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

[Intrinsic_Value]

Here is another cynical part of me.

The banks are getting sued for excess 'late fee' payments. IMF could be on a real money spinner representing class actions on this front.

So how do the banks respond?

Its basic game theory:
change the rules.

If cant whack with excessive late fees (which act as a beautiful increase in margins), then charge differential lending rates determined by a stricter lending criteria.

 

[MTR]

Some borrowers will benefit. If banks start rejecting some customers because of black marks, they still want to expand their loan book. So they might change their lending criteria (qualifying rate, living expenses, % of rent) to lend more to borrowers who don't have black marks.

Fact is, banks can alter their qualifying criteria to reject whoever they want now.

I believe what may happen is it will cost some people more to source finance as they may have no option but to use lenders with higher IR, I don't think this is new, however due to new criteria some will have no other options.

Also, I don't believe the 5 day late payment is in action yet, it is still 90 days and who knows how long it will take?

I have not always paid my bills on time, I would be shocked if most have not been in similar scenario for whatever reason, looks like we are all screwed

 

[keithj]

The bottom line is that the banks will still lend to the most creditworthy of the population. If some of the borderline cases have more or less than the average number of 'black marks', then the decision to lend may just change.

Nothing will change for 99% of people with an occasional overlooked bill, because almost everyone has them.

The new credit rules will make it slightly easier for lenders to weed out those that shouldn't be given credit - surely that is a benefit to everyone.

 

[turk]

mate you fail finance 101.

Reduction in finance per sei leads to reduction in economic efficiency.

But your logic there should be no credit at all.

Finance is a productivity enhancing mechanism that increases the effectiveness of capital allocation and leads to future increased productivity.

Its when central bankers distort the natural market flow of capital and debt, that real problems occur.

IV you have misread my post.

My logic is that finance grows, the improved cashflows leads to,

Less bankruptcies, a more efficient economy

The ability to cut overdrafts if the business wants to, they can still use other forms of credit to grow.

As stated this will encourages the business to expand and increase employment both of which increase productivity and the use of finance.

 

[Beanie Girl]

New Credit Reporting Code & New Privacy Legislation re Cedit Reporting

Here are the source information for the new Credit Reporting Code and the new Privacy Legislation re Credit Reporting. Both will come into effect on 12 March 2014. The old credit code will be repealed 12 March.

New Credit Reporting Code
http://www.oaic.gov.au/privacy/applying-privacy-law/privacy-registers/credit-reporting-privacy-code

New Part IIIA of the Privacy Act - Credit reporting
http://www.comlaw.gov.au/Details/C2012A00197/Html/Text#_Toc343175887

When you open the above Privacy Legislation Doc, scroll down till you hit 'Division 2 - Key definitions relating to credit reporting' where this provides 'definitions of terms' if you're interested in that sort of thing.

Scroll down some more and you will hit Part IIIA - Credit reporting. That's where the juicier stuff is. Particularly when CRB is permitted to disclose credit reporting information. (CRB = Credit Reporting Body e.g. Veda, Dun & Bradstreet)

N.B

20A

(2) The Australian Privacy Principles do not apply to a credit reporting body in relation to personal information that is:

(a) credit reporting information; or

(b) CP derived information; or (CP = Credit Provider)

(c) a pre‑screening assessment.

Note: The Australian Privacy Principles apply to the credit reporting body in relation to other kinds of personal information.

 

[rodimus]

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

What if:

1) you've gone interstate for holidays for 2 weeks.
2) you've suddenly got a responsibility for a few weeks such as caring for a sick child
3) you forgot
4) the bill was lost in mail or sent to wrong address (or old address)
etc
etc

 

[Ausprop]

What if:

1) you've gone interstate for holidays for 2 weeks.
2) you've suddenly got a responsibility for a few weeks such as caring for a sick child
3) you forgot
4) the bill was lost in mail or sent to wrong address (or old address)
etc
etc

5) a provider charges for something that is in fact a contract penalty

 

[geoffw]

6. You get four different bills from one provider. You have Bpays set up for all. You select the wrong reference number.

 

[MTR]

Thought I would get my credit report, have not noticed any new changes to my report and yes, I sometimes pay my bills late for whatever reason, but never ever mortgages

 

[roe]

What if:

1) you've gone interstate for holidays for 2 weeks.
2) you've suddenly got a responsibility for a few weeks such as caring for a sick child
3) you forgot
4) the bill was lost in mail or sent to wrong address (or old address)
etc
etc

Your employer go on holiday and forgot to pay your salary for a few days
is it acceptable?

Business has the right to get their money on time as well.

it is your financial obligation be it a pain in the a** it is something you have to remember and do.

 

[Colin Rice]

Thought I would get my credit report, have not noticed any new changes to my report and yes, I sometimes pay my bills late for whatever reason, but never ever mortgages

Same and same!

 

[Peter_Tersteeg]

They've since made some updates. You're not going to get a black mark after 5 days, it's been extended (might be 30 days but I'm not sure).

