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Despite financial strain, only 18 per cent of Australians with a loan reached out to seek support from their lender in the past 18 months, down from 26 per cent last year. At the same time, more borrowers are suffering in silence: 20 per cent admitted they needed help, but didn’t ask for it, up from 16 per cent.
The findings reveal a clear disconnect between consumer perception and reality. Too many Australians are struggling unnecessarily because they don’t understand how hardship assistance works. Our research shows the fear of being penalised on future credit applications doesn’t match the reality of lender behaviour. Borrowers are suffering in silence when support is both available and safe to access.
Fear of credit impact is keeping borrowers quiet
The number one barrier? Fear of damaging future borrowing power. The research found 57 per cent of people who needed help didn’t ask for it because they were afraid of the impact on their credit report, a significant jump from 45 per cent last year.
Confusion is widespread about what actually happens when hardship is recorded. Just 38 per cent of Australians believe new lenders to whom they apply for credit can see hardship information when assessing an application, while 31 per cent think all lenders could access it, and another 31 per cent believe no lender can.
In reality, hardship arrangements are designed to help borrowers get back on track. A hardship note is temporary and stays on the credit report for 12 months, far shorter than the five years a default remains.
The data also shows that hardship doesn’t spell the end of future borrowing: two-thirds (68 per cent) of those who received hardship support later applied for more credit, and the majority (55 per cent) were approved. Rejection rates dropped to 13 per cent, down from 23 per cent in the previous wave of research.
At-risk borrowers most hesitant
The reluctance to seek help is particularly concerning among those most at risk. Among borrowers struggling with their credit health, 41 per cent said they needed help, but didn’t ask for it, up from 28 per cent.
Brokers know firsthand how damaging it can be when struggling clients avoid their lender. This silent suffering can escalate problems that could have been resolved early with hardship support.
Signs of confidence among younger borrowers
Interestingly, the research shows Gen Z borrowers are becoming more financially confident. Just 25 per cent reported seeking hardship assistance, compared to 50 per cent in the previous wave, and 45 per cent said they didn’t need any help.
While younger borrowers remain confused about how hardship information is used – 41 per cent believe other lenders could see hardship notes – they appear to be relying less on lender support overall.
What this means for brokers
For brokers, the findings highlight the crucial role they play in bridging the knowledge gap. Borrowers often turn to brokers as a trusted source of truth when navigating credit options.
With misconceptions proving a barrier to early intervention, brokers are in a unique position to educate clients about how hardship assistance really works and reassure borrowers that hardship is not a permanent black mark and is removed after 12 months.
By encouraging proactive engagement with lenders before problems escalate and clarifying the facts about what’s visible on credit reports and what lenders actually see, brokers are in an important position to make things clearer for consumers.
Clearer communication is urgently needed so borrowers know they can ask for help without fear. Brokers are on the frontline of these conversations and can make a real difference in ensuring Australians no longer need to struggle alone.
Elsa Markula is CEO of Arca.