MyCRA Specialist Credit Repair Lawyers

Tag: bad credit history

  • Mortgage stress eased by RBA cuts to interest rates…if passed on

    The Reserve Bank of Australia has cut the cash rate by 25bps today – which should ease mortgage stress and the rate of credit rating defaults, provided banks pass on the reduction.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    Today Australian Broker reported the cut in its story RBA maintains cutting course and says weak retail figures and low inflation has contributed to the cut.

    “It is a relief to see that the RBA finally seems to have grasped the severity of the situation facing our main employment industries like construction and retail,” 1300 Home Loans’ John Kolenda said.

    While Kolenda conceded that the rate cut would not be a panacaea for consumer sentiment, he said it would provide a much-needed boost.

    “This rate cut is not the end of the road by any means but it does mean that homebuyers and consumers will be a little less cash-strapped and might step back a bit from their siege mentality,” he said.

    It seems from experts we can determine that all but those related to mining and other resource sectors are struggling or slowing, so a drop in interest rates will be welcome, particularly for those teetering on the realm of defaults. A cut like this can represent a significant saving for consumers, provided that banks mirror the RBA cut, which in the recent past has not readily been the case.

    Unfortunately, for those living with bad credit history, these cuts will be negligible and they will still be paying a significant amount more in interest through the non-conforming sector.

    So any actions to prevent the number of likely defaults is extremely heartening if mirrored in interest rate cuts by banks.

    Image: jscreationzs/ www.FreeDigitalPhotos.net

  • Default rates soar amongst over 65’s

    A study on generational trends in credit activity over the past ten years put out by credit reporting agency Veda Advantage reveals that the rate of default amongst the older generation (65 years and above) has increased a staggering 200% over the past ten years. We look at why this could be occurring and the possible ramifications of bad credit history for this age group.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    Veda’s study results, released on June 1 in a report titled: New data from Veda shows surprising differences in credit activity between generations reveals this age group have become more reliant on credit which has led to the increased level of defaults as some struggle to meet financial obligations.

    This topic was explored further by the Herald Sun in its article Bad debt increases among over-65s. It reports Veda general manager of consumer risk Angus Luffman saying 6 per cent of over-65s had more debt this year than last year. He said most debts related to living costs such as utility and telecommunications accounts.

    Here is an excerpt from that story:

    Financial counsellors said yesterday people could find it difficult to reduce their spending when they reached retirement and the supply of easy credit was a major problem.

    “After retirement, some people find that their incomes have decreased but their credit card limits can be quite high,” Financial Counselling Australia chief executive Fiona Guthrie said.

    “The adjustment can be hard (and) many older Australian are simply poor.

    “They may be using credit to simply make ends meet.

    “It is also frustrating to hear that industry still tries to sheet the blame home to consumers for what in fact has been the irresponsible marketing.”

    It is a worrying trend that older Australians are having to rely on credit to simply make ends meet. The reasons for the increase in the rate of defaults could be simply these age groups not having the necessary funds to meet their repayments, or as speculated by Angus Luffman, it could also be due to a lack of education around credit.

    In Veda’s report, Mr Luffman said that education is needed within all age groups on the risks of being enticed into credit as a result of factors like low introductory interest rates.

    “The fact is that consumers of all ages still fail to realise that missed monthly mobile phone, utilities, and credit card or loan repayments can all affect their credit rating.   It is vitally important that consumers consider and understand the difficulties they could face when they take on credit commitments that they can’t meet,” said Luffman.

    We assume that the over 65’s have it all worked out financially. This report debunks that and shows that bad credit history can occur at any age group, and can be as much a result of a lack of education about credit obligations as it can be about not having the necessary funds to meet those obligations.

    I always maintain that there is a lack of education about consumer rights and responsibilities around accessing and repaying credit and likewise in addressing credit listing complaints. Credit reporting law is hugely legislated and Privacy Principles cross a number of different codes of conduct for different industries. The difficulty for ordinary consumers in understanding these laws is reflected in a) the number of consumer defaults and b) the volume of consumers seeking credit rating repair services to fix their bad credit.

    More education would go a long way in preventing the rate of default in the first place. It would also allow consumers to understand their rights within credit reporting law. Many are unsure what to do if they find themselves with a credit listing which they believe should not be there, and when they try to address the issue with the Creditor, they can be left no better off.

    Perhaps older Australians are the most uneducated generation on their rights and responsibilities around credit. This generation is traditionally the ‘saving’ generation – most would have used very little credit in their younger years and the trend towards credit in society today has possibly pushed them into a realm they may be ill-equipped for. A meagre pension propped up by small levels of Superannuation for this generation can also be a contributing factor.

    Direct debit problems, bill disputes, divorce or separation issues, even identity theft can all lead to an unncecessary bad credit rating and can be a problem for any generation. And what about those grey nomads tripping around Australia – what if people have failed to tie up all loose ends and have left a bill unpaid or unsettled? In reality, an overdue account will lead to bad credit. They could be listed with a Default and have 5 years of bad credit. If the Creditor can’t get hold of them – they will have a Clearout listing against their name – that’s 7 years of bad credit.

    So what can people do if they find this happens to them?

    Consumers should address credit listing complaints straight away. What they shouldn’t do is wait 5 or 7 years if the listing should not be there. The best chance of getting that bad credit history removed is for people to contact a credit rating repairer and put their circumstances to them, so it can be established whether they are a suitable candidate. There are some cases of bad credit which cannot be removed. But if there are inconsistencies, there is a good chance that a credit repairer can help them with their case for removal of the credit listing.

    And for older generations who want or need to use credit, there is no time to waste on bad credit history that shouldn’t be there.

    Image: www.FreeDigitalPhotos.net

     

  • Report shows more Australians are forced into accessing fringe credit

    If anyone thought having bad credit meant people were merely unable to purchase big ticket items such as a home or a business – they are sorely mistaken. As our credit repair clients would surely testify, bad credit history permeates through every area of a person’s life, to the point where they can’t even get a mobile phone on a plan. These people, through denial of mainstream credit are forced to seek alternative credit often at higher interest rates – perpetuating the debt cycle even further. This has parallels with a recent study which reports that the high cost of access to basic financial services particularly in remote areas are forcing more and more towards fringe credit as well.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    An article published in the Sydney Morning Herald today, titled More of us lacking access to banks revealed the study results – more than 2.9 million adults do not have adequate access to day-to-day financial products such as a basic banking account, car insurance or even a credit card.

