This article was originally published in June 2020.

The emergency mortgage, credit card and loan payment freezes introduced during the pandemic have now closed: new applications ended on 31 March 2021 and the final deferrals ran out on 31 July 2021. If you are struggling with repayments today, help still exists, but it comes through your lender’s tailored support and forbearance obligations under the FCA’s consumer credit rules and the Consumer Duty, rather than a blanket payment holiday scheme.

While this might be good news if you’re struggling with your finances, this isn’t the time to take advantage of a ‘free’ payment holiday if you don’t really need it. The reason being that this option isn’t actually free, as you’ll end up paying more interest in the long run.

Not sure whether to freeze your payments? This article should help you understand the impact of a payment holiday on your finances so you can make an informed decision.

The government initially proposed payment freezes back in April, as the negative effects of coronavirus began to take their toll on consumers.

Now, it’s been agreed that if you have a credit card, car finance plan, personal loan or pawned goods, you can defer repayments for another six months. Mortgage payment holidays have also been extended by six months, with a top-up to six months if you have already taken out a holiday.

Once the payment holiday period is over, you’ll need to repay your debt along with any interest that’s been accrued. (If you’re still unable to make your repayments at the end of the ‘holiday’, the FCA has asked lenders to support people by reducing their credit card and loan payments for a further three months.)

Are you struggling to make ends meet? Pandemic-era support such as mortgage holidays and key-worker discounts has now closed, as explained in the ClearScore COVID-19 hub.

What replaced Covid-19 payment holidays?

Covid-19 payment holidays are no longer available. The Financial Conduct Authority's emergency scheme was always time-limited: applications for new payment deferrals closed on 31 March 2021, and the last deferrals ran out on 31 July 2021. The rules were introduced as a blunt, fast response to a national shock, and they were deliberately temporary because a blanket freeze that ignores individual circumstances is a poor long-term tool. If you're struggling with repayments now, you still have the right to help - it just works differently, and it goes by different names.

Tailored support and the Consumer Duty

What replaced payment holidays is what the FCA called Tailored Support Guidance, now largely absorbed into the regulator's ongoing consumer credit rules (CONC) and the Consumer Duty, which came into force in July 2023. Under these rules, lenders must treat customers in financial difficulty fairly and offer forbearance that fits your actual situation. That might mean a full deferral, reduced payments for a set period, a longer repayment term, frozen or reduced interest and charges, or simply more time before any enforcement action. Your lender has to consider your circumstances rather than apply a one-size-fits-all answer, and under the Consumer Duty it must act to deliver good outcomes and avoid causing you foreseeable harm.

The key difference: credit reporting

The single most important change from 2020 is how support shows up on your credit file. During the Covid scheme, credit reference agencies agreed to freeze the status of accounts under a payment holiday, so deferrals were invisible to future lenders. That protection has gone. Any forbearance you agree today is normally reported - most commonly as an 'arrangement to pay' marker, or as a reduced-payment flag - and lenders can see it. It's still far better than simply not paying, which produces missed-payment markers and, eventually, a default. But you should go in expecting your credit report to reflect the arrangement.

Breathing Space (the Debt Respite Scheme)

Breathing Space launched in England and Wales in May 2021 and gives you 60 days of legal protection from most interest, fees and enforcement action on qualifying debts. You can't apply directly - you access it through an FCA-authorised debt adviser, such as StepChange or Citizens Advice, who will check whether it's right for you. There's also a separate mental health crisis version, which lasts for as long as your crisis treatment plus 30 days. Scotland has its own equivalent through the Statutory Moratorium.

The Mortgage Charter

Residential mortgage borrowers with most major lenders are covered by the Mortgage Charter, agreed in 2023. It lets you switch to interest-only payments for six months, or extend your mortgage term to reduce monthly payments and reverse that within six months, without a new affordability check and without it being recorded on your credit file. You need to be up to date with payments to use these options, which is why acting early matters.

Where deferrals still exist by name

Some products still offer something close to the old payment holiday. Many car finance agreements allow a short deferral or payment reduction by arrangement. Some personal loan and credit card providers offer a one- or two-month break, sometimes marketed as a 'payment break' or 'skip a payment'. Student loans repaid through PAYE automatically pause when your income drops below the repayment threshold, with no application needed. In every case, ask whether interest keeps accruing and how the arrangement will be reported before you agree to anything.

Can I apply for a payment holiday?

You can no longer apply for a coronavirus payment holiday - that scheme closed in 2021. What you can do is tell your credit card, loan or car finance provider that you are in financial difficulty and ask for tailored support. Depending on your circumstances that might be a short deferral, reduced payments, a longer term, or frozen interest and charges, and the lender must consider your individual situation rather than apply a blanket rule.

