Changes to VedaScore

[burmans]

If so why not show the outstanding balance is not growing (ie a good thing)

Because the law does not allow balance to be reported by credit providers to the Credit Bureaus!. Blame the customer advocates for that one, they convinced the government this should not be allowed.

 

[Renato1]

I thought this change would have improved my score considerably, since I pay my cards off once or twice a week.
But oddly enough, after seeing my scores plummet from card applications to plumb insulting lows, while my Vedascore has gone up a bit to just hit the very first point score of "Good", my Experian score has increased more rapidly to near the top of "Good".
Regards,
Renato

 

[andye]

Does anyone know if the length of crdit history is tied to a particular card or to the financial institution? E.g. if you have had multiple different amex products but remained a continuous member

 

[OzEire]

Thanks fairbasa, Coles and burmans for the replies.

I thought that CCR was introduced to allow credit providers to get a snapshot of total liability, ie. an amount actually owing at a point in time like the EOM, of if actual is not permitted then something like combined limits.

If not given a value then what is the point of a monthly "financial health" check, what info does it actually provide?

 

[OzEire]

Today I have asked my 3 card issuers to remove credit limit increase offers, and reduce limits to the minimum allowable for the card type (and cancelled one). Hopefully this will see an improvement in the appearance of my credit worthiness.

I say appearance because my financials are excellent but look worse due to the way I have applied for loans and cards. For example I made an enquiry with CBA about switching a home loan to them... quick as a flash they did a credit check but I ended up taking the loan with another provider, who did two separate credit checks based on an estimated loan amount at application and then again on the actual loan amount which was $8 more (not $8,000, actually eight dollars). So now it looks like I have 3 loans for the one property, all taken within a month of each other - ie. that I am drowning in debt when my investment property is paying itself off with rent to spare.

 

[Jack_OC]

Today I have asked my 3 card issuers to remove credit limit increase offers, and reduce limits to the minimum allowable for the card type (and cancelled one). Hopefully this will see an improvement in the appearance of my credit worthiness.

I say appearance because my financials are excellent but look worse due to the way I have applied for loans and cards. For example I made an enquiry with CBA about switching a home loan to them... quick as a flash they did a credit check but I ended up taking the loan with another provider, who did two separate credit checks based on an estimated loan amount at application and then again on the actual loan amount which was $8 more (not $8,000, actually eight dollars). So now it looks like I have 3 loans for the one property, all taken within a month of each other - ie. that I am drowning in debt when my investment property is paying itself off with rent to spare.

Interesting. To my surprise, my score has just dropped substantially - by over 100 points, taking me from "Good" to "Average". And as I mentioned previously, it had remained completely unchanged for 4 consecutive months, and nothing has changed recently (i.e. no new credit), so this is definitely due to Veda's new methodology.

I'm trying to figure out what the reason for the decrease is. Is it the large total CC limit (>$140k)? Like others, I pay off the balance in full every month (at least), but with one exception - I took out a balance transfer offer for a 20 month interest free period, so there is an outstanding balance on that card, and I also wonder if applying for the balance transfer itself has a negative effect? I guess it would make sense if it did, although in my case I could clear the outstanding balance today if I wanted to, I just choose not to as I'm better off leaving that cash in my offset account until the 0% period ends. Does anyone know if this is likely to be an issue?

By the way, here is what it said about "Contributing Factors" before and after the changes:
"Lack of consumer adverse information" - was 3 green (upwards) arrows, now 2 green arrows.
"Type of credit currently or previously applied for" with 2 green arrows has been replaced with "Type of historical consumer credit applied for" and one yellow (downward) arrow.
"Number of consumer credit enquiries" with 2 orange (downward) arrows has been replaced with "Number of credit applications with multiple credit providers" and one yellow arrow.
"Individual shopping pattern for credit" with one yellow arrow has been replaced with "Type of second last consumer credit applied for" and one yellow arrow.

