19 June 2012
Brokers who provide extra education to their clients to ensure full comprehension of mortgage and loan products, could start with education on the fundamentals of obtaining credit, and particularly how to address credit listing complaints, a consumer advocate for credit reporting accuracy says.
Founder and CEO of MyCRA Credit Rating Repairs, Graham Doessel says potential obligations to educate clients under NCCP as part of the move towards responsible lending could include education on basic credit rights and responsibilities of credit reporting, as well as the ins and outs of the specific finance products offered.
“Too many people are just not savvy enough about their credit file, and the impact it has on their financial future. Too many people are forced to learn the hard way through being lumbered with bad credit just how the system works,” Mr Doessel says.
This recommendation comes as industry commentator Kym Dalton claims many borrowers have limited knowledge of the meaning of mortgage products and terms, and that merely satisfying NCCP disclosure requirements may not be enough to keep brokers safe.
“Disclosure and comprehension are not the same,” he said. “Borrowers are frequently nervous about asking questions when applying for a loan, in case it jeopardises their application,” he told Australian Broker yesterday.
Mr Doessel suggests further credit education from a broker perspective could begin with some core topics which frequently see consumers come unstuck:
· What a credit file is and what can be reported on it;
· How consumers get ‘bad credit history’;
· The potential impact adverse listings have on a consumers ability to borrow further;
· The importance of regular credit file checks; and most importantly
· What to do in instances of credit file inconsistencies.
“Addressing credit file errors and inconsistencies is a big issue. Since an adverse credit listing disadvantages the consumer’s borrowing ability for between 5 and 7 years, there needs to be more education from the finance community as to what consumers can do if they want to dispute something on their credit file.
Many consumers are really left in the dark about the process and are often told by Creditors that listings cannot be removed from their credit file, and this is unfair,” he explains.
Mr Doessel says the crucial area of credit listing complaint education could mean brokers help save consumers thousands.
“Families who are funnelled into a non-conforming loan due to a bad credit rating will be paying a staggering $15,046.57 more just over the first three years of the loan on an average loan amount of $300,000. This is based on a standard variable rate of 7% versus a non-conforming interest rate of 9%,” he says.
Due to the increase in people saving rather than spending in Australia, many of his credit repair clients are in a better financial position than they have been in years for loan qualification, but are held back from taking advantage of competitive interest rates and stable house prices by black marks on their credit rating.
“Many clients tick all the boxes for loan approval, until they are knocked back due to credit rating defaults they were previously unaware of – and often those defaults should not be there,” he says.
He says the best way brokers can prevent this scenario is to help consumers to get savvy with their credit file and the ways their good name can be compromised.
“People also need to know that clearing credit ratings of errors is neither easy nor quick. They can get the run around from Creditors, but if they believe the listing should not be there, it is a point worth fighting for.
He says if people have neither the time, nor knowledge of legislation that is required to deal with Creditors, over their credit reporting inaccuracies, a credit repairer can do the work for them.
“A credit repairer uses their knowledge of credit reporting law to make a more effective case based on the appropriate legislation and also negotiates with the Creditor on the consumer’s behalf for the removal of those inconsistencies from their credit file,” Mr Doessel says.
Graham Doessel – CEO MyCRA Credit Rating Repairs Ph 3124 7133
Lisa Brewster – Media Relations Mob: 0450 554 007 firstname.lastname@example.org
MyCRA Credit Repairs is Australia’s leader in credit rating repairs. We permanently remove defaults from credit files.
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