An Australian was left stunned after his home loan application was rejected because he still owed less than $2 on an old credit card.
Sam, who stopped using his Citibank card in 2023, accidentally left behind $1.50 in debt before applying for a home loan earlier this year.
The minute amount increased as two cents were added each month due to interest and other charges.
The small amount caused his home loan application to be rejected in advance, derailing his plans to buy a house.
An Australian was left stunned after his home loan was rejected because he still owed $2 on an old credit card (stock image)
NAB, which took over Citibank in June 2022, apologized to Sam and admitted the credit card account should have been closed.
NAB chief executive Alan Machet told Daily Mail Australia the error was a ‘mistake’.
“It is clear that we were not at our best here and we apologize,” he said.
“Once the customer actually paid off the credit card balance, we should have closed the account.”
“The failure to do so was a mistake and caused unnecessary distress to the customer. Again, we are sorry this happened.”
Mr Machet confirmed that the bank is working to restore Sam’s credit file and will ensure he receives further support if necessary.
Sam said he was pleased with the outcome after the bank quickly resolved the issue.
The Financial Rights Legal Center (FRLC), which provides legal advice on a range of financial matters, had supported Sam during his dilemma.
FRLC senior policy and communications officer Julia Davis said Sam did not know he owed the bank and slammed Australia’s banking system.
NAB claimed that a bank statement was sent to Sam stating that he owed money on the credit card.
NAB, which took over Citibank in June 2022, apologized to Sam and admitted the credit card account should have been closed (stock image)
“First of all, Sam should have been notified when missed payments showed up on his credit report,” she shared 7News.
‘Under our current rules, banks are not required to contact a customer if there are missed payments on their credit file, even if they might otherwise have a perfect record.’
A default listing is provided to a customer if their credit card debt is $150 or more and it is not paid within 60 days.
Customers will have their repayment history listed on their credit report for two years.
They are urged to pay off any interest or fees, such as monthly or annual account maintenance fees, before canceling their credit cards.
The federal government in February ordered an independent investigation into the credit reporting framework used in Australia’s banking system.
The study will examine the effectiveness of the credit reporting provisions under the Privacy Act (1986) and the National Consumer Credit Protection Act (2009).
