In a final attempt to plead for correction of what many are calling some glaring mistakes for consumers within Australia’s new credit laws, a coalition of consumer groups is urging the Federal Government to make some changes before they pass the Privacy Amendments (Enhancing Privacy Protection) Bill 2012. We look at what this group is proposing, and how the new laws, if they are passed as is, could affect you and your credit history.

By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs

A coalition of consumer groups is hoping the Federal Government will make some changes to their new credit reporting laws prior to the Bill’s passing by both houses. One aspect they are opposed to is the minimum debt amount for credit listings – which currently stands at $100 .Various recommendations to increase the minimum amount were submitted to The Senate Legal and Constitutional Affairs Legislation Committee recently. Consumer groups believe the minimum should be increased to $500.

The consumer groups are: Financial Counselling Australia, Australian Privacy Foundation, Consumer Credit Legal Centre NSW, Consumer Action Law Centre

Here is an excerpt from the group’s media release, which featured on Financial Counselling Australia’s website Small debts lead to big problems:

Spokesperson Kat Lane of Consumer Credit Legal Centre, said ‘under the current proposal someone’s ability to access a home loan could be ruined by one overdue electricity or phone bill.’

‘It’s easy to fall 60 days behind on an energy bill—it could be something as simple as the bill being sent to the wrong address or the account holder being away from home for an extended period. I don’t think many people would think this should affect someone’s ability to get a home loan,’ said Ms Lane.

‘If the amount for which someone could have a default listed on their credit report was increased to $500, people would be far less likely to be overly penalised for one overdue bill or for making one simple mistake.’

Ms Lane said many small debts listed on credit reports were utility or phone debts and didn’t necessarily reflect a person’s suitability for credit. She also said that smaller debts, such as phone or utility debts, are often disputed by consumers.

‘We’d hate to see someone’s credit history affected because of an outstanding bill which they don’t even owe. Billing mistakes do happen and, as the Government’s plan currently stands, these small mistakes could have big consequences.’

The group is also concerned about the additional information which will be available to lenders once the new laws are introduced, and particularly repayment information. They recommend the Government do more to educate consumers on their rights and obligations under the new laws:

‘If comprehensive credit reporting is introduced, Government and industry needs to make efforts to explain the new regime to consumers, especially that repayment information such as whether you repay your loans on time each month will be now listed on credit reports, and consumers’ rights to make complaints if there are disputes,’ Ms Lane says.

We agree with the group’s proposals in the interests of consumer rights. The Government must do more to educate consumers on their rights if they are going to insist that more information about them be made available to lenders. In my experience, many consumers collectively:

1. Do not know they can apply for a free credit check every year.

2. Do not know that their credit file could contain errors and that they are responsible for ensuring their credit file accurate.

3. Are not finding out they have credit listings in many cases until they apply for major credit and are refused.

4. Are suffering mistakes with their credit listings which they have very little knowledge of how to rectify – this can go from a disputed bill, right through to blatant mistakes such as wrong names and wrong addresses.

5. Do not know that if they pay a bill late in the very near future, that this could impact their ability to obtain.

6. Have had very little explanation from the Government on precisely how correcting credit file mistakes will be made easier with the new credit laws

We wait in hope that many of the current issues will be rectified following the introduction of these new credit laws. In the meantime, we will continue to try to educate consumers on how to navigate Australia’s credit reporting laws, and continue to insist on credit reporting accuracy by contesting disputable credit listings on behalf of our clients though our business of credit repair.

For more information on credit repair, contact a Credit Repair Advisor on 1300 667 218 or visit our main website www.mycra.com.au.

Image: renjith krishnan/ www.FreeDigitalPhotos.net