New credit rules - 5 days late - black mark on credit filecredit file

[Beanie Girl]

This is the stupidest and most unfair new credit rule ever!
Apparently from next month onwards, any time you are just 5 days late on a bill from a licensed credit provider, that late payment will go as a little mark onto your credit file. A little black mark. Every. Single. Time.

That history will be available for any lender to check out if you ever need money again.

Credit card payments. Mortgage payments. Car loans. Personal loans.

It's predicted that it won't be long before Utility bills will be included. Then Telco bills.

These sudden changes are taking place next month and no one is telling us about them.

What's worse is that the scheme is retrospective. From December 2012, if you were late it can be uploaded to your file. Here's the link to the article written by the reporter from The Canberra Times.

http://www.canberratimes.com.au/com...ew-credit-reporting-rules-20140210-32d1i.html

 

[alexlee]

Why shouldn't people pay their bills on time, and suffer consequences if they don't?

 

[Beanie Girl]

It's okay, alex.....If you don't consider the implications and ramifications of this to be serious, then delete this thread

 

[alexlee]

There are a lot of ramifications, obviously. I don't see why it's necessarily stupid or unfair. Or any more stupid or unfair than the current system (which, for example, penalises a person for shopping around for loans by actually applying for them, whereas you can get around this by having a broker assess you).

 

[tobe]

cool your jets, we dont know how each lender will use this info.

To many lenders itl just be another factor in their credit score. It could be just as important as your age, sex or employment industry. thats the sort of thing lenders currently 'discriminate' on, or base their lending decisions around.

I think being late on payments might be a fairer way of doing no?

each lender will do it slightly diferently in any case, so while one black mark might cause issues with one lender, it might not for others. some lender might start changing rate for risk, others might give you a discount if all your bills are on time. We dont know yet.....

 

[Peter_Tersteeg]

On the other hand, if you do pay all your bills and debts on time, this will also be noted on your credit report. This will make you a more valuable client to the banks, thus giving you more negotiating power on your loans and other products and services.

 

[Kinnon Bell]

The lenders do it anyway, just not in an official form. Why do you think they ask for 3-6 months of bank and credit card statements? They're checking your payment behaviour for late payment fees, over limit fees, dishonour fees, direct debits that have bounced back etc etc. This is just a way of formalising it and making it easier for the banks.

It's hardly sudden. It's been well reported and I can think of at least 5 different threads on this forum that have been based purely on this.

I think it will make getting credit easier for the ones who deserve it and harder for the ones who do not. I think it's a good idea.

 

[Kinnon Bell]

On the other hand, if you do pay all your bills and debts on time, this will also be noted on your credit report. This will make you a more valuable client to the banks, thus giving you more negotiating power on your loans and other products and services.

To add to this, hopefully risk based pricing will be a result of the CCR. Lower rates for the less risky customers and higher rates as the probability of default goes up.

 

[oracle]

On the other hand, if you do pay all your bills and debts on time, this will also be noted on your credit report. This will make you a more valuable client to the banks, thus giving you more negotiating power on your loans and other products and services.

You never know PT_Bear. You might actually be more valuable to the bank if you ALWAYS paid your bills but just paid them late. Imagine all the late payments fees and interest the bank makes out of you.

It's like bank hardly makes any money out of people who always pay their credit card bill on time but makes heaps more from people who only pay the minimum balance each month.

Cheers,
Oracle.

 

[BayView]

Why shouldn't people pay their bills on time, and suffer consequences if they don't?

There are way more folks out there that are living week to week and have too much week at the end of their money than many folks here on SS realise.

To be 5 days late would be mainstream I'd say, and a credit mark for that is a severe penalty.

I have loads of customers who need work done on the car, but have to wait until payday, and for a few other bills to be paid first...

Hand to mouth is alive and well; despite what the stupid media and Gubbmint spew out each week.

But it depends where you live to; someone living in Middle Park, or Brighton, etc and working/playing around the City won't see much of that.

But don't let the postcode fool you; lots of those folks will be hand to mouth at times.

