COVID holiday payment has affected my credit rating - mortgage declined

HelsBels71

Has anybody had the same experience? I took advantage of the COVID mortgage repayment relief from my lender (Barclays) and subsequently sold my house and repaid the mortgage in full in Sept.

I am building a new house and need a small mortgage, a third of what my previous mortgage was. I have been declined due to my credit rating as it shows arrears for the COVID relief period. I have always had an excellent credit score prior to this.

This was for a self build mortgage. Has anyone had similar experiences after the COVID payment holidays?

ACG

The original payment holiday was not supposed to affect your credit report.
The new one, I am not 100% sure about. 

Are you saying it now shows as arrears on your credit report or just that your balance went up and your are being penalised for taking the payment holiday? 

[Deleted User]

If it shows as arrears on report then its potentially an error.   If you have been declined as you took a payment holiday, thats pretty common. Lenders originally said they wouldnt make a negative mark on credit report, not that they would disregard them completely for new lending requests

Thrugelmir

Did you actually need to take a payment holiday?  Or did you simply use it to benefit yourself. 

HelsBels71

Experian report shows numbers ie 2 3 4 4 from April to August
i have spent weeks on phone to Barclays and yesterday they confirmed it was their error and they were changing it to ‘payment holiday’ but today when I did a credit check my score has gone down! And the report hasn’t been updates.

Why would the score go down?
How long should it take to update the report - I was led to believe it was instant?

HelsBels71

I’m a director of Ltd company, we didn’t get furlough or any financial support as you prob have seen the uproar so yes I needed to take it.

ACG

The score has gone down because you have arrears on there, but ignore the score it is irrelevant. 
It does not usually update instantly, it can take up to a month. But it can be less than that. 

Are you going to a lender who credit scores you or credit checks you? If you are going to a lender who credit checks, would they accept a letter from Barclays to confirm it was a mistake and they will be correcting your credit report? 

HelsBels71

I am going through a mortgage adviser and the mortgage is with Newcastle Building Society. I understand they use Experian. That gives me a little hope if it takes longer to update my credit report, I was lead to believe it was within 24hrs. I just don’t understand why it has gone from 863 to 782 overnight.

ACG

I think the bigger question (and the reason I say to ignore the score) is how you had a score of 863 with 4 months of mortgage arrears on there as recently as 2 months ago - that score should be through the floor. 

Honestly, just ignore the score. Wait for it to update with the arrears removed, and you should be fine. 
Alternatively, ask your broker to see if there are any non scoring lenders who will accept a letter from Barclays - but this may cost you more. 

HelsBels71

Thanks for your replies -  much appreciated.
Realistically if the score dropped overnight for unknown reasons, how long will it usually take to update if Barclays say they closed the complaint and rectified the status from ‘arrears’ to ‘payment holiday’ at their end yesterday?

Thrugelmir

Lenders don't use the published "scores".  Lenders use data sets provided by the CRA's to do their own risk analysis. 

From the lenders perspective. If a holiday was required  back then what's changed now, in a matter of a month or two. The uncertainties of Covid remain. Pressure remains on incomes/company profitability for the foreseeable future. A payment holiday is an indicator of financial stress.  Lenders are going to wish to expose themselves to more risk on their own books at this point of time.