credit in AustraliaAustralia has just undergone a major credit reporting change. If you don’t know much about credit reporting, then you could be at risk of  messing up your credit rating. Yesterday, we answered your basic questions on credit reporting. Today we answer more of your questions on bad credit and what to do about it.  Find out what you may not know about credit in Australia.

By Graham Doessel, Non-Legal Director of MyCRA Lawyers

I have paid my credit card bill late, what are the consequences of this?

Accounts like your credit card, your personal loan, your mortgage or your car loan are provided by ‘licenced’ credit providers. These providers are required to hold an Australian Credit Licence. They are also able to record and access repayment history information, include late payment history. If you are more than 5 days behind in your repayments it could be noted on your credit file. So in a nutshell, if your credit provider has previously informed you that it will be collecting repayment history, expect that notation to show up against your name, including the date the account was paid. This information will stay on your credit file for 2 years. It is unclear what the consequences of one late payment notation will be. Certainly it has been said that several late payment notations will impact your ability to obtain credit.

I have found a default on my credit rating, what are the consequences of this?

If you discover you have a bad credit file, you will find it very difficult to obtain credit in the future. Generally this problem will keep occurring for the 5 years the default is on your credit file. This will probably prevent you from obtaining a home loan with most lenders and possibly lead to credit refusal of many kinds from loans right through to phone plans. A default is not removed unless it can be shown it was placed in error on your credit file or was placed unlawfully.

A record of good repayment history information may ease the severity of having a default on your credit file, but as defaults are not removed for 5 years, there is no guarantee you will be granted approval. You may also be offered a higher interest rate while the default is on your credit file.

What can I do if there’s something I don’t agree with on my credit file?

If there are errors on your credit file, be aware you do have the right to have them rectified. Likewise, if there are numerous strange defaults and or applications for credit that you don’t recognise you would need to immediately investigate these and notify Police in case of identity fraud.

If you don’t agree with a credit listing that has been placed by your credit provider, and you want to dispute it, the new laws allow you to ask the credit reporting body which holds your credit file to note a dispute against it.

Some people choose to go through the process of disputing their own credit listing, and other people prefer to leave it to a third party. Both options are there. Often it depends on a) how savvy you are b) how much time you have c) how complicated the process of dispute is going to be.

In many cases where people have attempted to remove the default themselves, they have come across difficulties and defaults have not been cleared. Most times the creditor will explain to the client that defaults DONT EVER get removed. The best they can do is mark the listing as paid (if it’s been paid). This may not be sufficient to ensure credit is obtained with some lenders.

If you are looking at choosing a third party to dispute your credit listing, make sure you choose wisely. You can contact the Credit Repair Industry Association of Australasia (CRIAA) for help with selecting a reputable and ethical credit repairer.

MyCRA Lawyers is a firm focused primarily on credit disputes. Not only can we work to repair and remove your bad credit by disputing your credit listing, we can also work on your behalf in legal matters as they arise (which they frequently can).

Images: Stuart Miles/