Credit Card Payment Holiday: Really Hidden on Credit Report?

OneTrueScotsman

Hi Experts. I've read all the news about how Covid related credit card payment holidays don't show on your credit report, and also the news on MSE that lenders have other ways to see if you've taken a mortage holiday.

I understand how potential mortage lenders can see if you've taken a mortage payment holiday...e.g. the mortage doesn't go down during that period. Mortage lenders are also looking at current account statements closely, so they'd know if you were making payments. But in terms of a credit card holiday, I'm wondering how a lender (mortgage or otherwise) could tell if you've taken one simply from your credit report? Since credit card balances can go up and down anyway based on payments and spending, if the account is reported as "current" every month, I'm not sure how they could tell?  Obviously increased debt ratio would have an impact on your report if you kept spending during the holiday, but would it be discernable if you took a payment holiday itself?

Am I interpreting this correctly? Any insights?

[Deleted User]

A credit record does not just show the balance, it also shows payments made against the balance, so for a credit card it records various details.

Those are for each month, so generally it will show "In good standing", that would be the same regardless of paying as normal or a repayment holiday, it will also show in late payments, non-payment, full default etc. As well as that it shows "Previous balance", "Payment amount", "No of cash advances", "Cash advance amount" and "Promotional rate". For a payment holiday the previous balance would stay the same, but payment amount would be zero, although the account would remain In good standing. 

This will be the same for all mortgages, credit cards, loans, car finance, holiday finance etc. so lenders will be able to tell if you have had any payment holidays and how long for. 

OneTrueScotsman

Hmmmm. OK, thanks much.

My problem is I sort of inadvertently took a payment holiday on my PayPal Credit Account. I really didn't need it, but I got an email about it, and was curious what it was about, what info they'd ask for, etc. so I hit "Apply Now" just to see what the application would look like. Instead I got an automatic "Thank you for your application for a Payment Holiday" message, and a few days later got a message saying I'd been approved. Since they weren't charging interest during the period, and they'd already granted it, and it wasn't supposed to impact my credit report, I thought "why not". 

That was a couple months ago, and as promised the PayPal account still shows up to date. But I'm wondering if it was a mistake now, and whether I should just ride out the last month or just pay it off (1,000) now. I have perfect credit (999 on Experian), never missed a payment and pay off my credit cards every month. The 1,000 I owe on PayPal credit was a 0 interest thing.

So given that, I guess my question is, have I really damaged my credit by taking the offer, and is there any advantage or disadvantaged to paying it off now vs. just paying it after the payment holiday ends next month?

[Deleted User]

There a lot of caveats to this as no one really knows yet, but by and large it does not appear that a payment holiday (a payment holiday, not multiple, or taking the second three months on mortgages etc.) will make a huge difference in the short term, and probably little to no difference long term. Unless you are planning on applying for a mortgage in July then I very much doubt it will matter in the slightest. 

As to whether you should pay off the £1,000 debt that would depend, do you feel more comfortable having a £1,000 debt and £1,000 in accessible funds, or zero debt, but £1,000 less accessible funds? If you still have a rainy day fund after paying it off then I would personally pay it off, if you have no other reserves then it might be wiser in the short term to keep the £1,000 on hand rather than clearing down a zero cost debt. 

OneTrueScotsman

Thanks again. I'm comfortable paying off the £1,000, it won't matter either way (which is part of why I feel stupid about inadvertently taking the holiday in the first place), I'm just wondering if have two months vs. three months "no payment" on the report will make much of a difference. It sounds like from what you're saying, it probably won't either way.

Thanks much for the helpful reply & info!

mobilejo

With Paypal credit and the 4 month 0% promotions, you can sometimes end up with a balance outstanding but no or very low monthly payment. It will be difficult for a lender looking at your Paypal credit payment history on your credit report to work out the exact reason for you not making a payment in a given month, especially if that account shows as 'in good standing' every month. 

You could always make a payment of say 10% of the balance, and that will look like 'normal' management of the account.