    Here is an excerpt from the same story featured in WA Today, Titled More Australians can’t access money: report :

    The research by the Centre for Social Impact – backed by the University of Western Australia – shows the ability to secure as much as $3000 in funds for an emergency through the mainstream financial system is becoming increasingly out-of-reach for Australians.

    Instead, more people are relying on family or friends or turning to fringe credit products, such as payday lenders, who regularly charge substantially higher interest rates than banks.

    Such products have seen a surge in uptake in recent years….

    NAB chief executive Cameron Clyne accepted the banking industry was partly to blame, conceding it needed to lift its game by providing affordable products to more people.

    ”The absence of access to mainstream financial services does preclude people from advancing socially and economically,” he said.

    ”Often it’s the unexpected expenses [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][such as] if the car breaks down or someone needs to get to a job interview.
    “There’s an obligation for the banking system to improve financial inclusion.”

    Financial inclusion is a big issue. Many people need a fair go – and the chance to borrow small amounts of money at reasonable rates which they might have a chance at paying back, allowing them to actually move forward in life.

    Parallels for bad credit clients

    In our race to ensure we are not throwing money at people when they already can’t handle the credit they have – we have adopted a policy of excluding people who present with bad credit from mainstream lenders. This is responsible lending, but where do those people turn to in emergency situations? The very same places the people surveyed in the WA report do – family, friends or fringe credit.

    It seems a shame to throw people who are already struggling with debt into a ‘debt trap’ of borrowing from pay-day lenders and the like.

    One terrific favour we can do for people we meet who are ‘on the fringe’, struggling with bad credit, is point them in the direction of financial counselling – so that when they are turned away from mainstream credit, they can be given something positive to pull them out of the ‘debt trap’ and deliver them back on the road to financial security.

    And of course, if there is any doubt about whether they should have the bad credit in the first place – then referring them for assessment for credit repair would be the ultimate gift. If they are able to remove the negative history from their credit file which shouldn’t be there, then they have the best chance at a fresh start with credit, and a normal life.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

  • Credit reporting changes introduced into Parliament

    Further to news on changes to Australia’s Privacy Laws, the Attorney-General Nicola Roxon announced that much awaited changes to the Privacy Act 1988 were introduced into Parliament yesterday. These changes will affect your credit file and how your good and bad credit history is shown.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    The Attorney-General said The Privacy Amendment (Enhancing Privacy Protection) Bill 2012 represents the most significant developments in privacy reform since Labor introduced the Privacy Act in 1988.

    All of these changes have significant bearing on credit reporting accuracy in Australia, as an individual’s credit file contains so much personal information which is checked to assess risk when an individual applies for credit. It can also be subject to misuse and error.

    The laws are promised to strengthen the power of the consumer over this important Privacy right.

    “These new privacy laws focus on giving power back to consumers over how organisations use their personal information,” the Attorney-General said in a statement to the media yesterday.

    This statement also addressed credit reporting specifically.

    The Government has promised to ‘modernise’ credit reporting arrangements. The Attorney-General was more specific with some of the changes coming in with the introduction of comprehensive credit reporting as part of these Privacy Act 1988 reforms:

    • making a clear obligation on organisations to substantiate, or show their evidence to justify, disputed credit listings
    • making it easier for individuals to access and correct their credit reporting information
    • prohibiting the collection of credit reporting information about children
    • simplifying the complaints process by removing requirement to complain to the organisation first, complaints can be made directly to the Privacy Commissioner, and by introducing alternative dispute resolution to more efficiently deal with complaints.

    The Government says it expects the credit industry will benefit because the reforms provide a more accurate picture of an individual’s credit situation to help them make a robust assessment of credit risk, which is expected to lead to lower credit default rates.

    Namely, this refers to the controversial introduction of late payment notations on consumer credit files. Late payments will be added by licenced creditors even if a bill is one day late. The notation remains on the individual’s credit file for 2 years. It is unclear at this stage the exact process of law governing how late payments may be added to credit files, nor the precise way these late payments will be used when assessing risk and the potential impact on an individual’s ability to obtain credit.

    I can’t help expecting some real confusion over this type of data to occur particularly in the early days whilst data has been collected without individuals knowing the potential impact on their credit file information, and generally arguments and confusion from consumers over what may constitute a bad credit risk after these laws are introduced.

    Australian Broker published an article Credit Agencies rejoice as positive regime gets a kickstart, today in which Dun & Bradstreet’s Director of Consumer Services, Steve Brown said comprehensive credit reporting should open up credit for some groups of people.

    “The use of comprehensive rather than just negative credit information provides greater visibility of under-served consumers who would otherwise find it difficult to access credit,” Mr Brown said.

    This assumption would be due to people being able to now ‘counteract’ a late payment notation or potentially a default listing through their repayment performance history. This could mean that if people have a 5 or even 7 year listing on their credit file, they may be able to show that over a period of 2 years (the length of repayment performance history recorded) they have managed to pay their bills on time. It would then be up to the lender to assess whether they believe a consumer or business with a default who has paid their bills on time for the past 2 years is or isn’t a credit risk.

    Whilst in theory this works, I am concerned this is very subjective and lenders could err on the side of caution especially initially.

    At the moment I believe ‘repayment performance history’ only adds to the volume of negative data which will be visible on consumer credit files. I will be interested to see if in the coming years and months the advantage to this system does in fact materialise in the form of consumers with defaults being given a fairer go due to better repayment history before I am truly convinced.

    Some significant submissions put forward to the Senate Finance and Public Administration Legislation Committee which were accepted by the Government and which should benefit consumers include:

    • Streamlining the correction and complaints process for credit reporting
    • During a correction complaint, the Creditor must give justification for credit listings and actually substantiate the information is reports on credit files.
    • Consumers may complain directly to the appropriate Ombudsman rather than having to go through the organisation’s complaints process first.
    • The provision for remedies such as compensation for consumers who are negatively impacted by a Creditor who has failed to comply with credit reporting law.

