The day was coming, and has now arrived.
In March 2014, the new credit reporting regime began in earnest in Australia and we were told that repayment history information would now be recorded on credit files. The legislation that brought this change came into effect in early 2013, and from this date credit providers could collect late payment information and have it at the ready to insert onto your consumer credit file as soon as practicable.
Over the past month, late payments – or as they are sometimes called ‘repayment history indicators’ (RHI) – are finally showing up on credit reports. RHI is different to a ‘default’, which is information about a payment of $150 or more that has been overdue for at least 60 days.
RHI indicates whether you have missed or made a payment on a certain type of credit contract. You will be considered to have missed a consumer credit payment if you make the payment more than 14 days after the date it was due to be paid. The RHI will appear on your consumer credit report as a 1, 2, 3, 4, 5, 6, X next to the month in which the payment was due. A higher number (or ‘X’) will indicate that the payment has been overdue for longer.
If you pay only part of the amount owing, you are taken to have missed a payment. However, in relation to credit cards, you are only taken to have missed a payment if you fail to make the ‘minimum payment due’ (as indicated on your credit card bill). The amount of any missed payment is not recorded on the credit file – only the fact that you have made or missed a payment.
Only credit providers who hold an Australian credit licence can put RHI information on a credit file. Common types of credit providers in this category are those who provide home loans, personal loans (including payday loans), and credit cards. Energy companies, telecommunications companies, and bills for other services do not place RHI information on your credit file.
RHI will affect your ability to obtain certain types of credit in the future (such as a home loan, a personal loan or a credit card), and stays on your credit file for two years. Correctly placed RHI indicates to credit providers that you are struggling to meet your current credit obligations. If a credit provider approves a loan while you are struggling to meet other payments, it may breach the rules around responsible lending.
As with defaults and court actions on credit reports, there are rules that concern the placement of RHI on a credit file. If your client is adversely affected by RHI, Princeville can investigate whether the markers have been placed correctly, and erase them if an error has been made. We have been working with RHI information in the UK for two years and are experienced in this work.
Privacy factsheet 34 from the Office of the Australian Information Commissioner has been used to prepare this article.
Dr Merrilyn Mansfield, lead adjudicator and researcher, Princeville Credit Advocates