Kesse, do you think that people who pay late want to pay late?
Do you think people with poor credit history deliberately set out to pay their numerous bills late? "Today, I'll decide that I am going to pay all my bills late! Whoo-hoo!'
Fact is lots of people are struggling to meet all their bills and payments. Lots of ordinary folk pay bills late from time to time.
I'm talking average working Australians, most with families.
They end up juggling bills, paying the ones which are the most important first, paying the least important ones last. Why?
Everything - cost of living, accommodation, mortgages - has gone up
astronomically. Food, groceries, rent, petrol, utilities (gas, water, electricity), council rates, insurances (building, contents, car, life), medicine, public transport, telco, rego, children's school fees, uniform fees, excursions etc.
Just for day to day living, we have so many bills to pay. Sometimes all the bills come at once, many people struggle with paying them off on time so they prioritise and some bills end up late, not 60 days late, but a couple of days is pretty mainstream, I am sure you have experienced that and have had to do some juggling too.
14 years ago, 2 kg of lamb cost $6.99. Houses were cheap. Land was cheap.
Lots of things were a whole lot cheaper.
Now the Comprehensive Credit Reporting will record
date due and
when paid. 5 days late and you have a little black mark. We don't not know how each bank/lender will configure their credit scoring to take into account 1-4 days late, which are mainstream scenarios. Minus credit points?
The cruel fact remains that CCR is retrospective from December 2012. People have not been forewarned that even a few days late can have serious implications and consequences for their credit file/report.
If utilities and telcos are also included and retrospective from Dec 2012, you can be sure that a WHOLE HEAP of people will have little black marks criss-crossing their record.
I find it ironic that the old CRAA system only recorded credit defaults of 60 days and over and bankruptcies as being serious black marks on your credit file in the days when everything was so
CHEAP compared to now.
Now in these ever increasing expensive days, not only does the new credit reporting system incorporate and keep everything the old system had (the para above and even number of credit enquiries (e.g. online pre-approvals) as negative), it now records 5 days late as a black mark and
who knows how 1-4 days late will be regarded. Utilities and telco expected shortly to be part of the credit reporting system.
Now, credit providers can reject your credit application on your total indebtedness, inadequate salary or unsatisfactory repayment history ('unsatisfactory' not defined, remaining subjective) amongst other things.
list below from new credit reporting code: -
- the adequacy of the applicant's level of income and other resources to meet repayments of credit;
- the extent of the applicant's indebtedness and other commitments;
- the security of the applicant's employment;
- the applicant's credit history including previous bankruptcy, defaults, serious credit infringements, high number of credit applications and unsatisfactory repayment history;
Kesse, you said, 'It's coming and there's nothing I can do to change it' and 'Don't like it? Don't apply for credit!'
Well, there is something I can do - which is to inform people of the little bit I do know. Or point people to the right sources of information and not the spin websites.
