Petition to Reform the current system of payment markes on consumer credit reports

neilperks

I’ve made a petition – will you sign it?

Please feel free to leave your thoughts below too

Click this link to sign the petition:
https://petition.parliament.uk/petitions/598236/sponsors/new?token=0n5wYnKrntu7J5zt7gEW

My petition:

Reform the current system of payment markers on consumer credit reports

Credit accounts recorded on consumer credit reports are populated with various ‘markers’ representing the status for each account, including late payments and defaults. To ensure the accuracy and fairness of these markers on consumer credit files, a ‘Remedied’ ('R') marker should be introduced.

Default markers severely damage a consumer’s credit report for six years, from the date of default, and regardless of any subsequent payment made towards the account. Implementing a ‘Remedied’ (‘R’) marker would effectively replace the default marker to represent more accurately, the proactive remedy of defaulted accounts. In turn, a remedied marker would reduce the negative impact that a default marker continually imposes, aiming to increase the eligibility and fair access to future credit

[Deleted User]

Lenders can already see if any account is being paid off and if the default has been settled, so no need for an additional marker.

neilperks

Deleted_User said:

Lenders can already see if any account is being paid off and if the default has been settled, so no need for an additional marker.

Thanks for your contribution

I would have to disagree with you in part ... while Lenders may be able to see the payment information, the default marker remans applied despite positive actions being taken, which continues to negatively impact credit eligibilty. The 'remedied' marker would bolster incentive to settle defaulted accounts on the premise that the new marker imposes a lesser impact on their credit score, giving the consumer a fair(er) chance to improve their economic condition by improving their eligibility for credit.

I would be keen to learn of your detailed thoughts on this, if you are open to share them?

sourcrates

The damage is done once an account defaults, the monthly status update just reflects this, if the default sum is re-paid, its marked as satisfied, if it isn`t, it stays as defaulted.

Its all there for a lender to see.

Can`t see a need for an additional marker to be honest.

[Deleted User]

neilperks said:

Deleted_User said:

Lenders can already see if any account is being paid off and if the default has been settled, so no need for an additional marker.

I would have to disagree with you in part ... while Lenders may be able to see the payment information, the default marker remans applied despite positive actions being taken, which continues to negatively impact credit eligibilty. The 'remedied' marker would bolster incentive to settle defaulted accounts on the premise that the new marker imposes a lesser impact on their credit score, giving the consumer a fair(er) chance to improve their economic condition by improving their eligibility for credit.

It would make no difference to now a lenders assesses an applicant, as the default, payment history and any settlement is still all there. The default won't be hidden or given any more or less emphasis because of an additional marker.

If a CRA decided to change your credit score because of a new marker, that would again  make no difference, as the score has no relevance to your credit worthiness.

The only way  you would change how you were assessed would be to change the underlying data, but that won't happen as it needs to be accurate.

neilperks

Deleted_User said:

neilperks said:

Deleted_User said:

Lenders can already see if any account is being paid off and if the default has been settled, so no need for an additional marker.

I would have to disagree with you in part ... while Lenders may be able to see the payment information, the default marker remans applied despite positive actions being taken, which continues to negatively impact credit eligibilty. The 'remedied' marker would bolster incentive to settle defaulted accounts on the premise that the new marker imposes a lesser impact on their credit score, giving the consumer a fair(er) chance to improve their economic condition by improving their eligibility for credit.

It would make no difference to now a lenders assesses an applicant, as the default, payment history and any settlement is still all there. The default won't be hidden or given any more or less emphasis because of an additional marker.

If a CRA decided to change your credit score because of a new marker, that would again  make no difference, as the score has no relevance to your credit worthiness.

The only way  you would change how you were assessed would be to change the underlying data, but that won't happen as it needs to be accurate.

Thanks for clarifying your point ... I do agree, at present, this is the way things are so I appreciate your opinion.

Do you think the current system is already fair enough then?

By way of my petition, I am hoping to suggest an improvement to the current system, to particularly set apart the efforts made by those who proactively seek settlement of their defaulted account, as opposed to debtors who abandon accounts due to the invariability of the default marker.

I understand that accounts can already be marked as 'settled / part settled' however the default marker still carries the same weight as if the account was left unresolved... this certainly does bare relevance to a person's credit worthiness.

Would other reforms work better, do you think? ...perhaps a reduction in the 6 year recording? I'd appreciate your ideas

neilperks

sourcrates said:

The damage is done once an account defaults, the monthly status update just reflects this, if the default sum is re-paid, its marked as satisfied, if it isn`t, it stays as defaulted.

Its all there for a lender to see.

Can`t see a need for an additional marker to be honest.

Hey, thanks for your input ... I understand where you're coming from as this is how the system currently stands.

Would you deem it fair enough already?

[Deleted User]

neilperks said:

Deleted_User said:

neilperks said:

Deleted_User said:

Lenders can already see if any account is being paid off and if the default has been settled, so no need for an additional marker.

I would have to disagree with you in part ... while Lenders may be able to see the payment information, the default marker remans applied despite positive actions being taken, which continues to negatively impact credit eligibilty. The 'remedied' marker would bolster incentive to settle defaulted accounts on the premise that the new marker imposes a lesser impact on their credit score, giving the consumer a fair(er) chance to improve their economic condition by improving their eligibility for credit.