    MyCRA will be very intent on seeing how the laws pan out for the actual application of these significant changes for consumers and their credit file information.

    If people have bad credit history which they believe shouldn’t be there, or the data on their credit file is inconsistent – they can contact a professional credit rating repairer to get advice about formulating a credit listing complaint. Call MyCRA Credit Rating Repairs on 1300 667 218 or visit our website www.mycra.com.au.

  • The credit card mistakes that increase your risk of bad credit history

    What are the mistakes you could make with your credit card that potentially increase your risk of bad credit history?  We look at the advice for credit cards that could save your credit rating.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    Savings Guide Australia featured a great article on the 7 Classic Credit Card Mistakes. It reports on info from MSN Money on the Seven Deadly Sins of Credit Card Use. They provide some useful information on the right way to think to avoid credit card mistakes that could hinder your credit report.

    Some really important points from this SavingsGuide.com.au article are:

    Don’t max out the credit card…

    “Consistently nudging your limit at the end of the month is a sign you should be reconsidering your usage and budgeting to allow more financial space for saving.”

    Be wary of unnecessarily high credit limits…

    “It doesn’t even matter whether or not your card is maxed out, when applying for a loan, your credit limit becomes important. If it’s high, it can undermine your approval opportunities.”

    Avoid Cash Advances…

    “The price is high; huge interest calculated from the day you borrow, making it very difficult to get on top of your credit card repayments. Avoid at all costs.”

    Here are some more ideas to prevent your credit card use from leading to a bad credit rating from my post on How to avoid bad credit history from credit card debt:

    Create your own credit limit.
    Set yourself a limit based on what you can comfortably afford to repay. It’s important to realise that you will pay at some point for the credit you use. Make sure at worst case scenario you can afford to repay it. You will then have confidence in your spending without the temptation to overspend.

    Don’t exceed the credit limit.
    This will just mean you incur hefty charges.

    Pay off the balance each month.
    Ideally, pay off the entire card balance within the interest free period. If you don’t, you will be charged interest right back to the date you purchased each item. You not only lose the interest-free period on those past purchases, but until you pay off the balance there will be no interest free period on anything you spend in the future.

    Or, choose a low interest card, but still pay more than the minimum repayment amount each month.
    If you have debt which carries over on your card month to month you should look at a card that has a lower interest rate. It may not offer an interest free period, or hefty rewards points, but the lower interest rate should mean the carried over debt is more manageable for you, and will prevent possible bad credit history.

    If you want to see what is said about you on your credit report, you can do this for free every 12 months from Australia’s credit reporting agencies. For help with getting a copy of your yearly free credit report, you can contact MyCRA.

    We may also be able to help repair your bad credit history, or give you more information on your credit rating. Visit our website www.mycra.com.au or call MyCRA Credit Rating Repairs tollfree on 1300 667 218 for more details.

  • Privacy Commissioner reports data breaches on the rise

    As part of Privacy Awareness Week 2012, over 180 business leaders met in Sydney this week to discuss the topic of data breaches. Data breaches can occur through lost or stolen laptops, portable storage devices and paper records, or through databases being ‘hacked’ into or organisations mistakenly providing information to the wrong person. The effects of data breaches can be theft of identity and potentially credit fraud leading to bad credit history for the victim. The Privacy Commissioner claims there is in effect one data breach a week in Australia – an increase of 27 per cent from last year.

    This is an excerpt from Privacy Commissioner Timothy Pilgrims statement to the media on Monday on data breaches in Australia:

    “The Office of the Australian Information Commissioner (OAIC) was notified of 56 data breaches in the last financial year, equivalent to a data breach a week. This is up from 44 in the previous year, an increase of 27 per cent,” Mr Pilgrim said.

    However, the Privacy Commissioner also noted that he opened a further 59 investigations into other breaches where he wasn’t notified of the incident.

    “Serious harm can befall people when the security of their personal information is compromised”, Mr Pilgrim said. “It is our view that whenever there is a real risk of serious harm, affected individuals should be notified.”

    …Data breach notification is not a mandatory obligation applying generally to government and business in Australia. However, there is increased pressure on the Government to introduce laws to make it a general legal requirement as it is elsewhere — data breach notification is already a mandatory requirement in Europe, the UK and the United States….

    The Privacy Commissioner warned that in some circumstances, it may be a breach of the Privacy Act not to notify as organisations covered by the Privacy Act must take reasonable steps to protect the information they hold.

    For businesses who would like a reference for guidelines on handling personal information security breaches, the OAIC has released this document:

    Data breach notification: A guide to handling personal information security breaches. It outlines four steps to consider when responding to a breach or suspected breach and also outlines preventative measures that should be taken as part of a comprehensive information security plan.

    Personal information has become a valuable commodity used to commit identity fraud and potentially ruin the victim’s financial future.

    We can’t take lightly the possibility that any company that keeps data on its customers could be exposed to data breaches. Identity theft is becoming more prevalent, and personal information is lucrative for fraudsters.

    Personal information in the wrong hands can lead not only to identity fraud, but the misuse of the victim’s credit file, which can have significant long term consequences.

    Data breaches are difficult for individuals to have any control over, and the only way people can ensure their details are safe are to demand that the companies they deal with have strong IT systems before disclosing that information.

    The Australian Crime Commission’s Identity Crime report advises consumers on ways they can protect their personal information. They advise all individuals to obtain a copy of their credit report annually in order to keep abreast with any changes to their credit file which may point to identity theft.

    This could detect suspicious entries such as new credit enquiries or changes in contact details which would point to an identity theft attempt, allowing steps to be taken before the fraud affects the person’s good credit rating.

    If a person may be vulnerable to identity theft through a data breach, they should check their credit file immediately, and also contact Police who will advise them on the best course of action to take to restore their accounts and potentially their good name. This could include applying for a Victims of Commonwealth Identity Crime Certificate – which covers particular Commonwealth Identity Crime and can aid in recovery.

    If people need help to prepare a case to creditors for default removal following identity theft, it may help to contact a reputable credit repair company.

    Image above: David Castillo Dominici/ FreeDigitalPhotos.net

    MyCRA Credit Rating Repairs is proud to be a partner for Privacy Awareness Week 2012.