If you’ve got other types of credit agreement, such as a payday loan or rent-to-own agreement, you can find more about the financial support available to you on the FCA website.

Payment holiday vs other ways to get help with repayments

Pausing payments completely is rarely your only option, and it's usually the most expensive one. A full deferral stops money leaving your account but does nothing about the interest still piling up behind it, so you emerge from the break owing more than you did going in. The route with the lightest touch on your credit report isn't always the cheapest overall, and the cheapest isn't always the one you can realistically afford this month. Weigh all three: cost, duration and credit impact.

If you're only dealing with one account and a short-term dip, negotiating directly with your lender is usually enough. But if you're juggling several debts, borrowing to cover essentials, or your minimum payments alone now exceed what you can afford, stop negotiating alone and speak to a free debt adviser. StepChange and Citizens Advice can look at every debt together, tell you which are priorities, and access options such as Breathing Space that you can't apply for yourself. Advice from free, not-for-profit debt advice bodies is provided at no cost, and simply speaking to an adviser is not recorded on your credit file.

Will it affect my credit score?

During the emergency scheme that ran from April to October 2020, the FCA confirmed that a payment holiday would not affect your credit score or report for its duration. That protection no longer applies to support agreed today.

The UK’s three credit reference agencies - Equifax, Experian and TransUnion - have agreed to freeze people’s credit scores when they halt their payments with their lender, however this may change with payment holidays taken out from October as the FCA, Credit Reference Agencies (CRAs) and lenders respond to the government's latest announcements.

Remember that any deferral agreed today is normally reported to the credit reference agencies and visible to lenders. Lenders may also check in other ways - for example, asking for a copy of your bank statement when you apply for credit.

ClearScore is not a credit reference agency, but we give you your credit score and report for free using data from Equifax. Check yours now - checking won’t affect your score, and it’s the first step to taking control of your finances.

Payment holidays and your credit score: FAQs

Does a payment deferral show on my credit report now?

Yes, in most cases. The emergency credit-reporting protection that applied during 2020 and 2021 no longer exists. If you agree a deferral or reduced payments with your lender today, it will typically be reported as an arrangement to pay, and any lender who searches your file can see it. Some options are exceptions - Mortgage Charter changes and Breathing Space aren't themselves recorded as markers.

I took a Covid payment holiday in 2020 - is it still on my credit file?

No. Covid-era payment holidays were never recorded as negative markers, and any account activity from 2020 has now passed the six-year window in which credit information is retained. A payment holiday taken under the emergency scheme has no bearing on applications you make today.

Is an arrangement to pay marker worse than a missed payment?

Generally no. A missed payment shows you simply didn't pay; an arrangement shows you spoke to your lender and agreed something. Lenders tend to view the second more favourably. Both affect your score, and repeated missed payments can lead to a default, which is considerably more damaging than either.

Will a payment holiday stop me getting a mortgage or remortgaging?

It can make it harder, particularly while the arrangement is active or very recent. Many mainstream lenders want to see at least 12 months of clean payment history after an arrangement ends, and any decision rests on more than your score - lenders also weigh your income, existing borrowing and whether repayments are affordable. Specialist lenders are often more flexible, though usually at a higher rate. If you're planning to buy or remortgage within a year, factor that timing in before agreeing a deferral.

How long does an arrangement or default stay on my report?

An arrangement to pay stays on your credit report for six years from the date the account is settled or closed. A default also stays for six years from the date it was recorded - not from when you repay it. Both fade in significance over time, and lenders weigh recent behaviour far more heavily than something from four or five years ago.

Does a payment holiday affect my partner if we have a joint account?

Only where you're financially linked. If the account is in your name alone, it appears only on your report. If it's a joint account, or you have an existing financial association through a joint mortgage or loan, a lender assessing your partner may see your file too. Financial associations don't end automatically - you need to apply to the credit reference agencies for a notice of disassociation once the joint borrowing is closed.

Does Breathing Space affect my credit score?

Breathing Space isn't recorded as a marker in its own right, so the scheme itself doesn't damage your score. However, any arrears, arrangements or defaults on the underlying accounts remain visible as normal. It buys you protected time rather than a clean file.

Will my credit limit be cut or my card frozen if I ask for help?

It's possible. Lenders routinely restrict further borrowing on accounts where a customer is in financial difficulty - that may mean a reduced limit, a blocked card, or no further drawdown. That isn't a punishment; it's a requirement not to extend credit that's likely to be unaffordable. Ask what will happen to your account before you agree anything.

