Experian, and other credit reference agencies (CRAs), have today confirmed new guidance to protect business credit scores during the Covid-19 pandemic.
Lenders can now offer an ‘emergency payment freeze’ to businesses that may be worried about meeting regular payments because of the pandemic. Once agreed, lenders should not report a build-up of arrears to the four designated CRAs – Experian, Creditsafe, Dun and Bradstreet, and Equifax – ensuring business credit scores are protected from this forbearance during the agreed timeframe.
In line with the latest FCA guidance, organisations are expected to act in the best interests of their customers and show greater flexibility at this difficult time. Lenders will decide whether to offer affected businesses the emergency payment freeze based on their circumstances.
The guidance covers both the voluntary Credit Account Information Sharing (CAIS) and the Government’s mandatory Commercial Credit Data Sharing (CCDS) scheme, which covers Current Account Turnover (CATO) data as well as credit accounts.
If a business falls behind on their payments without agreeing a payment freeze, including cancelling their direct debits, then the usual reporting position from lenders will apply.
Jonathan Westley, Chief Data Officer at Experian, said: “Businesses around the country have been forced to put their growth plans on hold and go into survival mode. It’s vital they get the support they need to survive the pandemic and our industry has an important role to play.
“The emergency payment freeze for businesses will help them to navigate the period when they are most stretched. Businesses need to know that cancelling direct debits won’t solve their problems. Now is the time to speak to your lender and discuss the most suitable arrangements for your business, including the emergency payment freeze which can protect your score.”
As part of its response plan to support businesses, Experian has confirmed organisations can gain free access to its My Business Profile service for three months. My Business Profile gives customers full visibility of their business credit profile, enabling them to manage it during this difficult period.
Experian has also helped businesses to understand which loans they are eligible for funding during the Covid-19 pandemic through our partnership with Funding Xchange. The CBILS SmartFinance Hub, that will be launched in the coming days, gives business owners speedy and safe access to all CBILS solutions – unblocking access to much needed finance.
Further to this, Experian has agreed to help to minimise the impact on the commercial CRA credit assessment of any application by a business for a government scheme designed to support their survival through Covid-19. Ordinarily, in some cases, taking advantage of these schemes could be interpreted as a sign of business weakness. It’s hoped that working with BIPA (Business Information Providers Association), these measures will be adopted across the wider industry.