  • How to fix a bad credit rating – in Australia

    How do you fix a bad credit rating? Well it depends on where you live. In Australia it can be difficult, but not impossible. Australians are best to follow advice from our own shores. Here’s some information on credit reporting in Australia and 5 ways you can improve your chances of obtaining credit.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    Google ‘fix bad credit rating’ and the list of articles on improving your credit score can be a mile long with countless advice on bad credit solutions and suggestions to fix what the banks see as bad credit history. People are looking for a way to overturn or ‘counteract’ a bad credit listing and get the best chance of approval for home loans, personal loans or any forms of credit.

    What many don’t realise is that many articles from the U.S. and U.K. are not relevant on Australian shores. These countries have ‘positive’ credit reporting systems – very different from Australia’s. So the information, whilst good, often doesn’t apply for people in this country.

    In fact, many times if Australians follow that information they may actually be hindering their chances of obtaining credit in the current market, not helping it.

    So here is some information for people concerned about their credit rating, to have as a reference for what applies in this country for our unique credit reporting system.

    What exactly is my credit file?

    A credit file is made for every person who is credit active in Australia. The credit reporting agencies currently providing credit reports are Veda Advantage, Dun & Bradstreet, and Tasmanian Collection Service (if Tasmanian). There is also a new entrant Experian, but they are currently only collecting data.

    A person’s credit file contains their personal information. It also records any credit applications, all loans which are current and also records any adverse listings such as Defaults, Writs, Judgments, Clear-outs or Bankruptcies* which are issued under that person’s name.

    It is from this file that creditors make a decision whether or not to lend people money. This information is then available to banks and building societies; finance companies, utility providers, mobile phone companies and retail stores. These companies are all known as credit providers or creditors.

    Any creditor may place an adverse listing on a person’s credit file if an account has been in arrears for more than 60 days. This includes phone companies, utility companies, and gyms as well as banks, finance companies and retail stores – and the outstanding amount can be for as little as $100. These listings are current for between 5 and 7 years depending on the listing, and ‘drop off’ the credit file after this time.

    A negative credit reporting system

    Currently Australian credit reporting operates under a ‘negative’ system. This will change as Australia moves towards comprehensive credit reporting, but until then – the rules of the game are very different from many other countries.

    Only negative data is recorded on a person’s credit file. From this point of view – there is nothing people can do to counter-balance any negative data which is displayed on their credit file. It is either present – or not.

    So is there anything I can do to change my bad credit rating?

    The best thing you can do for your current and future credit rating is to make all of your repayments on time.

    You can’t remove negative listings from your credit file unless you dispute the listing. You also can’t counteract the effect of those listings with ‘positive’ credit information yet either.

    But there are a few other things you can do to improve how you appear to lenders potentially improving your chances of obtaining credit in Australia. Here are 5:

    1. Reduce credit limits.
    Lofty credit limits do not improve a person’s credit ‘risk’ assessment. If the loan applicant has a credit limit of say $20,000 on their credit card, the debt amount on that card will be calculated on $20,000 – even if the actual amount the applicant has owing on that card is only $5,000. So a potential borrower should seek to reduce any credit limits on cards or loans they currently hold.

    2. Reduce credit enquiries.
    Do not shop around for credit. Whenever a person other than the credit file holder makes an enquiry on their credit record – that enquiry is recorded on the person’s credit file. Currently there is no way of seeing on someone’s credit report if the loan was approved or not, only that the application was made. Some lenders are refusing home loan applications due to too many credit enquiries, such as two enquiries within thirty days or six within the year.

    3. Check credit file regularly.
    Anyone has the right to request a copy of their credit file, to see what is being said about them. This report is free for the credit file holder every 12 months. The request should be made to all the applicable credit reporting agencies, and a report will be made to the credit file holder within 10 working days.

    There is the potential for creditors to make mistakes when entering listings on credit files. So anyone who is credit active should check theirs, regardless of how diligent they think they may have been with their repayments.

    Many times people are unaware they have adverse listings on their file until they apply for credit and are refused. Unfortunately at that time it can be stressful, and they can lose the home or business they are trying to buy, or be forced to choose a different loan with a higher interest rate to accommodate their bad credit history.

    4. Pay any outstanding amounts.
    Currently even defaults which have been marked as paid may see you refused credit – but it can’t hurt to pay an overdue account if it should have been paid. Whilst the creditor cannot remove the listing, they can mark the listing as paid. Some lenders may overlook a default listing if other parts of the application present as low risk.

    5. Remove errors from your credit file.
    Adverse listings can sometimes occur due to identity theft; some people are caught in issues over separation from their spouse; some have been disputing the bill which went to default stage and many people are just victims of the fallout from inadequate billing procedures – wrong names, wrong addresses errors with creditor computer systems, and sometimes human error.

    You have the right to have any inconsistencies on your credit file rectified. People should bear in mind that listings are not removed by creditors unless the credit file holder can provide adequate reason and lots of evidence as to why the listing should not be there.

    Credit reporting is governed by strict legislation of which most consumers have limited knowledge of, and often very little time to get to know.

    Many seek out the help of a reputable credit repairer who will be able to work on their behalf to assess their suitability for credit repair and then formulate a case based on legislation for removal – negotiating with creditors to have the default or other listing removed.

    People can visit the MyCRA Credit Repairs website for more help with their credit rating, and help to repair a bad credit rating.

    *Bankruptcies cannot be removed from credit files.

    Image: Stuart Miles / FreeDigitalPhotos.net

  • A consumer advocate shows Aussie singles how to recover from post-relationship credit crisis.

    Being lumbered with relationship debt is a common cause of bad credit. People can be stuck to a bad relationship long after the people in question have got out and moved on. A bad credit rating, or credit rating defaults, can hinder a person’s ability to obtain new credit for between 5 and 7 years, so it is important to cover yourself and your credit rating against an STD (Sexually Transmitted Debt).

    By Graham Doessel – Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    Recently I read a fantastic article in Brisbane’s Courier Mail on How to Fix Relationship Debt. The perspective was provided from Generations Columnists Gen Y’s Justine Davies, Gen X’s Bruce Brammal, Baby Boomer Mark Bouris and Retiree Kerrin Falconer.

    I would advise people to read the article and apply the principles for their generation.