Can I still use a credit card during a payment deferral?

Usually not. Most lenders will suspend new spending for the duration of an arrangement. Even where the card stays open, adding to a balance you've already said you can't service will make the eventual repayment harder and may prompt the lender to withdraw its support.

How do I check what my lender has actually reported?

Look at your credit report directly. Lenders update the credit reference agencies monthly, so a change usually appears within four to six weeks. Check that the status matches what you agreed - reporting errors do happen, and you can raise a dispute with the agency or the lender to get them corrected. At ClearScore we show you your Equifax credit score and report. Check yours now - it's free, forever.

Should I freeze my payments?

If you can’t afford to make your payments right now (maybe you’ve lost your job due to coronavirus) freezing your payments might offer you a bit of respite from your money worries.

But don’t forget - although your payments are frozen, the interest you owe won’t be. This could end up having a significant impact on the amount you need to pay back once payment holidays are over.

Before you make a decision, make sure you:

• Think carefully about the impact it could have on your finances in the future.

• Only freeze your payments if you need urgent, temporary financial help.

• Continue to pay as much of your bill as you can afford to, even if it’s less than the minimum repayment.

Back in 2020, the FCA’s then interim chief executive Christopher Woolard said "where consumers can afford to make payments, it is in their best long-term interest to do so, but for those who need help, it will be there.” The scheme he was describing has since ended, but the underlying principle still holds under today’s rules.

If you decide that freezing your payments is the best option, it’s important that you agree this with your lender before you stop paying. Missing payments and cancelling direct debits before you’ve agreed a plan with your credit provider is likely to damage your credit score, making it harder for you to access credit down the line.

To arrange a payment freeze, you’ll need to get in touch with your lender directly. Bear in mind that phone lines are likely to be extremely busy during this period, so if you can contact them online you might get the help you need faster.

Ultimately, if you can afford to keep repaying your balance, you should continue to do so.

If money worries are keeping you up at night, there are organisations who can help.StepChange offer free, expert debt advice - it’s completely confidential and all online, so don’t suffer in silence.

How to ask your lender for help - step by step

Asking for help is a structured conversation, not a favour you're begging for. Lenders are regulated to support customers in difficulty, and going in prepared gets you a better arrangement faster.

• Work out your budget first. Your lender will ask for an income and expenditure statement: what comes in each month, what your essential costs are (rent or mortgage, council tax, energy, food, travel, childcare), and what's genuinely left for debt repayments. Build this before you call. Charity budgeting tools use the Standard Financial Statement, the same framework lenders recognise, so a figure produced that way is much harder to argue down. Be honest rather than optimistic - an arrangement you can't sustain fails within two months and leaves you worse off.

• Contact them before you miss a payment, not after. This is the single biggest lever you have. An account that's up to date opens options - Mortgage Charter changes, promotional forbearance, a clean-file solution - that vanish once arrears are recorded. If a payment is going to bounce next week, ring this week.

• Use the words 'financial difficulty'. This isn't semantics. Saying you are in financial difficulty triggers specific obligations under the FCA's consumer credit rules: the lender must treat you with forbearance and due consideration, and must not pressure you into an unaffordable repayment. General grumbling about money being tight doesn't do the same job. If you have a mental or physical health condition affecting your finances, say so - it brings additional vulnerable-customer protections.

• Ask three questions before you agree to anything. Will interest and charges be frozen or reduced during the arrangement? Exactly how will this be reported to the credit reference agencies? And what happens at the end - does the shortfall become immediately payable, get spread across remaining payments, or extend the term? Do not accept vague answers. The cost of a deferral lives entirely in the answers to those three questions.

• Get it in writing before cancelling any direct debit. Ask for written or emailed confirmation of the agreed amount, start date, duration and reporting treatment. Cancelling a direct debit before the lender has confirmed the arrangement turns a supported payment break into a missed payment on your credit file. Keep a note of the date, time and name of whoever you spoke to.

• If you're turned down or offered something unaffordable, escalate. Ask for the decision to be reviewed and put a formal complaint in writing - lenders have eight weeks to give you a final response. If you're unhappy with that response, or they don't reply in time, take it to the Financial Ombudsman Service. It's free, and it can order a lender to put things right, including amending what's been reported to the credit reference agencies.

Where to get free help

You don't have to negotiate alone, and paying for debt advice is never necessary. StepChange offers free, confidential debt advice online or by phone and can deal with creditors on your behalf. National Debtline and Citizens Advice provide the same free support, including access to Breathing Space. MoneyHelper, the government-backed service, has free budgeting tools and can point you to a local adviser. Speaking to any of them has no effect on your credit score.