How is persistent debt recorded on CRA's?

ejc81

Just wondering how this is, or is going to be reported to through the CRA's?
Has anyone experienced this yet? They're quick to say 'it may effect you credit file' on the PD letters, but how???? How is it reported????

boo_star

It isn't, specifically.  But its obvious when your outstanding balance isn't dropping

Dandytf

I haven't seen any New Rules CRA infoOnly my DD repayments.
I guess after 36months has expired could be very different if CC providers take action to reduce Limit/0 Limit and or suspend cards.

sourcrates

I believe its recorded internally by individual financial companies, if you pay more in interest and/or charges, over a certain period, than the amount your debt reduces by, then you are deemed to be in persistent debt.
That in itself won`t show up on any credit file, but if debt management is called for, or an arrangement to pay, then that will be recorded on your file, either by defaults or AP markers.

Willing2Learn

Just to add that Experian have account markers for 'minimum payment' and 'promotional payment'.  ( the promotion would be typically for a 0% APR offer)

fatbelly

sourcrates said:

I believe its recorded internally by individual financial companies, if you pay more in interest and/or charges, over a certain period, than the amount your debt reduces by, then you are deemed to be in persistent debt.
That in itself won`t show up on any credit file, but if debt management is called for, or an arrangement to pay, then that will be recorded on your file, either by defaults or AP markers.

We've yet to see in practice how this works out. The 36 month letters will be going out in bulk next month and there should then be loads of examples. The least harmful strategy (if it's offered) would be a consolidation loan where the credit card is marked as settled and the loan creates a fresh entry. That's not to say the consolidation loan would be the best option, because in most cases it wouldn't be.

My opinion is that the default marker should not be used where someone has been making the minimum payments or above, yet has slipped into persistent debt as it is now defined.

If the account is suspended under PD rules, and an arrangement made to repay over 3-4 years then an AP marker would be likely.

Thrugelmir

ejc81 said:

Just wondering how this is, or is going to be reported to through the CRA's?
Has anyone experienced this yet? They're quick to say 'it may effect you credit file' on the PD letters, but how???? How is it reported????

With six years of credit history visible. Lenders can already determine whether an individual is simply treading water with regards to their overall indebtedness. With persistant debt , the onus is falling on credit card companies and banks (overdrafts) to lend more responsibly. Open ended / revolving credit agreements being the initial target. Fixed repayments at least provide a discipline for the customer. 

ejc81

Thrugelmir said:

ejc81 said:

Just wondering how this is, or is going to be reported to through the CRA's?
Has anyone experienced this yet? They're quick to say 'it may effect you credit file' on the PD letters, but how???? How is it reported????

With six years of credit history visible. Lenders can already determine whether an individual is simply treading water with regards to their overall indebtedness. With persistant debt , the onus is falling on credit card companies and banks (overdrafts) to lend more responsibly. Open ended / revolving credit agreements being the initial target. Fixed repayments at least provide a discipline for the customer. 

No offence, but that's utter nonsense as the PD rule doesn't affect any accounts that have been less than £200 in debt over the previous 18months. Anyone 'sensibly' moving balances around on 0% deals is therefore highly unlikely to be subject to this scrutiny and therefore should not have a credit history that reflects persistent debt. Credit cards already have minimum repayments, these are 'fixed' to a minimum!

ejc81

fatbelly said:

sourcrates said:

I believe its recorded internally by individual financial companies, if you pay more in interest and/or charges, over a certain period, than the amount your debt reduces by, then you are deemed to be in persistent debt.
That in itself won`t show up on any credit file, but if debt management is called for, or an arrangement to pay, then that will be recorded on your file, either by defaults or AP markers.

We've yet to see in practice how this works out. The 36 month letters will be going out in bulk next month and there should then be loads of examples. The least harmful strategy (if it's offered) would be a consolidation loan where the credit card is marked as settled and the loan creates a fresh entry. That's not to say the consolidation loan would be the best option, because in most cases it wouldn't be.

My opinion is that the default marker should not be used where someone has been making the minimum payments or above, yet has slipped into persistent debt as it is now defined.

If the account is suspended under PD rules, and an arrangement made to repay over 3-4 years then an AP marker would be likely.

I can't see how they could use a default marker at any point if minumum payments have been met as this would conflict with basic CCA T&C's and also the general guidance given by the FCA.

I was thinking the AP was likely, but just wondering if they'd come up with some sort of new PD marker. Time will tell I suppose, it's all a bit grey atm

fatbelly

ejc81 said:

I can't see how they could use a default marker at any point if minumum payments have been met as this would conflict with basic CCA T&C's and also the general guidance given by the FCA.

I was thinking the AP was likely, but just wondering if they'd come up with some sort of new PD marker. Time will tell I suppose, it's all a bit grey atm

Completely agree.
I also wondered if they'd come up with some sort of new PD marker. When DROs first came in, they got marked as bankruptcy and then later got their own mark. It wouldn't be difficult to introduce a PD mark.

Interesting how none of the detail seems to have been thought about.

Willing2Learn

I am not sure I agree that there will be a PD marker.  Because a PD marker would mean that the borrower had stuck to the contractual terms of their credit agreement.  Experian already have a minimum payment marker.  I would have thought the minimum payment marker would be adequate.