    Here is a great point I found in this article:

    “A FEW years ago, Paul Clitheroe told me that he wanted money to be the sex of the next generation.

    He explained that when he was young, sex was a taboo topic whereas now it’s talked about everywhere. He hoped that Gen Y would do the same thing for money: bring it into the mainstream.

    The best place to start making that conversational change is with your partner, because according to Relationships Australia, conflict over money is one of the top causes of arguments and relationship breakdowns in Australia,” Justine Davies says.

    Being in love is one of the best feelings in the world, but not one of the most practical states to be in. Sometimes personal financial values go out the window and people lose themselves in the process of adding to the ‘relationship’ and creation of ‘us’.

    But it is important to think practically about joint finances.

    Many people come unstuck by not asking the tough financial questions about their prospective partners early in the relationship.

    And when they fail to, when love turns sour they can end up broken hearted and broke.

    Black marks on your credit rating – the ‘STD’ that is hard to get rid of.

    When two different money ‘personalities’ combine, the potential for both to be financially damaged is greatly increased.

    Every day we meet people who need help with fixing credit rating issues due to no fault of their own really, but they have fallen under the financial shortcomings of a partner.

    When people take out any credit together, such as loans, utility accounts, homes and rental properties, they become very reliant on the partner to keep up their end of the credit repayments.

    Sometimes one partner ends up with a bad credit score, simply because the other person on the account has not kept up with repayments. People can be unaware their partner is generating defaults on their credit rating until it is too late.

    In many instances it’s not until people apply for credit in their own right that they find out about the credit problems their partner has initiated. The relationship may even have ended years ago and the partner is still paying for it.

    Bad credit history can last for 5-7 years, depending on the listing. The most common type of negative listing is a default, and is placed by the creditor when an account holder fails to make payments past 60 days.

    For Valentine’s Day this year, I wrote a post titled ‘Valentines Day Blues. What You Need To Know About Your Credit Rating When Love Goes Bad.’

    Here are my 10 Steps for financial separation to protect your credit rating from that post:

    10 Steps for financial separation

    1. Cancel joint bank accounts. You could use the money from these accounts to go towards paying off any debts you may have together.

    2. Pay off and cancel joint credit cards. If the debt on the card/s can’t be paid off, inform the creditor that you have separated and ask them to put a stop on the account so there may be no more transactions. They could possibly make arrangements to transfer the repayments to two separate accounts.

    3. Resolve the mortgage debt. Sell the home and divide the proceedings, or sell your share of the home to your ex-spouse or vice-versa. Before this takes place, notify the bank you have separated. Make sure no further amount can be redrawn on the loan and that you receive separate statements whilst you are separated and both still own the property.

    4. Transfer names on other accounts. Phones, electricity accounts, rental properties, rates, car loans and store credit should all be transferred to one name as appropriate.

    5. Pay any unpaid accounts. No matter who has accrued these debts, the creditors will still see you as responsible. Ensure all accounts are paid on time while they are in both names.

    6. Keep a record of all undertakings. Keep good paperwork and notes related to the separation, including cancellation or changes to any accounts for future reference.

    7. Employ a good family solicitor. Legal advice is important as it relates to children, family businesses and property. Also if anything runs off course with division of debt, they can give good advice on the next course of action.

    8. Notify credit reporting agencies. Let Veda Advantage, Dun & Bradstreet, or Tasmanian Collection Agency know of your separation and any steps you have taken to separate accounts to date.

    9. Check your credit score. Request a copy of your credit report and check each entry. A free copy of your credit file is available every 12 months from one or more of the credit reporting agencies in Australia. This is essential particularly if settlement is drawn out over a number of years.

    10. Seek help from a professional credit repairer for any defaults, Writs or Judgments. Once outstanding accounts accrued by your spouse are paid, there is the issue of the bad credit score which needs to be cleared so you may have the opportunity to borrow again in the future.

    Gen X’s Bruce Bammal describes the steps people can take if they find themselves in a post-relationship debt crisis:

    “If an ex has done the dirty on you financially, urgently get hold of your credit file to see exactly what damage has been done. They’re free through Dun & Bradstreet (dnbcreditreport.com.au) and Veda Advantage (mycreditfile.com.au).

    Assess the damage and start repair jobs, if possible, by contacting the organisations directly. Then follow up with the credit reporting services.

    Cancel joint accounts and credit cards. End all financial ties. See a specialist about recovering from sexually transmitted debt,” he says.

    The repair jobs Bruce talks about on a person’s credit rating could be small or could be significant. But if the bad credit rating really shouldn’t be there, if the listing contains errors or inconsistencies, then the negative effect on the person’s finances should warrant attempting to have the bad credit history removed.

    Current legislation does allow people to have inconsistencies removed from their credit file, but the whole process is more complicated than most people are led to believe.

    Credit reporting is governed by strict laws that the creditor must abide by, and there is no point people going in to bat for themselves without an extensive knowledge of this credit reporting legislation and a good ability to negotiate with creditors.

    In reality many people are not successful when they attempt to fix bad credit themselves. Remember, often it is a large creditor which put the listing there in the first place, so people need to know what to say to these companies and the way to say it. They also need to be thoroughly schooled in the legislation (or have enough time to get to know it), to ensure a successful credit repair. Basically people are preparing a ‘case’ to show reason as to why the creditor should remove the listing.

    In the preparation of this case and presentation to the creditor there are many instances where individuals can write, do or say the wrong thing, which can not only mean they get the creditor ‘offside’ but can damage the chances of having the listing removed for the entire term of the listing. So for the best chance at success, consult a reputable credit repair company. Visit our main website at www.mycra.com.au or call tollfree 1300 667 218.

    Image: graur codrin/FreeDigitalPhotos.net

  • Graham Doessel – consumer credit advocate – reveals the gap has widened between the haves and the have nots

    For those people on a low income, statistics coming from the Australian Bureau of Statistics report that home ownership has transported low income households in Australia from the poverty line over the last six years, and buffered the hard times where low income is temporary. With house prices currently down in many areas, now could be a good time to get your credit history checked and try to buy your own home, potentially becoming one of the ‘privileged’ in Australia who own their own home – even despite low income.*

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    According to the Australian Bureau of Statistics (ABS) in its article ‘Life on Struggle Street – Australians on low economic resource households’ home ownership can act as a buffer for people who experience periods of low income.

