The incorrect reporting of payment deferrals can do a number on an individual’s ability to access future credit
When the COVID-19 pandemic hit, the team at Borrowell jumped into action. Borrowell is the first company to provide Canadians with free access to their credit score. They quickly assembled a task force to come up with strategies to help Canadians stay in control of their finances and credit during this uncertain time.
They began producing a lot of educational content including tips on how to manage finances during a crisis, but the most exciting development to come out of the crisis is a new feature on their mobile app to monitor payments deferrals. In an effort to provide peace of mind and increased transparency, it allows users to check whether their financial institution has reported a payment deferral correctly. They worked with Equifax, Canada’s largest credit bureau, to create this service for Canadians who have been stretched financially because of the crisis.
“This is the first time I can recall where banks are allowing these deferrals on a large scale, and so many Canadians are taking advantage of it,” said Andrew Graham, cofounder and CEO of Borrowell. “There is a risk that if these aren’t being recorded properly by financial institutions and credit bureaus, due to sheer volume, it could have result in a big hit to a person’s credit.”
Before the COVID-19 pandemic, Graham says deferrals were only allowed on a much smaller scale, for example, in the case of a flood or natural disaster, lenders may have given some leeway in a specific region or city, but nothing like this.
“In this environment, it's especially important that everyone keep a close eye on their credit score to make sure that it isn’t going down for reasons that are incorrect. A payment deferral is an agreement with the bank, and people shouldn’t be penalized for it. This feature gives peace of mind to Canadians that their credit score is not going to be affected during a time that’s stressful enough,” said Graham.
There has been an increased focus on the importance of monitoring credit health over the past few months, Graham added, as Canadians try to make more informed decisions surround their finances and how to weather this difficult time.
If you are struggling to manage debt, there are lots of great tools and resources available to help you understand your options and make more informed choices when it comes to your finances.
“Credit can be complicated. We do everything we can to make it simple and easy to understand. We want everyone to have a good sense of their credit.”
