25 August 2011
Home owners refinancing in the wake of the government’s scrapping of home loan exit fees should consider the health of their credit file before they make a new application, according to a national credit repairer.
Director of MyCRA Credit Repairs, Graham Doessel says existing home owners should exercise their right to a free credit report from the major credit reporting agencies prior to making any enquiries on a new home loan.
“People who already have a mortgage probably haven’t considered how important a clear credit rating is – even second time around. Regardless of whether people have been diligent payers, creditors can and do sometimes make mistakes with people’s credit files and some people end up with black marks against their name that shouldn’t be there,” Mr Doessel says.
A bad credit rating can result when a bill or repayment goes unpaid past 60 days. After this time, a creditor has the right to list that non-payment as a default on the person’s credit file.
“In the current finance market, any black mark generally results in an automatic decline with the major lenders. Even too many credit enquiries can blow someone’s chances of finance approval, so it really is important for people to know what is said about them on their credit report before they go in to refinance,” Mr Doessel says.
This comes as The Telegraph reported earlier this month existing home owners are staying put and refinancing in high levels.
It reported mortgage broker Australian Finance Group’s figures of about 39 per cent of their July mortgages were from people refinancing. AFG attributed this trend to the major banks competing very aggressively on fees and price since exit fees were banned.
“If you have a home loan at the moment, it’s the best time in 20 years to be looking for a better deal,” AFG spokesman Mark Hewitt said.
Mr Doessel says many of his clients have been in the middle of refinancing, whether to reduce their repayments or to get a better deal – when the bank has performed a credit check and found defaults against their name.
“Sometimes people don’t know their good name is compromised until they apply for finance and are refused. Many times if they had checked their credit file they may have had the chance to rectify any errors or save themselves the embarrassment prior to applying for the loan,” he says.
Mr Doessel says approximately 63% of the clients who contact his company for credit repair would be people who have defaults, writs or Judgments which are listed in error on their credit file.
“We have clients who are facing identity theft; some are caught in issues over separation from their spouse; some have been disputing a bill which went to default stage and many people are just victims of the fallout from inadequate billing procedures – wrong names, wrong addresses, human and computer errors,” he says.
Under current credit reporting legislation, consumers have the right to a free credit report from the credit reporting agencies once a year.
People need to contact all the credit reporting agencies to request their report – as creditors have access to 3 agencies within mainland Australia and 4 in Tasmania. The report must be provided to them in writing within 10 days of the request.
Consumers also have the right to have any inconsistencies on their credit file rectified. Defaults can be marked as paid if the account has been settled.
But Mr Doessel says listings are not removed by creditors unless the file holder can provide adequate reason and lots of evidence as to why the listing should not be there.
“Credit repair requires knowledge of the legislation, lots of evidence and perseverance. But for those people whose financial freedom is hindered because their credit file contains errors, it is a point worth fighting for,” he says.
Lisa Brewster – Media Relations Mob: 0450 554 007 firstname.lastname@example.org
Graham Doessel – Director (07) 3124 7133 http://www.mycra.com.au
MyCRA Credit Repairs is Australia’s leader in credit rating repairs. We permanently remove defaults from credit files.