Reporting financial hardship on your credit report
On this page
- What is financial hardship information?
- What do these changes mean for me?
- More information on financial hardship information and your rights
- Why were these changes made?
What is financial hardship information?
From 1 July 2022, a new type of credit reporting information can be reported about you under the Privacy Act 1988 (Privacy Act).
This is known as financial hardship information. Financial hardship information will appear on your credit report if you have entered into a financial hardship arrangement with your lender (also known as your credit provider).
Find out more about what can constitute a financial hardship arrangement.
What do these changes mean for me?
If you are experiencing financial difficulties, you can reach out to your credit provider to ask to enter into a financial hardship arrangement. This arrangement can now be reflected on your credit report.
An example of a financial hardship arrangement can be an agreement to reduce your regular repayments or to defer your regular repayments.
During your financial hardship arrangement, your credit report will show that you have entered into a financial hardship arrangement and the type of arrangement.
During the financial hardship arrangement, your repayment history will be reported against that arrangement.
Financial hardship information is subject to additional protections under the Privacy Act, including:
- There are strict provisions around when a credit reporting body can disclose your financial hardship information.
- Financial hardship information is not allowed to be used by credit reporting bodies in the calculation of your credit score.
- Financial hardship information is only able to be kept on your credit report for 12 months. After this time, it must be deleted.
Find out more about financial hardship information and your rights.
Why were these changes made?
From 1 July 2022, changes will come into effect under the Privacy Act 1988 to introduce a new type of credit information, known as financial hardship information.
These changes will allow financial hardship arrangements to be reported in the credit reporting system in Australia. This information will be reported alongside information about your repayment history.
This means that when you are in a temporary financial hardship arrangement your credit report shows your repayments against that arrangement (not their regular repayments). This is intended to protect you by ensuring your credit report reflects your current arrangements.
The changes aim to improve credit reporting in Australia while also balancing your interests and the privacy of your personal information, with the interests of credit providers and credit reporting bodies.
Financial hardship information has strict restrictions around how it can be used and how long it can be reported for.
Being able to report financial hardship information means that credit providers will have a more complete picture of your financial situation. This will assist them in meeting their obligations around responsible lending practices. These changes will also assist you to meet your repayment obligations if you are experiencing financial hardship, without impacting your credit score.
Before 1 July 2022, you could still enter into a hardship arrangement with your credit provider however, there was no mechanism for this to be reflected on your credit report.
This meant that credit providers did not have visibility over hardship that you might be experiencing in deciding whether or not to extend credit and how to assist you to meet your repayments. It also meant that individuals could have their credit score impacted due to missed payments being reported on their credit report.
These changes to the Privacy Act will ensure that credit reporting is consistent and that credit providers are alerted to when an individual is experiencing financial hardship.
Credit providers do not receive information about why an individual is in a financial hardship arrangement. It is up to the credit provider to make further inquiries to understand an individual’s circumstances.
The government plans to review the operation of these new provisions in 2024.
See further resources about financial hardship information: