Australians who are living with defaults on their credit file could potentially be hit with a whopping $15,046.57 or more in additional home loan repayments over the first three years of their loan if they are lucky enough to get one.
Although this week’s predicted 0.25 per cent interest rate cut did not occur, each previous one had the potential to pass on a saving of around $50 per month to the average householder for a mortgage of $300,000 if the full amount was passed on.
By Graham Doessel Founder and CEO of MyCRA Credit Repairs and www.fixmybadcredit.com.au.
But for those Australians who are living with credit rating defaults, last year’s interest rates cuts, and any which are predicted in the near future will be negligible.
Our calculations show families with a $300,000 loan who are unlucky to have defaults on their credit file for 5 years, who are able to secure a loan with a non-conforming lender will be paying a staggering $417.96 more per month in interest rates.
We talk about massive savings for the average Australian with these cuts, we talk about encouraging people to switch lenders, but this is not a reality for people with defaults. Most banks won’t lend them money, forcing them into non-conforming loans and paying top dollar because their credit file shows they are a bad risk – and it may not be true.
It is a fact in our experience that there are many families living with unfair defaults.
It is not known for sure how many of the over 14 million credit files in Australia could contain errors or inconsistencies.
The possible volume of errors on Australian credit files was exposed by a small scale study conducted in 2004 by the Australian Consumer Association (now Choice Magazine). It revealed about 30% of credit files were likely to contain errors.
“In our view, there are serious, systematic flaws which are leaving an increasing number of Australian consumers vulnerable to defamation, mis-matching and harassment,” the ACA report said.
Transferring those figures from the Choice study to the number of credit files in Australia today, could take the figures to over 4 million errors, inconsistencies or flaws.
Recently Channel 7’s Today Tonight interviewed Veda Advantage’s Head of External Relations, Chris Gration on the possible number of errors on credit reports. He admitted errors within their system alone amounted to 1%.
“We give out about 250,000 credit reports to consumers every year. But only in 1 per cent of cases is there a material error on the file, so a default or an enquiry that’s incorrect,” Mr Gration told Today Tonight.
We feel based on the ACA study and the Choice survey that the real figure across the board is likely to be in the middle somewhere – much higher than 1%. With 14.6 million Australian Veda Advantage credit files alone 1 per cent of errors amounts to 140,000 Australians’ financial lives potentially in ruins through no fault of their own.
Under current credit reporting legislation, it is up to the consumer to check for errors. Credit file holders are able to obtain a copy of their credit report from one or more of Australia’s credit reporting agencies for free every 12 months.
Unfortunately consumers are often not aware across the board of their responsibility to check the accuracy of their own credit file, so many errors go undetected.
Errors do occur, but often it is not until people apply for a loan that they learn they have an adverse listing on their credit file, but by then it is too late to correct errors and they are generally refused credit or forced to take on non-conforming loans at sky-high interest rates to secure the home.
When disputing any adverse listing, it is up to the credit file holder to provide reason as to why the creditor has not complied with legislation.
Unfortunately many people find this process difficult at best – negotiating with creditors is not always easy for the individual to undertake. Our job as credit repairers is to check the creditor’s process of listing defaults for legislative and or compliance errors, any such errors could deem the credit file default listing unlawful, at which time we advise the creditor to remove the default.
If you want a home loan, or to re-finance, but are weighed down by credit rating defaults, contact us to see how we can repair credit fast.