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Discussion Starter #1
TransUnion is now putting a big red exclamation mark on credit reports for any payments that were deferred by the lenders due to COVID.

Credit scores are going to get hit, despite the lenders saying otherwise. I wonder what that will do to mortgage renewals.
 

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Discussion Starter #3
The mortgage payments were just deferred for up to 6 months. The people will be making the payments and end up paying more interest.

Now the banks are going to trash their own customers credit scores ?
 

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The mortgage payments were just deferred for up to 6 months. The people will be making the payments and end up paying more interest.

Now the banks are going to trash their own customers credit scores ?
I know little about how credit reporting works. I have never had a problem getting any credit I have wanted. Like andrewf, I have been diligent about meeting my credit obligations.

But, from the little I know, credit reporting keeps track of late payments as well as complete failure to pay. I am not sure it's as good to say "I always pay eventually" as it is to say "I always pay on time". If I were a lender, I might give a lower score to the "pays in the long run" person than I would give to the "fastidiously punctual" payor.

In the present case, I can see how lenders might be interested to know of those who availed of payment deferral schemes. I would see those types as less creditworthy than those who pay timeously in all circumstances. I see the latter as on a more solid financial footing than the former. If recording that observation is tantamount to a "trashing" of customers' credit scores, then it's perhaps a deserved trashing.

It also occurs to me that, if one has maintained a credit score of 850 or thereabouts for the last 20 years and now it gets trashed as you suggest, it would seem that a reasonable lender might take exigent circumstances into account. But the payment deferral remains relevant to any decision to extend credit, I would think. As a small-scale landlord, I am sure I would not rent to anyone who had to defer rent or mortgage payments. I would prefer they not take me down with them.

You say, sags, that "The people will be making the payments and end up paying more interest." Do you know that to a certainty? I can envision situations where a creditor, by choice or by decree, defers receipt of payment and gets stiffed in the end. That could occur due to a variety of circumstances. The borrower might die before the debt is paid; they might make an assignment in bankruptcy; if we are talking about mortgage debt - a secured obligation - the security might prove inadequate. Pursuit of payment might result in unrecovered costs, even if the principal debt is repaid. In short, I see every dollar deferred as a dollar at risk. The borrower is assuming no risk.
 

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The people who think about credit scores, think about it too much. from what I know, calculating the score is proprietary to the 3rd party. Pay your bills on time, avoid bouncing off the credit card limit And avoid multiple high-use cards. Everything will be fine after that.
the only people who should care about scores, are those who have missed payments. People with strong scores (780+) may get better rates on unsecured loans and LOCs, but we’re usually not talking big discounts. Good scores and a strong relationship with a bank lead to lower rates.

as an aside, I’m Not sure we‘ve seen the worst of the covid impacts. I have 3 friends impacted. 1st was in a non-essential business. He’s been home since March. Invited a CLK to work but won’t earn enough for daycare. He’s staying home for now. Deferred his mortgage til Oct. 2nd lost his job in Jan. Unrelated to covid. Hasn’t been able to find a job since. Forced to sell his cottage. Hasn’t Considered a deferral p, unless it fails to sell. 3rd just moved into his new home. Lost job, unrelated to covid, but can’t find anything new.

the tough decision to sell cottages or rentals is just starting to creep into people’s mind space. Deferrals will end in a matter of months and many will still be un(der)employed.
 

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The people who think about credit scores, think about it too much.
Probably true, but I think the point here raised is not so much about credit scores as it is about whether anything should appear on one's credit report if one has availed of such things as C-19-related payment deferrals. sags seems to see some unfairness or impropriety in having that circumstance appearing on one's credit report.
 

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Probably true, but I think the point here raised is not so much about credit scores as it is about whether anything should appear on one's credit report if one has availed of such things as C-19-related payment deferrals. sags seems to see some unfairness or impropriety in having that circumstance appearing on one's credit report.
I personally think it should be reported, but I also think banks should/will acknowledge it was covid related. They should only be interested if deferrals are repeated or there are other credit issues.
 

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TransUnion is now putting a big red exclamation mark on credit reports for any payments that were deferred by the lenders due to COVID.

Credit scores are going to get hit, despite the lenders saying otherwise. I wonder what that will do to mortgage renewals.
It makes sense. when lenders offered the option to defer payments, they did so without additional penalties. They didn’t say there would be know interests or that there would be no impact on ones credit score.

