Why tens of thousands of Australians’ credit scores will jump on February 14 automatically

By Graham Doessel

Date: 31/01/2020

From the 14 of February civil court filings will no longer appear on people’s credit files giving thousands of Australian’s credit scores an instant boost.

It will allow people to get credit where previously they were rejected or negotiate lower interest rates according to leading consumer and financial law firm MYCRA Lawyers.

Leading consumer and financial law firm MyCRA Lawyers CEO Graham Doessel said mortgage brokers have been frustrated for years as clients had their bank funding cut off or rejected because of trivial and vexatious civil court actions that judged them guilty till proven innocent when it came to credit worthiness regardless of the type matter before the court.

“We started campaigning to the Price Waterhouse Coopers three year review of the Credit Reporting Code in 2017 to have this detrimental and harmful misreading of rules changed,” MyCRA Lawyers CEO Graham Doessel said.

“Now only judgments can be recorded on someone’s credit file and those judgments must relate to “credit” to impact someone’s credit rating” he said.

“I recommend on February 15 everyone check there credit file at www.freecreditrating.com.au and if you see your civil court listing has been removed then contact your bank and ask for an interest rate cut,” Mr Doessel said.

It will also spell the end of weaponized civil court actions.

“Tens of thousands of Australians have had their credit rating destroyed, businesses and financial security put in jeopardy all because civil court actions treated defendants as guilty till proven innocent when it came to their credit rating as ex business partners, disgruntled employees and jilted lovers used civil courts as a weapon to cripple someone’s credit,” Mr Doessel said.

“We’ve had a client with a business employing 120 staff almost sent to the wall because of a trivial dispute with their pool repair man over $3000 that never even went to court.”

“Other common weaponized civil disputes are ex business partners suing simply to dry up funding even spurned partners who are out to get their ex lover’s business,” Mr Doessel said.

“We made a submission to Price Waterhouse Coopers’ three year review of the credit reporting code on this issue 2 years ago.  The 32 page submission detailed how civil court claims were being used to impact people’s credit files even when the case had no chance of ever making it to court.

It’s a victory for common sense,” Mr Doessel said.

Credit reporters look for loopholes

But, and there is a big but, credit reporting bodies traditionally reported this information and still want to where they can get away with it .

Credit reporting bodies will be reading this legislation as narrowly as possible.  In our discussions with one body they are already interpreting the changes differently to us and believe this change only applies to consumer files not commercial files which means for those with the most to lose, namely small business proprietors, are potentially in the same predicament, Mr Doessel said.

“If this is the case and we won’t know till after February 14 when the changes come into affect, then it renders the new laws almost useless because those most affected by these will be small business people,” Mr Doessel said. 

“Anything on someone’s commercial credit file will show up on their individual report and while it is illegal to judge a consumer’s credit worthiness based on their commercial credit information it happens everyday.  We have a room full of client files that have been impacted by this very issue,”  Mr Doessel said.

“The whole point of this legislative change was to remove guilty till proven innocent when it came to your credit worthiness, but if credit reporting bodies only apply this selectively then what is the point,” Mr Doessel said.

“We believe the law changes need to apply to consumer and commercial credit files.  Even then the credit reporting system still isn’t perfect with people able to besmirch someone’s credit file simply by making credit enquiries in that person’s name via the internet with a just few personal details, but we are now headed in the right direction, Mr Doessel said.

“The logic applies to both, simply commencing proceedings proves nothing, and this legal change needs to apply across all credit files,” Mr Doessel said.

The new requirements come into effect on Valentine’s Day and will be retrospective, so people with a civil court default on their file that isn’t the result of a judgment and isn’t credit related will have them removed.

Any brokers who have clients who have these defaults still on their file are encouraged to contact MyCRA Lawyers for a free initial consultation.

ENDS