    “While regular income is an important economic resource for many people, wealth in the form of bank accounts, shares, superannuation or property can be drawn upon to smooth and support consumption over time, including during periods of low income,” the ABS says in this article.

    The information on low economic resource households was utilised from a larger article ‘Australian Social Trends March 2012’, released yesterday. This article draws on a wide range of data, to present a picture of current Australian social conditions.

    Australian Social Trends March 2012 uses data from the ABS 2003–04 and 2009–10 Surveys of Income and Housing, and the ABS 2009–10 Household Expenditure Survey.

    What seems apparent from the article is that the event of home ownership could potentially change a person’s life forever – particularly those people currently on a lower income, or those who expect to be on a lower income at some stage in the future (due to retirement, child-rearing etc).

    We know the benefits of home ownership – the home owner has the opportunity to accumulate wealth outside their income through projected capital gain, and they also have the potential to borrow against the home in some instances.

    The ABS puts this into perspective when deciding on what is considered a ‘low economic household’.

    “The advantage of taking into account wealth as well as income is that it excludes those with high wealth who enjoy reasonable levels of consumption despite a low level of income. This approach is therefore more likely to capture people most at risk of experiencing economic hardship, than analyses of income alone,” the ABS article Life on Struggle Street – Australians on low economic resource households explains.

    Home ownership lessens the risk of experiencing economic hardship.

    “This disparity between people in low economic resource households and the rest of the population is even more pronounced when it comes to wealth. The average equivalised net worth of people in households with low economic resources in 2009–10 ($53,500) was one tenth of the average across other households ($509,800). After adjusting for inflation, the net worth of low economic resource households had not increased significantly since 2003–04, while the average net worth across all other households had increased by 29%.

    “These data indicate that the disparity in both income and wealth between those in low economic resource households and the rest of the population had grown over the six years to 2009–10,” the article reports.

    It seems in the past six years it has been more beneficial than ever for people on lower incomes to have owned their own home. But unfortunately with rising house prices and an increased cost of living, saving for the deposit and actually qualifying for the loan can be difficult. Then, the global financial crisis hit, and banks have been making it even harder ever since for people to get a home loan.

    For those lower income owners who are lucky enough to qualify for a home loan, it is more vital than ever that their credit check comes back clear to be assured a loan.

    A clear credit file ensures people have the best chance of obtaining a home at the most affordable interest rate.

    So if people otherwise qualify for a loan, but have bad credit history which is holding them back, all may not be lost. They should talk to the team at MyCRA Credit Rating Repairs about potentially restoring their credit file. Call us on 1300 667 218 or visit our website www.mycra.com.au.

    The picture painted by the ABS of many of those low economic resource households who can’t afford a home of their own or other investments is a rather grim one.

    “Around a quarter (24%) of low economic resource households reported spending more money than they received most weeks, twice the rate of other households (12%). This gives an indication of the extent to which people, particularly in low economic resource households, may be forced to draw upon their limited assets or rely on credit from week to week simply to make ends meet,” the ABS says.

    Low income households also would find it difficult to raise emergency money:

    “In 2009-10, 43% of low economic resource households reported that they would not be able to raise $2,000 in a week for something important. In contrast, only 7% of other households reported being in this position.”

    “A range of other indicators of financial stress were more prevalent among low economic resource households: 10% reported that they had gone without meals in the past 12 months due to cash flow problems, while 8% had resorted to pawning or selling possessions. By contrast, only 1% of other households had been forced to either of these lengths.”

    Close to a third (31%) of low economic resource households reported that they had been unable to pay a utility bill on time in the past 12 months, and 20% had sought financial help from friends or family due to cash flow problems. This compares with 8% and 5%, respectively, among other households. One in ten (10%) low economic resource households were forced to seek assistance from welfare or community organisations, compared with 1% of other households,” the ABS says.

    At this end of the scale, lack of access to cash can be a difficult cycle to get in to. Those people suffering with defaults or other negative listings on their credit file could be faced with high interest rates in an emergency, putting stress on an already struggling household. People in this predicament should talk to someone about the options of removing negative listings which shouldn’t be there, from their credit file as well.

    Watch this short how-to video to find out how credit rating repair could help you.

    * The opinions in this article should not be construed as financial advice. For expert advice on whether home ownership is right for you, contact a Finance Broker or Financial Adviser.

    Image: Dan / FreeDigitalPhotos.net

  • Consumer advocate Graham Doessel, showing ordinary Aussies how to avoid bad credit history from credit card debt

    A major source of bad credit history is credit card debt. People spend more than they can afford, and may even take out one card to pay off the other – and never really clearing their debts until one day their credit rating is tarnished. Credit success begins with choosing the right credit card. It’s important to read the fine print before you decide on a credit card. Avoid getting enticed by rewards and low interest periods, and take the time to understand what you can afford so you can choose the card that fits you and your lifestyle. That’s the key point to avoid bad credit history through credit card debt.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au

    Australian money saving website, Savingsguide.com.au posted a great article yesterday on choosing a credit card. They mentioned how essential choosing the right credit card is to your finances – it can be the difference between good and bad credit history. Here are their 5 tips for choosing the right credit card.

    5 Tips When Getting A Credit Card by Savingsguide.com.au:

    1. At The End Of The Month. If you’re unable to pay off your credit card at the end of the month, Yahoo! Personal Finance suggests looking for cards with 45 days of interest free and then cards that have the lowest interest on purchases. I would also suggest keeping credit use to a minimum until you’re able to pay it off at the end of the month.

    2.  Fee. If you’re planning on using your credit card frequently and for rewards programs, then an annual fee might be a worthwhile spend. You could be looking at anywhere between $50 to $250 a year, but if you’re redeeming your points for money-saving purchases like flights or accommodation, it might be a worthwhile investment. If, however, you’ve got the card as an emergency back up when you go overseas, you may as well just get a card that doesn’t have an annual fee.

    3. Interest Rate. When getting a credit card, it’s essential to weigh up whether any outlay on the card is a worthwhile investment. The same is as true of interest as it is of the annual fee. The card might have a high interest rate but if you can be certain you’re going to be able to pay it off at the end of every month, then those cards can also offer great rewards. Often, it’s stipulated you have to be earning over a certain amount to qualify to use the card.

