Credit recovery after late payment

[k_sheep]

Well this is embarrassing.

I had a citibank credit card, thinking it was the fee free for life one I got ages ago (I think we all had it!). Turns out it wasn't fee free for that particular card, and they charged the annual fee. Now, having not used that card for months (no travel), I did not login at any stage to check the balance.

Consequently I got charged late fees and default fees and whatnot. Once I realised I paid it immediately and cancelled the card. Problem is, my credit score has nosedived from ~850 to 500. A quick google shows this will remain on my file for 5 to 7 years! Has anyone had experience in how long it takes the score to recover? Hard to believe one stupid mistake ('overdue' amount was $67!) will cause 7 years of financial misery (presuming I can't get reasonable refinance on home loans etc).

Otherwise, please use my stupidity as a warning. Check all your cards - even the ones you never use - and get rid of the excess

 

[ChrisMars]

Money smart claims it's 5 years.

Credit repair - Moneysmart.gov.au

You don't need to pay to fix your bad credit history. Take steps to do it yourself for free.

moneysmart.gov.au

There is a section about repair, it indicates that the credit provider could fix it if some circumstances are met. One is that they failed to notify you, which I guess could be the case if you got no email sms or snail mail? Maybe citibank can also understand it's an oversight error that has nothing to do with your repayment capacity and fix it? Either way I would contact them kindly to see what they can do.

For a homeloan, I would contact a mortgage broker to get their advise. It's their job to get you approved, they will know the impact.

 

[Scr77]

I wouldn’t be concerned about it effecting property purchase. I’ve refinanced 2 properties while having a terrible score because of churning. Simply explained the reason.

 

[Spongbob]

I could be wrong, but 7 credit score years is about 67 in dog years.

 

[MEL_Traveller]

Well this is embarrassing.

I had a citibank credit card, thinking it was the fee free for life one I got ages ago (I think we all had it!). Turns out it wasn't fee free for that particular card, and they charged the annual fee. Now, having not used that card for months (no travel), I did not login at any stage to check the balance.

Consequently I got charged late fees and default fees and whatnot. Once I realised I paid it immediately and cancelled the card. Problem is, my credit score has nosedived from ~850 to 500. A quick google shows this will remain on my file for 5 to 7 years! Has anyone had experience in how long it takes the score to recover? Hard to believe one stupid mistake ('overdue' amount was $67!) will cause 7 years of financial misery (presuming I can't get reasonable refinance on home loans etc).

Otherwise, please use my stupidity as a warning. Check all your cards - even the ones you never use - and get rid of the excess

Did you contact the bank before payment? If a card hasn't been used, and the sole charge was the annual fee, banks are often willing to reverse the fee, or to at least waive the default from their end.

 

[k_sheep]

Did you contact the bank before payment? If a card hasn't been used, and the sole charge was the annual fee, banks are often willing to reverse the fee, or to at least waive the default from their end.

I did. No dice. They managed a pro rata refund of the annual fee but that was it. I still had to pay all penalties, and later they did the credit reporting thing.

Groan.

 

[MEL_Traveller]

I did. No dice. They managed a pro rata refund of the annual fee but that was it. I still had to pay all penalties, and later they did the credit reporting thing.

Groan.

That doesn't seem fair! Maybe a letter to customer service to see if they can fix the default?

 

[ethernet]

I wouldn’t be concerned about it effecting property purchase. I’ve refinanced 2 properties while having a terrible score because of churning. Simply explained the reason.

Somebody needs a bashing. Churning and getting multiple quotes should have nothing to do with credit scores in the context of getting lowest price. I ditched Cwth Bank when overpayments were not the same as an offset. Oh wait, another members bank played that dirty trick too. Those stuck on variable rates are presently being done over. I saw 1.98% fixed but 3.4% comparison meaning bank fees are still out of control.

 

[k_sheep]

Well I've written a slightly pleading letter on their online form. Don't expect it to do anythiing but worth a shot I guess.

 

[ethernet]

If you get a form cut n pastes response the complain to

Make a Complaint

Make a Complaint

www.afca.org.au

It costs them money to fix up insincere back office flick-offs.
You mentioned covid, and that is a sound reason. Good luck

 

[k_sheep]

No answer to my email, no surprise

But the good-ish news is my score raised 50 points this month, so maybe it'll recover quickly enough?

 

[k_sheep]

To answer former me in case anyone wants to know; my score recovered to 615 and sat there for 10 months!

Just this month it has jumped up to 740 thank goodness; still well short of where it was, but high enough for me to take a chance and apply for another card

Only inquiry I had during this time was for a home loan preapproval.

 

[k_sheep]

And an update again for those playing at home - seems the default drops off at 2 years, I'm back well over 800 despite 3 new cards. Phew!

 

[clifford]

And an update again for those playing at home - seems the default drops off at 2 years, I'm back well over 800 despite 3 new cards. Phew!

I guess you're under 65.

 

[ethernet]

After the Optus fiasco (still being covered up by not stating the timing and extent of exposure - not just the one they know about) data retention by default is just getting a grain of salt thinking by politicians who have not actually thought things through. Credit Reporting is a near monopoly with near monopoly rules, played in a country with defective competition and defective oversight. I used to put in complaints - to cost robotic customer dis-service reps through the ringer. I think I saw my last email complaint - no answer - no return, but simply hidden in online banking message box - not actually sent to my email at any stage. Just like I do not use mygov for any messages - letters only. Bring on class actions.

 

[k_sheep]

I guess you're under 65.

Yep well under ... why's that? Reporting rules different? Or just harder to improve a credit score in retirement?

 

[clifford]

Yep well under ... why's that? Reporting rules different? Or just harder to improve a credit score in retirement?

No one wants to give you a credit card after that age (well that's my experience).

 

[k_sheep]

I shall make sure to pump my numbers up over the next few decades then