alecorn

Unfortunately not  as we are both on furlough

bradders1983

In which case it wouldnt have mattered if it affected your credit rating or not, you had no choice. 

Alecorn

bradders1983 said:

In which case it wouldnt have mattered if it affected your credit rating or not, you had no choice. 

Do you actually have an answer to my question?

Vestraun

I don’t know why anyone is surprised about this, everyone that has taken a mortgage or pcp holiday is going to face the same. It’s not the same as a default but future lenders may look unfavourably on these “arrangements”. 

Takmon

Alecorn said:

Hi there
I have 2 loans, on both of them I have agreed to reduced the payment instead of holiday/freeze as I still can afford to make a partial payment. To my surprise today I have received the following notification "A Unsecured Loan account will be changed to a negative status on your next credit report" . My understanding was that the Credit Agencies were meant o protect our score during the lockdown period?
I have email the lender and this was their reply:

I've looked into this for you with regards to your credit file and how your account is reported.

As you're in a payment arrangement with us, this information will be reported on your credit file as being in an arrangement, and I apologise if this was not explained to you when going through the set up of this.

Being in an arrangement on your credit file does not have the same impact as a missed payment would have, had that been the case.

There is no requirement for them to "protect" your score and even if they did keep the score the same it wouldn't help you because no lender actually look's at the score on your credit report when making a decision and only look at the data it contains. 

What they have put on your credit report is correct and if they put anything else it would be false so your credit report would be incorrect and they can't do that. 

Hopefully one good thing that can come from all this is people will realise the importance of having a an emergency fund with three months expenses in it and if everyone had followed this advice then there would be far less people who are experiencing financial difficulty now. 
Both of your being on 20% less pay shouldn't really have caused you any issues if you had budgeted better before all this started. 

John_

What matters to you is how banks will view what’s happened. I’d be amazed if they didn’t severely downgrade the importance of blips that happen around now. The whole point of the system is for lenders to work out how likely they are to get their money back in full and on time, and while a failure to pay what’s due at the moment is not ideal, they’re not being very sensible if they assign it the same weight as if it had happened at other times.