Is anyone able to decode these criteria and work out what they mean in practice? In particular, what on Earth does "second last consumer credit" mean? Overall though, it seem clear that the problems for me are the first two criteria, especially the "historical consumer credit" one. Is that basically too many CC applications over the years? If so, I'd love to hear from the people who have been taking out 10-15 CCs a year on how their scores have been affected (I've taken out about 2-3 per year at most).

 

[lathiat]

My score also dropped: from 800s to 700s (Very Good => Good).

What's interesting is that previously I had 3 upwards for "Type of credit currently or previously applied for".. now I have two downwards, one each for "Type of second last credit application" and "Type of historical credit". Second last application is a secured car loan but is listed as "Personal Loan" (no mention of security) so I am wondering if that is a correct listing or not - if it's supposed to indicate secured or something. Seems strange otherwise if everyone with a car loan gets penalised noticeably but maybe that is how it is. I lodged a query about it.

 

[Dannyism]

I have been going pretty hard on credit card sign ups lately. Probably 9 over the last 12 months. My VEDA score has dropped from 680 to 480, my Experian score is largely unchanged around 600. I've never missed or had a late payment so I'm not worried.

 

[burmans]

Thanks fairbasa, Coles and burmans for the replies.

I thought that CCR was introduced to allow credit providers to get a snapshot of total liability, ie. an amount actually owing at a point in time like the EOM, of if actual is not permitted then something like combined limits.

If not given a value then what is the point of a monthly "financial health" check, what info does it actually provide?

http://www.creditsmart.org.au/what-has-changed
Note that what is reported in credit available (your credit limit) not credit used (balance)

 

[Jack_OC]

What has changed? | Credit Smart
Note that what is reported in credit available (your credit limit) not credit used (balance)

Thanks for the link - very interesting. So given that Veda has access to my credit limits, but not credit used (and presumably then not repayment amounts either), I would have to assume that having high limits could only be seen as a bad thing? Whereas, if they knew I had total limits exceeding $140k, with a pretty high monthly spend, but repayment in full every month, it would create the opposite impression. Or at least I think it should!

 

[get me outta here]

This is the one that people who otherwise do the 'right' thing need to remember if you travel a lot and don't have direct debits set up:

"default information" (that is, a payment of more than $150 that is at least 60 days overdue and for which you have been served with at least two notices requiring payment)

 

[andye]

Thanks for the link - very interesting. So given that Veda has access to my credit limits, but not credit used (and presumably then not repayment amounts either), I would have to assume that having high limits could only be seen as a bad thing? Whereas, if they knew I had total limits exceeding $140k, with a pretty high monthly spend, but repayment in full every month, it would create the opposite impression. Or at least I think it should!

Agree, except what the CC companies really want is someone who spends big, always pays on time but doesn't clear the balance

 

[burmans]

Thanks for the link - very interesting. So given that Veda has access to my credit limits, but not credit used (and presumably then not repayment amounts either), I would have to assume that having high limits could only be seen as a bad thing? Whereas, if they knew I had total limits exceeding $140k, with a pretty high monthly spend, but repayment in full every month, it would create the opposite impression. Or at least I think it should!

In general terms, yes paying on time is good, but large limits are bad.

 

[burmans]

This is the one that people who otherwise do the 'right' thing need to remember if you travel a lot and don't have direct debits set up:

"default information" (that is, a payment of more than $150 that is at least 60 days overdue and for which you have been served with at least two notices requiring payment)

DD's or automatic payments, remember Banks don't need (or some would say want) you to pay in full, they only want the minimum payment each month! So setting up an AP solves this particular problem.

 

[Jack_OC]

Agree, except what the CC companies really want is someone who spends big, always pays on time but doesn't clear the balance

Yeah I know that's what the banks want in a customer (to an extent), but that's not the same thing as what sort of credit risk you pose. The Veda Score is supposed to provide a "risk estimate", and someone who doesn't clear the balance each month is clearly a higher credit risk than someone who does - spiralling credit card debt is one of the most common ways people get into financial trouble. By the same token, banks want you to have high credit limits (as you're then more likely to spend more and fail to clear the balance), but high credit limits have negative effect on your score as they make you a higher risk!