From March 12 2014, paying bills late will damage your credit rating

neil on 19/02/2014 - 15:00

Further, companies can backdate this data to Dec 2012. Better apply for your loans and credit cards before next month.

From Pocketbook

Traditionally, we have used “negative” reporting – meaning the primary focus has been on whether or not you have been denied credit enquires in your history. Every time you’ve been requested and denied for credit products like a home loan or a credit card.

and now:

From March 12, this will change to “positive reporting” – meaning the assessment will be made with the focus on whether or not you’ve serviced your credit on time. Or in other words, whether you’ve paid your bills on time

The implication of the new laws is that every time you’re late paying a bill, a black mark will essentially be registered against your name. While this sounds fair, the consumer behaviour truths make this worrying.

This means more careful management of paying your bills on time either through reminders or direct deposit. The bad part is that it's going to be done retrospectively. So next month, it would probably be a good idea to check your credit report which is free to do once a year.

General Discussion

Comments

  • mskeggs on 19/02/2014 - 15:26

    Initially, I believe this is limited to credit providers bills only (mortgages, loans, cards).
    I don't believe late utilites etc. payments will be tracked yet.

  • dondiego on 19/02/2014 - 16:00

    This is really a serious change.need to dig more into it

  • danield on 19/02/2014 - 16:11

    This is an issue for changing addresses.
    I always pay my bills on time but since moving address, Ive had so many overdue notices and unpaid accounts because some places don't update their databases when you request them to, some places Ive contacted up to 3 times cause Im not getting the bills.. funny how they always seem to find me when it becomes overdue though.

    • ilostnemo on 19/02/2014 - 16:43

      This is where a mail redirection comes in handy, we usually set it up for 12 months that way you can monitor if they have amended their records.

      • danield on 19/02/2014 - 17:28

        yeah, well I only moved across the hall.. and still have access to the mailbox. It just seems a little harsh to have a mistake like this come up on your credit rating.

  • sparkles on 19/02/2014 - 16:24

    Considers setting up auto payments - imagine getting knocked back on a mortgage or car loan because you paid your credit card a couple of days late. Will be interesting to see what constitutes a "strike" - not planning on testing the theory to find out though.

  • jace88 on 19/02/2014 - 16:54

    I either use direct debit or set up an automatic payment of what I think will be the minimum (typically $30). Keeps it safer.

  • mini2 on 19/02/2014 - 17:58

    Is it just me or Veda/D&B/Experian need a new revenue source so they've suddenly adopted what's been used in the US for yonks?

    (coincidently Veda was listed on ASX quite recently…)

  • tonester on 19/02/2014 - 21:37

    http://www.theguardian.com/world/2014/feb/18/credit-reports-…

    Just one late payment on a credit card bill, house or car loan, even by as little as five days, will soon show up on credit reports of consumers applying for credits cards, mortgages or mobile phone plans.

    http://www.smh.com.au/money/late-payers-are-running-out-of-t…

    Under the changes, credit reports will include much more detail about late payments on loans and credit cards.
    Australia has a system in which only payments more than 60 days late are recorded - but under the new reporting regime, a payment more than five days late will be recorded as ''not made''.
    A payment more than 60 days late will continue to be flagged as a ''default''.
    Payment history will continue not to be included for utilities and telecommunications companies where credit is provided - only defaults of more than 60 days.
    At present, credit reports include credit applications only, not whether the credit was approved or declined by the credit provider.
    The move to comprehensive credit reports will include not only applications for credit but also whether a credit account for the mortgage, personal loan or credit card was opened, as well as closed credit accounts.
    Credit providers will see credit limits of the accounts, if any, plus the payment history.

    Even though the new credit reporting regime is not due to start until March 2014, payment history going back to December 2012 can be included in the reports.

  • Janko on 19/02/2014 - 22:33

    What exactly identifies a person on these credit reports anyway?

    I applied for a credit report with D&B and was told they'd never heard of me (address, birthday and driver's licence # supplied).

    Also recently got a 28 degrees card and was also advised the credit reporting agency had never heard of me, as though something was wrong.

  • burningrage on 19/02/2014 - 22:50

    More on this in here. Latest.

    http://www.canberratimes.com.au/money/borrowing/providers-to…

  • anna10 on 20/02/2014 - 07:31

    Re a free credit check on myself, which company is legit, I see it mentions Veda? How about this one:

    http://www.veda.com.au/understanding-your-credit-file

    • neil on 20/02/2014 - 12:32

      Yes, that is legit.

      There are 3 credit reporting agencies (4 if you live in Tasmania). You would need to get a report from all of them to be sure.

  • ethereal88 on 20/02/2014 - 08:37

    Or just pay cash. In person on time. You know, before credit put most into years of debt.

  • [Deactivated] on 20/02/2014 - 09:45

    I've never owned a credit card and I don't think it's right my 'bills' have been recategorised as 'credit' without my permission. Scum!

    • _Bruce_ on 20/02/2014 - 15:13

      As anna10 indicates, it doesn't matter what you think about your 'permisson', any item or service you have that you have not yet paid for is credit, simple fact.

    • p1 ama on 20/02/2014 - 17:07

      Someone needs to learn some Accounting.

      Your bills are an accrued expense, I.e. use now, pay later and thus are liabilities.

      So they are credit.

      Your 'permission' has nothing to do with this.

  • anna10 on 20/02/2014 - 12:44

    Surely, if you owe money to someone (water, rates, insurance whatever), it is a credit until you pay it. CC are not the culprit.

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