It would make no difference to now a lenders assesses an applicant, as the default, payment history and any settlement is still all there. The default won't be hidden or given any more or less emphasis because of an additional marker.

If a CRA decided to change your credit score because of a new marker, that would again  make no difference, as the score has no relevance to your credit worthiness.

The only way  you would change how you were assessed would be to change the underlying data, but that won't happen as it needs to be accurate.

I understand that accounts can already be marked as 'settled / part settled' however the default marker still carries the same weight as if the account was left unresolved... this certainly does bare relevance to a person's credit worthiness.

That's not true though.

Any default is still an indicator of high risk, but I don't know of any lender who doesn't distinguish between settled and unsettled defaults.

The whole point of risk assessment is get as granular as you can so you can price appropriately for each segment.

Even if it were true, adding a new marker wouldn't change a lender's mind if they believed that there was no difference between settled and unsettled.

neilperks

Deleted_User said:

neilperks said:

Deleted_User said:

neilperks said:

Deleted_User said:

Lenders can already see if any account is being paid off and if the default has been settled, so no need for an additional marker.

I would have to disagree with you in part ... while Lenders may be able to see the payment information, the default marker remans applied despite positive actions being taken, which continues to negatively impact credit eligibilty. The 'remedied' marker would bolster incentive to settle defaulted accounts on the premise that the new marker imposes a lesser impact on their credit score, giving the consumer a fair(er) chance to improve their economic condition by improving their eligibility for credit.

It would make no difference to now a lenders assesses an applicant, as the default, payment history and any settlement is still all there. The default won't be hidden or given any more or less emphasis because of an additional marker.

If a CRA decided to change your credit score because of a new marker, that would again  make no difference, as the score has no relevance to your credit worthiness.

The only way  you would change how you were assessed would be to change the underlying data, but that won't happen as it needs to be accurate.

I understand that accounts can already be marked as 'settled / part settled' however the default marker still carries the same weight as if the account was left unresolved... this certainly does bare relevance to a person's credit worthiness.

That's not true though.

Any default is still an indicator of high risk, but I don't know of any lender who doesn't distinguish between settled and unsettled defaults.

The whole point of risk assessment is get as granular as you can so you can price appropriately for each segment.

Even if it were true, adding a new marker wouldn't change a lender's mind if they believed that there was no difference between settled and unsettled.

Okay cool, I'm taking what you've said on board, so in essence if a default is still an indicator of 'high risk' then a new marker would be an indicator of reduce risk (adding to the granularity)

Then I guess it would have to come down to legistlation for lenders to adopt the new marker when assessing risk and making decisions, hence the petition.

I understand your point regarding distinguishment between settled / unsettled and, if the default marker was removed when settlement occurs then there would indeed be no requirememt for an additional marker. However, the default marker remains, regardless of settlement and I still think this could be reformed in some way.

If you were to make a hypothetical lending decision, based on the above, what would you ideally like to see reported?

[Deleted User]

neilperks said:

Deleted_User said:

neilperks said:

Deleted_User said:

neilperks said:

Deleted_User said:

Lenders can already see if any account is being paid off and if the default has been settled, so no need for an additional marker.

I would have to disagree with you in part ... while Lenders may be able to see the payment information, the default marker remans applied despite positive actions being taken, which continues to negatively impact credit eligibilty. The 'remedied' marker would bolster incentive to settle defaulted accounts on the premise that the new marker imposes a lesser impact on their credit score, giving the consumer a fair(er) chance to improve their economic condition by improving their eligibility for credit.

It would make no difference to now a lenders assesses an applicant, as the default, payment history and any settlement is still all there. The default won't be hidden or given any more or less emphasis because of an additional marker.

If a CRA decided to change your credit score because of a new marker, that would again  make no difference, as the score has no relevance to your credit worthiness.

The only way  you would change how you were assessed would be to change the underlying data, but that won't happen as it needs to be accurate.

I understand that accounts can already be marked as 'settled / part settled' however the default marker still carries the same weight as if the account was left unresolved... this certainly does bare relevance to a person's credit worthiness.

That's not true though.

Any default is still an indicator of high risk, but I don't know of any lender who doesn't distinguish between settled and unsettled defaults.

The whole point of risk assessment is get as granular as you can so you can price appropriately for each segment.

Even if it were true, adding a new marker wouldn't change a lender's mind if they believed that there was no difference between settled and unsettled.

Then I guess it would have to come down to legistlation for lenders to adopt the new marker when assessing risk and making decisions, hence the petition.

There won't ever be legislation for lenders to ignore risk factors in their decision making. It's a commercial process. And remember that the marker is not giving any information. It would be like saying a lender has to look at your credit score. 

From a lending point of view, all the data I need is currently there, along with the other information collected in the application process..  Debts, repayment history, breaches and settlement.

molerat

The reporting system seems basically OK, a default is a default for whatever reason and past history is not changed by a current event.  What needs looking at is ensuring that the markers are applied fairly and that there is an easily accessible  dispute mechanism without being bounced between the two parties each blaming the other.

It has been seen many times on here that some are willing to settle a debt if the marker is removed. They only want to do this when they are trying to take more credit, usually a mortgage, and were quite happy leaving the debt outstanding as it suited them. Should they benefit from a different marker because they settled the debt purely in their own interest ?