Keep in mind that reporting is not mandatory. At this point I'm not aware of anyone who's actually reporting late data, although I expect this will eventually be integrated.

 

[rabidz]

Can I confirm that this new credit reform is only applied for:
Credit card payments. Mortgage payments. Car loans. Personal loans.

So, any other bills such as utility, telco, rego, etc are not applied yet (if we paid 5 days late/overdue)?

Can someone confirm this?
Big thanks...

 

[Peter_Tersteeg]

Can I confirm that this new credit reform is only applied for:
Credit card payments. Mortgage payments. Car loans. Personal loans.

So, any other bills such as utility, telco, rego, etc are not applied yet (if we paid 5 days late/overdue)?

Can someone confirm this?
Big thanks...

At this point I haven't heard of any utilities providers supplying data yet, but that doesn't mean that they're not. It's not something they'd tell the public about.

Additionally when they do supply data, they'll be able to hand over the last 2 years. If you're running late on bills today, it could still effect your report in 18 months time.

The best policy is to assume that all forms of credit have been reported as of March 12, 2012 (they can go back that far).

 

[jakaim]

At this point I haven't heard of any utilities providers supplying data yet, but that doesn't mean that they're not. It's not something they'd tell the public about.

Additionally when they do supply data, they'll be able to hand over the last 2 years. If you're running late on bills today, it could still effect your report in 18 months time.

The best policy is to assume that all forms of credit have been reported as of March 12, 2012 (they can go back that far).

Utilities aren't included.

From Veda:

What is repayment history information?
Repayment history information is whether the minimum repayment on a credit account, like a credit card, personal loan or mortgage has been made on time (or within a 5 day grace period) and if not, how late the payment was made, for a particular month. Only licensed credit providers can share and receive repayment history information. This doesn?t include telco and utility companies. Repayment history information is recorded monthly and can be held on your credit report for 2 years.

 

[Peter_Tersteeg]

Utilities aren't included.

I looked around and you do appear to be correct. Veda source

I'm now wondering why everything I've heard, including credit analysts at the banks and other professional sources, have explicitly stated that utilities are included.

Kudos for the good information.

 

[jakaim]

The guy I spoke to at the bank the other day tried scaring me into thinking absolutely everything would now be recorded, even if I didn't pay an account at a local store.

I tried to correct him but he insisted even forgetting to pay the local butcher would be bad for my credit :/

 

[Beanie Girl]

Utilities aren't included.

From Veda:

What is repayment history information?
Repayment history information is whether the minimum repayment on a credit account, like a credit card, personal loan or mortgage has been made on time (or within a 5 day grace period) and if not, how late the payment was made, for a particular month. Only licensed credit providers can share and receive repayment history information. This doesn?t include telco and utility companies. Repayment history information is recorded monthly and can be held on your credit report for 2 years.

Utilities and Telco bills are included in the new credit reform system in the sense that if you are more than 60 days overdue on a utility or telco bill and the debt is $150 or more, the utility/telco can/may provide this information to credit reporting agencies as a default and it will stay on your credit file for 5 years.

Not only for PPOR,
For investors with IPs, this could be fixed water charges, sewerage or water consumption charges in IP owner's name.

Quote from Veda here:

Can paying my phone or electricity bill late impact my credit file?

Yes, it can. Under the Privacy Act 1988, an overdue debt can be listed on your consumer credit report when it is overdue by 60 days or more, when the debt is at least $150. Please note that information about whether your have paid your account on time or not cannot be listed by a telco or utility provider as they are not a licensed credit providers, unless you are 60 days or more overdue.

Before listing a default, the credit provider has sent a written notice seeking payment of the overdue debt and a written notice stating that the default may be listed with a credit reporting body.

Once you've paid the overdue debt, the credit provider is required to update the listing on your credit report as soon as is practicable.

If the overdue debt is classified as a serious credit infringement, where you have left or appear to have left your last known address, the credit provider must first have listed a default and must have had no contact with you for the preceding 6 months.

The legislation does not place obligations on credit providers with respect to commercial credit defaults which means the obligations relating to consumer defaults and serious credit infringements does not apply to commercial defaults and clearouts.

http://www.veda.com.au/yourcreditandidentity/check/credit-file/what-looks-bad-my-credit-report

 

[Peter_Tersteeg]

Utilities and Telco bills are included in the new credit reform system in the sense that if you are more than 60 days overdue on a utility or telco bill and the debt is $150 or more, the utility/telco can/may provide this information to credit reporting agencies as a default and it will stay on your credit file for 5 years.

This has always been the case. Telco and utility bills are the most common sort of default we seen on credit reports. There's been no change in this regard.

 

[Singo]

The guy I spoke to at the bank the other day tried scaring me into thinking absolutely everything would now be recorded, even if I didn't pay an account at a local store.

I tried to correct him but he insisted even forgetting to pay the local butcher would be bad for my credit :/

Classic example for how much the bank employees know. Think how much damage can be done when one believes their knowledge and structure loans according to their suggestions.