    4.  Use It Everywhere. People look dismayed when they come to my work and pull out an Amex or Diners. Sure, we can transfer it. At the cost of a 3% surcharge, which usually precludes anyone from wanting to use it. Amex and Diners come with great rewards but a lot of businesses, at least in my town, have no interest in processing them so you have to rely on two cards. Recently, however, cards have been released where they are two cards in one (an Amex and Visa, or an Amex and Mastercard). So if you’re keen for the reward points, it could be worth investigating that option.

    5. Bonuses. Credit cards are big business, and they want to make sure that they keep yours. Hence, the amazing world of bonuses for your credit cards. The most obvious, and the most commonly used, is the protection should you be a victim of fraud. If it happens on your credit card, the bank will usually cover you as part of your credit card contract. If the same thing happens on your debit card, you’re not always as lucky. Other bonuses can include short-term insurance on items bought on your credit card or little luxuries like privileged access to concert tickets when they go on sale and the best seats. If a credit card fulfils all your other criteria, a bonus scheme could be a great way for you to save a bit of money throughout the year.

    Some great advice there on choosing credit cards. One important point is to not be sucked in by promises of rewards or other special deals when choosing credit cards – concentrate on the fees, interest and repayments. If you can afford all of that, then look at the possible benefits rewards can bring.

    Here is my advice to prevent bad credit history from credit card debt:

    Create your own credit limit.
    Set yourself a limit based on what you can comfortably afford to repay. It’s important to realise that you will pay at some point for the credit you use. Make sure at worst case scenario you can afford to repay it. You will then have confidence in your spending without the temptation to overspend.

    Don’t exceed the credit limit.
    This will just mean you incur hefty charges.

    Pay off the balance each month.
    Ideally, pay off the entire card balance within the interest free period. If you don’t, you will be charged interest right back to the date you purchased each item. You not only lose the interest-free period on those past purchases, but until you pay off the balance there will be no interest free period on anything you spend in the future.

    Or, choose a low interest card, but still pay more than the minimum repayment amount each month.
    If you have debt which carries over on your card month to month you should look at a card that has a lower interest rate. It may not offer an interest free period, or hefty rewards points, but the lower interest rate should mean the carried over debt is more manageable for you, and will prevent possible bad credit history.

    Avoid cash advances.
    Interest usually applies immediately on any cash advances from credit cards – whether the withdrawal is within the interest free period or not.

    For help with repairing bad credit history, or more information on your credit rating, visit our website www.mycra.com.au or call MyCRA Credit Rating Repairs tollfree on 1300 667 218.

    Image: worradmu / FreeDigitalPhotos.net

     

     

  • How to help more clients… A former award winning broker shows why the millions of Aussies with bad credit are not lost

    Those brokers who are just in it for the money are few and far between in this market.  Those that have hung around despite all the market conditions thrust upon them must have a passion for the job, and a drive to see people realise their dreams of home or business ownership. We show you why more of the people you come across every day could end up being your biggest fans and clients for life.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    As brokers, you are restrained by so many conditions which are simply out of your control in the current market.

    Left over from the Global Financial Crisis (GFC) are tighter lending conditions and nervous borrowers. Put this together with regulations for National Consumer Credit Protection (NCCP) compliance, and the result is unfortunately a diminished client base.

    Let’s face it – in this market, if you have to pick between a client with a perfect application or one which is slightly tarnished or impaired with bad credit (paid or unpaid), then it’s likely that you’ll choose the squeaky clean one…no headaches, no worries…and no extra indemnity insurance on a non-conforming loan.

    But most brokers do not know there is another way.

    In more than 9 out of 10 cases, bad credit history can actually be repaired. Engaging credit rating repair for a bad credit client gives the client the home at the best possible interest rates, and you the commission – and trail.

    Everyone wins.

    Plus, all parties are doing their part to help improve consistency in credit reporting through ensuring creditors enter listings fairly and accurately.

    For those who don’t know, here is how credit rating repair works…

    Bad credit can occur for a number of reasons:
    • Due to a dispute on a bill, such as a telephone or power bill;
    • Because of a change of address;
    • A major sudden upheaval such as illness or death;
    • Identity theft or fraud; or
    • Simple human error by the creditor

    The creditor defaults the consumer on one or more of their credit records held by the three (soon to be four) Credit Reporting Agencies in Australia.

    Defaults and other negative listing entries are strictly controlled by several pieces of legislation and several more codes of conduct. This aspect itself creates many grey areas and of course, is subject to interpretation.

    Consumers are blessed in Australia to live in a place where they are highly protected. Some of these protections are spelled out throughout the several thousand pages of legislation that works with and around Credit Reporting Law.

    Because the legislation is lengthy and involved, it gives those that are informed quite a lot of power. This knowledge is sometimes weighted heavily on the side of the creditor and leaves consumers with little ability to effect change in their own circumstances.

    For this reason, credit rating repairers have grown in popularity, as we are often the only people on the side of the consumer with the knowledge needed to fight the case on their behalf.

    As credit rating repairers we know this legislation. We review and consult it on a daily basis, looking to discover new and interesting methods to have bad credit set aside.

    During the process of discovery, we receive mountains of paperwork from your client’s creditors – which often include account statements, invoices, contracts and file notes.

    We review this documentation, constantly referring back to the legislation to formulate a case for your client. Once we are aware of any errors in the way the listing was added to your client’s credit report, we alert the creditor that the listing may be unlawful and request its immediate removal.

    At this stage it can sometimes get interesting, as many creditors genuinely believe that what they have done has been lawful and it’s up to us to educate them on where they have made errors.

    Occasionally, this can be a lengthy process and sometimes it may require the assistance and rulings of external governmental bodies.

    In more than 9 out of 10 cases, your client will be victorious. They can then go back to you to have their mortgage approved, their home loan settled, and their family can move into their very own home.

    I’m imagining a blue, round kiddie pool in the backyard, with a little sandy coloured puppy chasing the kids as they run up the slide to the cubby house, laughing and giggling all the way. That was my backyard a few years ago. My kids are all grown up now – one is about to get married. But those fond memories of us as a young family in our own home still remain.

