14 July 2011
Proposed changes to Australia’s credit reporting laws will give those home buyers who would otherwise not have been approved due to minor credit defaults more chances for finance, according to a national credit rating repairer.
Director of MyCRA Credit Repairs, Graham Doessel says the ‘comprehensive credit reporting’ changes currently under review by the Senate Finance and Public Administration should help lenders gain a clearer picture of a home buyer’s suitability for finance, and should help to alleviate unfair ‘knock-backs.’
“The problem with the information currently recorded on people’s credit reports, is that only negative data is displayed. There is no data showing any positive repayment history, the type of debt, or the outstanding amount. So utilities bills are treated the same as mortgage defaults. Currently we have hundreds of clients who are unable to secure a home loan due to being in default on phone bills – some for as little as $100,” Mr Doessel says.
He says the future of credit reporting will allow lenders to make a decision for home loan suitability based on more extensive history of the borrower. The proposed ‘comprehensive reporting’ scheme would include:
-the type of each current credit account opened (for example, mortgage, personal loan, credit card);
-the date on which each current credit account was opened;
-the limit of each current credit account (for example, initial advance, amount of credit approved, approved limit); and
-the date on which each credit account was closed.
This follows new legislation released by the Government early this year requiring lenders to prove the suitability of borrowers to make repayments before allowing access to further credit.
Mr Doessel says on the other hand there will be some buyers who are disadvantaged by the changes, particularly those who have a tendency to over-inflate their suitability.
“It will require home buyers to be truthful about the current credit they have taken out, and the limits on each account. The new system may reveal some people are considered to be over-extending themselves and are rejected where they normally would have been approved. But in my line of work, many buyers are absolutely suitable to service a home loan, but have small-time defaults which hold them back.”
“The other group that will be disadvantaged are those who are late with their payments for major credit. Under the new laws, late payments to a regulated NCCP credit provider such as a bank can be recorded as such, regardless of whether the late payment gets to default stage. Utility providers are not regulated in the same way, so normal rules for defaults will apply,” Mr Doessel says.
He says the new laws will mean it is more important than ever for people to request regular updates on their credit report.
“With all the new data available, there will be more opportunity for errors to occur. People should obtain a free copy of their credit report every 12 months from one or more of the credit reporting agencies in Australia, to ensure their file does not contain any inconsistencies,” he says.
Mr Doessel says if people find information listed on their credit file which they believe is in error, is unjust or just shouldn’t be there, they do have the right to have that information rectified. He does say however, that it that can be a difficult process for the individual.
“Navigating credit reporting legislation and negotiating with creditors is not easy. Unfortunately in most cases, if people attempt to remove the default themselves they can do more harm than good by not understanding the process fully, almost like trying to defend themselves in court. They might do OK, but they only get one shot at it and if they don’t get it 100% right, they will be unsuccessful. There is no appeal in most cases,” he says.
Contact www.mycra.com.au for more help with obtaining a credit report and credit repair.
Lisa Brewster – Media Relations
0450 554 007 email@example.com
MyCRA Credit Repairs is Australia’s leader in credit rating repair. We permanently remove defaults from credit files.