Article describing the new credit and privacy laws

[MTR]

About 12 months ago we applied for a loan where the client had a card with a particular lender, we figured having loans and banking in the same place was a good option and it was the clients first home. The client had been significantly late paying the card several times in the last 12 months so the application was rejected. It's didn't go into default, but he was just constantly late.

We put the deal to a different lender, they knew nothing about his credit card history so they approved the loan.

Some things to consider if this had been done under the new credit laws:

1. This deal might have been much trickier to get done and not a good outcome from the client. Other lenders may have seen that the history on the clients card was not good and similarly rejected the loan as the first lender did.

2. On the other hand the first lender may have seen that this client pays other bills on time (I don't know if this is true, but let's assume he did). With a good payment history offsetting the late credit card, the first loan might have been approved.

3. We got this done by taking advantage of the second lenders ignorance. We certainly put the borrowers interests ahead of the banks and I don't loose any sleep over this (he is paying his mortgage on time). It does beg the question though, if you know someone was consistently late paying their bills, would you really want to lend money to them? As investors we don't like tenants who always pay a week late, even though they do pay eventually.

If there is an issue I could just pay out the credit card and then just cancel it, will this work?

 

[Peter_Tersteeg]

If there is an issue I could just pay out the credit card and then just cancel it, will this work?

What do you expect it to do? You won't have the credit card anymore and your credit report will reflect this. It won't remove the notes that you paid it late though.


One of the things mentioned in the seminar I attended was that nobody has actually signed up with the new credit regime yet. Every credit provider has access to the data, but nobody has actually reported the data that they've got, it will take a while for the data to actually appear on your report.

You can get a loan with the CBA. Your report will note that the CBA made an inquiry, but it's then up to the CBA to report if you actually took the loan. It's also up to the CBA to report your conduct on that loan. The actual sharing of all the data that people are worried about is voluntary, not an obligation.

The analyst at the seminar suggested that the ANZ and NAB would sign up fairly quickly. Westpac would take a bit longer and CBA may choose never to share their data. I believe this was based on the amount of information they already hold and their internal procedures to check ongoing conduct outside of CRAA reports.

 

[MTR]

What do you expect it to do? You won't have the credit card anymore and your credit report will reflect this. It won't remove the notes that you paid it late though.


One of the things mentioned in the seminar I attended was that nobody has actually signed up with the new credit regime yet. Every credit provider has access to the data, but nobody has actually reported the data that they've got, it will take a while for the data to actually appear on your report.

You can get a loan with the CBA. Your report will note that the CBA made an inquiry, but it's then up to the CBA to report if you actually took the loan. It's also up to the CBA to report your conduct on that loan. The actual sharing of all the data that people are worried about is voluntary, not an obligation.

The analyst at the seminar suggested that the ANZ and NAB would sign up fairly quickly. Westpac would take a bit longer and CBA may choose never to share their data. I believe this was based on the amount of information they already hold and their internal procedures to check ongoing conduct outside of CRAA reports.

Very interesting PT, thanks for this useful info.

I expect the letter I received from BOQ re: savings and the new credit rules etc. was just a stock standard letter sent to all customers regarding the changes.

Cheers
MTR

 

[redwing]

Previously there were only really 2 things on your file

• any applications for credit - lender, type and amount applied for
• listing of any Bankruptcies, court action or defaults (repayments over 60 days late)

What the new credit reporting will also show:

● Monthly repayment history.
● Whether the application for credit is declined or approved, and a list of all debts.
● Missed payments of more than five days are recorded as ''not made''. Missed payment is cleared from record after two years.
● Credit limits of credit cards and other credit facilities are recorded.
● Late payments of more than $150 that are more than 60 days late, are recorded as ''default''. Default is cleared from record after five years.
● For telcos and utilities where credit is provided, only late payments of more than 60 days are recorded as ''default''.

Read more: http://www.smh.com.au/money/borrowi...etter-loans-20140315-34ugf.html#ixzz2wII2HfpM

 

[geoffw]

My family may have been the first in here to be affected by the new laws.

On Thursday, the day after the laws went into effect, my daughter started a new job.

With the credit reporting agency, Veda.

 

[Peter_Tersteeg]

You've probably got more to be worried about than the rest of us Geoff!