Consequences of a Late Credit Card Payment

GOCAT9 on 21/08/2019 - 10:10

I thought I would share this in the greater interest. I have (had) a credit score of 850. After returning from a one month trip overseas, I discovered that I had a credit card statement (from one of the big four) that was about three weeks overdue. The closing balance due on the statement was about $200 comprising an annual fee and an awards fee only. I had not used this card in about a year and consequently was not expecting any charges on it as it is not my daily go to card.

Anyway, as soon as I realised it was overdue, and because I didn’t really use it I called the bank to close the account. They reversed the two annual fee charges on the card at that time. However, to my surprise, since I was only about three weeks overdue, they report me to the credit reporting agency. Consequently my credit rating dropped about 200 points to 650 in one event!

So, don’t think that you have to be late by one or two months before you get reported to a credit reporting agency. When I called the bank they told me it is only 14 days before they do that.

In conclusion, given my perfect credit history and payments on time with the bank over many years, they offered to have it appealed to the relevant section. I suspect it was just an overzealous computer system or employee that did this without taking into account any prior credit history.

I’m awaiting the outcome, could take up to a month I was told. I’m feeling quite confident it will be in my favour. So just a warning to everybody, you don’t have to be overdue for very long, a couple of weeks only, before you get reported to a credit reporting agency. Live and learn!

Financial

Comments

  • holdenmg on 21/08/2019 - 10:14

    I presume www.fos.org.au…

    • GOCAT9 on 21/08/2019 - 10:22
      +1

      No, in the first instance, it’s being handled by the bank’s internal review process. Hopefully it won’t need to go any further than that.

  • GoldenDragon888 on 21/08/2019 - 11:11
    +1

    I can only suggest next time to have automatic payment set up.
    Also did you not have email access overseas?

    • GOCAT9 on 21/08/2019 - 14:27

      Yep, expected that comment. Yep I did have email access but did not receive statement.

  • josh676 on 21/08/2019 - 11:15
    +2

    I had the same thing happen to me, on a 20 dollar balance. 200 points off my score. They even reported the wrong month. Makes me really really angry.

    To top it off, the payment was missed because they moved me from Email statements, to 'online' when I had NEVER used their online banking portal (or asked for it).

    Fwits.

    • AustriaBargain on 21/08/2019 - 12:25
      +2

      Why do they report just one late payment, when they make all their money on those late payment fees? Shouldn't they want you to pay it back late so you incur the interest period.

      • Typical16-bitEnjoyer on 21/08/2019 - 13:22
        +1

        And this is precisely why we had a Royal Commission into the banking sector. So that practice doesn't occur ever again.

  • JimmyF on 21/08/2019 - 11:47
    +1

    However, to my surprise, since I was only about three weeks overdue, they report me to the credit reporting agency. Consequently my credit rating dropped about 200 points to 650 in one event!

    Well regardless of your history or the dollar amount you had been LATE in paying it.

    The entire idea of the reporting system is pickup people starting to fall behind on payments etc and cut credit off. Not to give you a 'free' pass each time you're late.

    Its rough, but thats the way it is.

    FYI I dont even know my credit score or care, but pay my bills on time and never been refused credit.

    • AustriaBargain on 21/08/2019 - 12:26

      would just paying the late bill, instead of closing his account and asking for it to be reversed, have brought his credit score back up to 850?

      • JimmyF on 21/08/2019 - 13:10
        +1

        Nope, as the OP was 'late' paying it, full stop. Hence the 200 point downgrade.

    • GOCAT9 on 21/08/2019 - 14:35
      +3

      JimmyF: Well, if you are a responsible borrower then you SHOULD care about your credit score!!

      Also, I think you are missing the point here! The point is that they reported me for being only 14 days late, not for JUST being late. There is a difference. My point, as others have said, is that late once only, or only 14 days is a bit over zealous in my opinion to be reported. If I was late multiple times or more than say 30-60 days then fair cop.

      With your line of reasoning, everybody should be reported even if they are just one day late-I don’t think so!!

      Finally, they DID NOT cut off my credit as you said, just reported late payment.

      • JimmyF on 21/08/2019 - 16:10
        -1

        The point is that they reported me for being only 14 days late

        Yes I'm aware and I think that is fair. You are 2+ weeks past the due date in paying it. So them reporting you 14 days late is fair, and not over zealous as you seem to think.

        If I was late multiple times or more than say 30-60 days then fair cop.

        If you had been doing this, then each time you would take a 200 point reduction on your credit score. Again you seem to think that you should get let off for not following the terms of your credit card and missing payments.

        Finally, they DID NOT cut off my credit as you said, just reported late payment.

        I didn't mean that credit card company would cut your credit off, but each time you're late in paying by more than 14 days, ie you're in over your head in debit and can't keep up with the payments, then you would get a 200 point ding on your credit score, so when you go to apply for more credit, you would at that point be stopped from getting new lines of credit.

        The system is working as designed. Deal with your mistake, you missed paying the bill, 3 weeks PAST the due date.

        I feel you're just upset that your credit score has taken a hit. Do you brag to your friends about it?

        then you SHOULD care about your credit score!!

        Why? I don't get refused credit today.

  • Typical16-bitEnjoyer on 21/08/2019 - 13:24
    +1

    It's all automatic. You can't escape it.

    Top tip: set up direct debits from a bank account that doesn't have an overdraft.

    1. You will never be late;
    2. If for whatever reason, good or bad, that you can't pay your monthly payment, it'll send your bank account into the negatives - but that bank account activity is not reportable on your credit history. (in any event you should have called your bank prior to make an arrangement)
  • HighAndDry on 21/08/2019 - 14:18
    +2

    I personally assume if I'm even one day past the due date, it'll affect my credit score, though 14 days doesn't sound too unreasonable.

    • GOCAT9 on 21/08/2019 - 14:38
      +2

      Well I’m only guessing, but I bet that if you are about 14 days late on your utility bills, you WON’T get reported-just a reminder. Why should banks be any different-it’s still just credit.

      • HighAndDry on 21/08/2019 - 14:46
        +1

        Actually, I wouldn't be willing to bet my credit score on that.

      • JimmyF on 21/08/2019 - 16:11

        I bet that if you are about 14 days late on your utility bills, you WON’T get reported

        Give it a go and let us know how it turns out :)

  • Baysew on 21/08/2019 - 17:42
    +4

    Banks have been opposed to this reporting from the start. From 2014 -

    Credit reporting move opposed by big banks

    Mandatory steps would create significant cost, complexity and potential for unintended consequences, the Australian Bankers' Association said in its submission to the inquiry.

    The Banks were compelled to provide this information -

    There's good and bad in comprehensive credit reporting

    Under the comprehensive reporting regime, there will be much more data, including monthly payment histories on loans and credit cards, where there will be red flags on any missed payments of more than 14 days.

    So, nothing over zealous from the banks. They are forced to disclose this information.

  • madreece on 21/08/2019 - 22:17

    That's a lot of being good with credit to be burnt for an oversight.
    Good luck with the appeal.

  • madreece on 20/09/2019 - 15:03

    Is there a final outcome with this yet?

    • GOCAT9 on 21/09/2019 - 10:03

      Well yes of sorts!

      I found out the following:

      1. If it’s the first time that you are late in making a credit card payment then you get 14 days grace. After that legislation mandates that you get reported as late.
      2. If it’s your second or greater time that you are late with your payment that you only get one day’s grace before you’re reported.

      So I think the conclusion was that even though I had a perfect payment record with the bank they were mandated to report it as late and could not reverse it. So I just took this as a lesson learnt and moved on.

      Thank you for your interest.

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