Job hunting and credit files seem unrelated – but they are connected for three reasons. We tell you how when you have lost a job, or when you are in the process of finding a new one, there are some things that impact your credit file that you need to know about. If heeded – they can help you avoid bad credit.
By Graham Doessel, Founder and Chief Executive Officer of MyCRA Lawyers
Yesterday, an article from SavingsGuide.com.au What To Do When You Lose Your Job caught my eye. It went through the things you need to do to make sure you remain in the black with your finances after you have lost your job. This article is the inspiration for the first piece of advice:
1. If You Have Lost Your Job – Sit Down and Work Out What You Owe and What is Owed To You
Even if you think the situation is very temporary – you don’t have a crystal ball. Put measures in place straight away to protect yourself and your family from debt and bad credit.
Savings guide recommends taking advantage of any insurance policies of income or mortgage protection that you have in place immediately. It could take a little while to process the claim. If you don’t have insurance, don’t be too proud to apply for assistance with the Department of Human Services. The sooner you do this the better, as it could take up to a few weeks to process the claim.
You will also need to work out how much disposable income you have now, and tally up all of your bills that you consider will appear in the future.
ASIC’s MoneySmart Website has some great advice and specific links for further information on what to do if you find yourself unemployed. Here is an excerpt from their web page titled Losing Your Job:
Knowing where you stand financially
You will feel able to make clearer decisions once you know how much money you really have. Find out what you have in savings, then list every expense you’ll have to meet for the next 2 months. Use our budget planner and include necessities like mortgage payments, loans, health care, medicines, car and home maintenance, and insurance premiums.
What you want to do is avoid getting in arrears with your accounts at all costs. It only takes 60 days in arrears on any account to get into ‘default’ with creditors, and this notation on your credit file will mean you will probably be blacklisted from credit for 5 years – even if you find another job and get everything back on track a month or two later.
Once you have worked out how long your current funds are going to last, you will be in a good position to do the next task…
2. If You Have Lost Your Job – You Need to Put Your Hand Up and Tell Your Creditors
Don’t wait until you are in arrears (or in debt up to your eyeballs!) to let your Creditors know. As SavingsGuide recommends, negotiating with Creditors early is the smart thing to do:
“Whether it’s your mortgage or a monthly gym membership fee, you’re going to need to address these payments before they get out of hand,” writer Toria Phillips advises.
Financial hardship variations are encouraged in many industries, with new regulations having just been brought in for both the finance and telco industries.
Money Help, a website run by the Victorian State Government offers more help on how to apply for hardship with creditors in the correct way. They advise people to work out what they can afford to pay prior to requesting a hardship variation – so if you have done this you will have a better chance of coming to a more affordable arrangement with your Creditor.
The Creditor may be able to offer reduced payments and in some cases could stall any movements to default your credit file if you happen to get in arrears.
Creditors are legally required to consider a person’s request for variation on payment arrangements, but are not obliged to agree to any hardship variation proposal put forward. But there is a trend towards offering help before defaults – so it is crucial to ask.
Having your current debts at a more manageable level will allow you to concentrate on the actual process of finding a job. But beware (as if you didn’t have enough to worry about) whilst you are looking for a job you also need to look out for fraudsters…
3. Job Seekers Scam Warning – Be Wary of Giving Away Your Personal Details To Scammers
Last week the Australian Taxation Office issued a warning to job seekers that they were the target of scams. It reports they have received more than 10,000 reports on a wide range of scams including fake job advertisements, emails and bogus phone calls.
Tax Commissioner Michael D’Ascenzo explains the job seeker scam – that bogus job ads are being posted on recruitment websites by scammers, and that people are even being asked to provide their tax file numbers.
“Personal information can be used by scammers to lodge false tax returns in your name, enable the use of your credit cards or even result in people taking out a loan in your name. In some cases, identity crime can take years to resolve,” Mr D’Ascenzo says in a statement to the media.
Becoming a victim of identity theft is the last thing a person who has lost their job needs. This crime could mean what little money you may have left in your bank accounts is drained by fraudsters; or a much-need tax return is pilfered; or it could even mean you have debts in your name you did not initiate and your ability to obtain credit is compromised for years to come.
Don’t ever give a potential employer your Tax File Number, banking details or any other crucial personal details until you begin work with them! If you’re not sure – you can always contact the Australian Competition and Consumer Commission (ACCC) to dispel any suspicions before you give away your personal information. You can call them on 1300 795 995 or visit the ACCC’s SCAMWatch website www.scamwatch.gov.au.
Let’s hope your unemployment is only very temporary and you are able to keep your credit file free from bad credit during the process!
If you are currently experiencing bad credit due to a temporary financial hardship such as a job loss, it may be worth assessing whether your credit history can be reviewed by a professional credit repairer. Any listings which are deemed unlawfully placed for whatever reason could be required to be removed by your Creditor. Contact a Credit Repair Advisor on 1300 667 218 or visit our main website www.mycralawyers.com.au for more information.
This week running 2-8 September, is MoneySmart Week – Australia’s first ever national, not-for-profit, financial literacy awareness week. For more details visit the Australian Government Financial Literacy Board initiative www.moneysmartweek.org.au.
Image: winnond/ FreeDigitalPhotos.net