If someone is so close to not being able to pay their mortgage during a job lose, that is indeed a higher risk to the lender. We continued paying our mortgage on our rental even if the renters didn’t pay. We have never miss a payment even in times of unemployment hence why we have a near perfect credit score. If we miss our payments, it would most likely be ~ 10 pts per month so a 60 point reduction.

any credit score over 700 will not have a problem getting a mortgage renewed. In fact, for renewals, if the borrower is not adding debt, no credit check is required. the hit in credit will only impact the mortgage renewal if they it drops below 700 AND they are looking to add more debt. theh may not be able to shop around as much, but they will still get a fair rate.

there is not much of a discount even at the 800+ range. I have found we have gotton a good deal because we had multiple mortgages And a good relationship with our broker.

The credit score is a reflection of ones ability to pay under all circumstances. The pandemic is a circumstance just like other job loses. Many are still paying. So why shouldn’t those that cannot pay have a lower score.
 

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as an aside, I’m Not sure we‘ve seen the worst of the covid impacts. I have 3 friends impacted.
I think we've hardly seen any of the impacts yet. The huge numbers of people who aren't working any more, or who have no jobs to return to, have all gotten government stimulus. That's the only reason they are able to pay their immediate bills.

People who pay rent etc are directly using CERB money to pay their expenses. What are they going to do when CERB stops?

I think that most people focus on the immediate and don't think very far ahead. When people find a stop gap solution (like CERB) they just use it, and that's as far as anyone thinks.

I think the day will come when, all of a sudden, huge numbers of people will suddenly be unable to pay their rents, mortgages, and other bills. We haven't faced this yet because of CERB -- but it doesn't mean it isn't coming.

I also think this is why banks and REITs are somewhat weak in this market rebound. I think that smart money knows that it's just a matter of time before banks and RE get nailed. Personally I expect some bank failures in the coming years (of the Home Trust, Peoples Trust variety) and somewhat of an economic depression.
 

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Discussion Starter #11 (Edited)
This is from the current Scotiabank website.


Deferred payments as part of Scotiabank’s COVID-19 relief measures will not be reported to the credit bureaus as missed payments so they will not impact your credit score as a traditional missed payment might. However, your credit score is based on many factors, including the balance owing on your Scotiabank product, and is unique to you.
If you have any questions about your credit score or how it is calculated, you can visit TransUnion or Equifax Canada.


Reporting or not isn't the problem. The problem is they openly misled their own customers about it.
 

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TransUnion is now putting a big red exclamation mark on credit reports for any payments that were deferred by the lenders due to COVID.

Credit scores are going to get hit, despite the lenders saying otherwise. I wonder what that will do to mortgage renewals.
How do you know TU is doing this?
 

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Discussion Starter #13
My wife gets free True Identity credit monitoring from Trans Union and they sent out a notice to all clients.

It was also mentioned on Garth Turner's blog.

Now, on the issue of mortgage deferrals we told you that every week another few thousand people tell their lenders they can’t pay. Many can, of course. They just don’t want to. They think the money can be ‘saved’ for something better. And they believe this can be done with no consequence.

Better rethink that, says blog dog Darrell, after looking at his recent bank report.

“Proof on my personal account today that Trans Union is flagging and tracking accounts that have deferred payments,” he reports. “This is a Trans Union service offered to RBC clients. The “new” statement went up within the last few days.” And you can see – a deferred payment is now clearly part of the credit bureau summary.
 

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My wife gets free True Identity credit monitoring from Trans Union and they sent out a notice to all clients.

It was also mentioned on Garth Turner's blog.

Now, on the issue of mortgage deferrals we told you that every week another few thousand people tell their lenders they can’t pay. Many can, of course. They just don’t want to. They think the money can be ‘saved’ for something better. And they believe this can be done with no consequence.

Better rethink that, says blog dog Darrell, after looking at his recent bank report.

“Proof on my personal account today that Trans Union is flagging and tracking accounts that have deferred payments,” he reports. “This is a Trans Union service offered to RBC clients. The “new” statement went up within the last few days.” And you can see – a deferred payment is now clearly part of the credit bureau summary.
thank you. I wonder if Equifax is doing the same.
 

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TransUnion is now putting a big red exclamation mark on credit reports for any payments that were deferred by the lenders due to COVID.

Credit scores are going to get hit, despite the lenders saying otherwise. I wonder what that will do to mortgage renewals.
Can you show evidence to support this.

I'm most curious how it's reported.
If you and the lender agree on the debt payment it should be fine, and reported as I1 O1 R1 or M1.

Understanding your credit report - Canada.ca

I'd suggest that if they are not reporting correctly you file a dispute.
 
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