Me, for example - we are as broke as I've ever been, and we regularly pay the gas and electricity bill late. Final notice late. But I always pay them.

I just choose to prioritise where the money goes, and I hate all utility companies, so they can get stuffed and wait until last.

But, we never miss the loans on time. Never have.

And, I am not poor - but have fallen on a time of cr@p cashflow.

For me to start getting credit marks after a lifetime of good records is a very unfair change if events.

Maybe a certain period of time of grace should be factored in to this...to allow for the anomaly in a person's record.

 

[Kinnon Bell]

It's like bank hardly makes any money out of people who always pay their credit card bill on time but makes heaps more from people who only pay the minimum balance each month.

Cheers,
Oracle.

You'd be surprised. If you think about the cost of funds (ie the money it costs the bank to 'buy' the money to lend on), someone with a consistently high balance who pays interest but does not transact is not always as lucrative as someone who makes a lot of transactions but pays their card off. This is due to the interchange revenue received.

 

[geoffw]

I'm fine on paper bills. They get filed, and my very efficient wife ensures they're paid on time. Mostly.

But I regularly miss bills which are email only.

I find it harsh that if I pay 98% of my bills on time, I will have a black mark for the very few which are late.

 

[Peter_Tersteeg]

You never know PT_Bear. You might actually be more valuable to the bank if you ALWAYS paid your bills but just paid them late. Imagine all the late payments fees and interest the bank makes out of you.

Not likely. The banks aren't allowed to over charge on late fees. I know they regularly do it, but the ANZ has recently been caught out over this and is now in the process of refunding millions.

The most valuable customer to a bank is the customer that pays their minimum payment on time, but never anything more. These are the people who get offers of credit card increases.

The least risky customer to the bank is the one who's ahead on repayments and pays everything else off quickly. Lenders are already pricing based on risk profiles, this just gives them more scope for further accuracy in their profiling.


@Bayview: Part of the lenders risk assessment is the time frame in which the problems occur. Time does heal wounds and lenders go forgive problems that occurred in the past. You might have trouble getting a loan in the immediate future, but as your circumstances change, your credit report will reflect this and lenders will treat you better.

In the meantime, there are still lenders who will look at your credit report but still take the time to understand your circumstances and make a 'human' decision. The big banks rely heavily on credit scoring, but there's plenty who don't. This new system is actually really good for competition in the banking industry.

 

[roe]

I'm fine on paper bills. They get filed, and my very efficient wife ensures they're paid on time. Mostly.

But I regularly miss bills which are email only.

I find it harsh that if I pay 98% of my bills on time, I will have a black mark for the very few which are late.

You get plus points for pay on time and minus points for paying late
You get a score from the history of your payment so paying late once in a blue moon wouldn't affect your score badly ....

And people don't get mad get even buy stocks from a business that profit from the new report regime change as simple as that ...

 

[cu@thetop]

Why shouldn't people pay their bills on time, and suffer consequences if they don't?

I shouldn't have to suffer the consequences of Australia Post delay or creditor processing delays.

 

[Peter_Tersteeg]

I shouldn't have to suffer the consequences of Australia Post delay or creditor processing delays.

The ATO is usually the worst. They date an invoice, wait 2 weeks to post it and it's due on the day it arrives. Consistently.

 

[cimbom]

I think the changes are fair but they should have made it so the report only records late payments and defaults after the date of introduction and not have it backdated to last year.

 

[Brady]

I had whole heap of late payments this year.

Was house sitting family friend and brother was kind enough to only give me some of my mail :S found out by getting some nice arrears notices, which were fixed up promptly.

 

[Peter_Tersteeg]

Don't worry Brady, give me a call if you need help getting finance.

 

[weg]

The usual way of paying loans is to have repayments direct debited, so if there are frequent late payments due to no funds it would indicate long term cashflow problems or poor money management.

Frequently late CC payments paint a similar picture.

If I was lending money I'd want to know these things.

Shame it doesn't apply to tenants.