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Will a payment holiday on your insurance, council tax or bills affect your credit score?


Those struggling to pay their water bill could also try to arrange a payment holiday; firms will decide on a case-by-case basis. If a payment freeze isn’t possible, they could try moving to a cheaper tariff.

Car insurance

Car insurers have come under pressure as policyholders have complained that they no longer need the same level of cover since the lockdown came into force. It has been estimated that motor insurers will save as much as £1bn from the fall in car use and insurance claims brought about by the Covid-19 epidemic.

Insurer Admiral said it would pay £25 to each of its motor insurance policyholders. Insurers have offered payment holidays, but this means policyholders who take up the offer must still pay the money back eventually, with the arrears added to future premiums or paid in one lump sum.

Admiral said it would offer payment holidays on a case-by-case basis, but any deferred payments would have to be repaid by the end of the policy term. Aviva said it was offering deferrals to anyone currently unable to work or on furlough, as well as free breakdown cover and other benefits to NHS workers. 

Axa, Churchill and the AA said they were reviewing payment holidays on a case-by-case basis.

Overdrafts, loans and credit cards

Banks and lenders have said that anyone with outstanding credit card bills or personal loans can now put a freeze on payments for up to six months if their finances have been negatively affected by coronavirus. 

Will it affect my credit score?

Any payment freeze that has been officially agreed with a firm or lender beforehand should not affect your credit score. These payment holidays are available for mortgages, loans and credit cards. 

If you were in arrears before the payment holiday was agreed, your credit file will record the same amount owed during the three-months – unless you manage to pay some of the money back during that time. If you had not fallen behind on payments before the freeze, your credit report will continue to show this. 

However banks and building societies have said that they will be able to see whether a payment holiday was taken and, even if this does not affect your credit score, it may impact your ability to get a mortgage or other types of credit in the future. 

Tenants taking a break on rental payments should be protected from any negative impact on their credit history, although that will depend on the agreement they come to with their landlord. 

Phone, broadband and energy customers whose suppliers are not offering payment holidays may find that the arrangement they come to will be marked on their credit file. You should check if this is the case when you speak to the provider. 

O2, Vodafone, British Gas, Ovo Energy, EDF and SSE have all said if customers keep up with their repayment plans their credit score will not be affected. 

Council tax payments are not reported to the credit reference agencies, meaning that any bill reductions will not feature on your credit report.  

Will claiming Universal Credit show up on my credit file?

No, any Universal Credit payments will not show up on your credit history and claiming benefits shouldn’t affect your credit score. 



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