A credit score is a rating that helps businesses such as banks, credit card companies and utility providers decide whether to loan you money and on what terms. It is based on your financial history and ability to repay debt and represents all the information in your credit report.
While there are many factors that go into generating your credit score, some primary considerations are:
- Your current level of debt
- The number of credit applications you’ve made
- Whether you make your repayments on time
So, if you’ve lost your job and you find yourself in a situation where you’re unable to make your monthly mortgage repayment, your credit score could go down. As a result, lenders may think it’s risky for you to borrow money.
When you receive financial hardship support, a hardship notice will be placed on your credit report for 12 months. As long as you meet the requirements of the hardship arrangement, you won’t be shown as missing repayments. However, if you apply for new lending while a hardship arrangement is on your credit report, you may need to explain to the lender what happened and why you needed support, and this may affect their decision on whether to offer you credit.
Learn more about financial hardship and your credit score.