    That is the power you have in your hands right now – to make someone’s dreams come true.

    Contact MyCRA Credit Rating Repairs tollfree on 1300 667 218 to speak with a consultant about our broker referral system.

     

    About Graham Doessel and MyCRA Credit Rating Repairs.

    Graham Doessel is the founder and CEO of MyCRA Credit Rating Repairs – Australia and New Zealand’s leading credit rating repair specialists.

    Graham’s origins are in finance, and he formed/owned the award-winning non-conforming brokerage “Mortgage Now.”
    Graham is a consistent spokesperson in the media for credit reporting issues in Australia and New Zealand.

    MyCRA Credit Rating Repairs, now in its fourth year of operation, has recorded an impressive track record of up to 91.7% rate of removal of inconsistent or inaccurate negative data from the Australian and New Zealand credit reports of both consumers and commercial entities.

    Graham and MyCRA Credit Rating Repairs are proud to be a part of developing a self-regulating framework for the credit rating repair industry through the lead role in the formation of a credit rating repair industry body.

    MyCRA Credit Rating Repairs is nominated for the 2012 Telstra Small Business Awards and the 2012 Start-Up Smart Awards.

  • Older Australians at risk of cybercrime: Super funds a prime target

    Personal information has become a valuable commodity in cybercrime circles. It can be extracted, abused and traded for identity theft purposes and to take advantage of someone’s good credit rating. And as many older Australians are finding out – it can also be pilfered to make some crook wealthy through hijacking Super Funds – without the victim knowing a thing about it.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    Australian Federal Police warn that older Australians may be susceptible to identity theft, phishing and data mining activities and in particular Superannuation Fraud, according to Technology Spectator.

    Its article ‘Super funds under threat from cyber criminals: AFP’ also reveals that this susceptibility is coupled with a lack of protection around identity verification with self-managed super-funds.

    An Australian Federal Police submission to the Joint Select Committee of Cyber Security recommends wider education about internet awareness for older Australians.

    The AFP says the combination of wealth and size of this population demographic is tempting for fraudsters:

    “Seniors citizens are accessible, they represent the fastest growing demographic in our ageing population and they hold a large portion of Australia’s wealth. Therefore, they are an attractive potential target for, and may fall victim to, an array of scams and frauds,” the AFP said in their report.

    In June last year we blogged about the growing trend of hacking super funds in a post titled ‘Identity theft News: Latest Warnings and Recommendations’.

    At the time, NSW Police had advised the public of a scam targeting Super Accounts, where fraudsters were stealing enough information from unsuspecting victims to transfer their Super into self-managed funds which could then be easily accessed by the criminals. In effect, criminals were hijacking Super funds.

    Fraud Squad Commander Detective Superintendent Col Dyson said “Superannuation fraud…works well because no-one checks their super…victims rarely notice account changes, making it easy for criminals to change mailing addresses.”  Read more on this story ‘Crooks siphon super funds,’ on CRN Australia’s website.

    Unfortunately, unlike bank fraud, there is no obligation for superannuation funds to reimburse victims, and if the fraud occurs on overseas shores, there is unfortunately very little chance of recovering the stolen money.

    There is also the chance that personal information may be further abused by fraudsters taking out credit in the victim’s name once the Super transfer is successful. This can lead to a series of defaults and bad credit history, which can be hard to recover from.

    People should contact Police for what to do if they have been a victim of Superannuation Fraud or any form of identity theft.  They may advise of the victim’s possible eligibility for a Commonwealth Victims of Identity Crime Certificate, which would at least aid in talking to creditors when the victim attempts to remove their bad credit history and recover their good name.

    People should also check their credit report for any signs of misuse – changes in contact information, strange credit enquiries they didn’t initiate and even new credit can all be signs of identity theft. A credit report is free every year, and can be obtained from the credit reporting agencies.

    For help with identity theft recovery, or for more information on identity theft and how it can affect a person’s credit file, contact MyCRA Credit Rating Repairs on 1300 667 218 or www.mycra.com.au.

    Image: Ambro / FreeDigitalPhotos.net

  • One in four Australians short of cash would default on mortgage

    More struggling Australian families than ever do not expect to manage their existing debt levels in the coming months. The numbers of families expecting to have to default on credit like mortgages, utilities, phone and internet bills in the coming months has increased. One in four Australians would default on their mortgage if they were short of cash. This is a worrying trend, and points to a continued lack of knowledge about the ramifications of defaulting on bill payments. For people who end up with bad credit history, they can potentially enter into a cycle of debt that can take years to recover from.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

    Alarming statistics have arisen from Dun & Bradstreet’s Consumer Credit Expectations Survey from this month – projecting into the June 2012 quarter.

    Over a third of Australian families will struggle to manage existing debt levels, with nearly half (46%) of low-income households expecting difficulty managing their debt. This represents a rise of eight percentage points since the fourth quarter of 2011, 11 points above the national average.

    Here are some of the statistics coming out of this survey:

    Default expectations

    – Overall, more than one in four (26%) of Australian consumers who are short of funds would forgo a mortgage payment.

    – Of those families that do find themselves short of cash in the coming months, more than one in ten (12%) would default on a mortgage repayment or internet bill. Fourteen per cent of families would choose to default on their pay television account.

    – Nearly one in five (19%) low-income households would sacrifice an electricity bill, three percentage points above the national average.  While six per cent would forgo a mortgage repayment.

    – An increasing number of young Australians also plan to default on mortgage repayments if short of cash. The survey also found 18 per cent of 25-34 year-olds said this would be the first bill to be sacrificed during low cash flow periods. This also increased noticeably among West Australian (up 13 points to 20%) and Victorian (up six points to 11 per cent) consumers.

    Credit use expectations

    – Number of consumers planning to use redraw facilities on their mortgage to make a major purchase was up four percentage points year-on-year to 22 per cent.

    – 41 per cent of Australian households with children will be forced to rely on a credit card to cover living expenses, up two percent since late last year.

    – A growing number of households earning less than $50,000 a year are planning to use credit to cover costs (41%), up from 37 per cent in the December quarter 2011.

    – However, 27 per cent of families plan to apply for new credit or a limit increase during the June quarter.

    According to Dun & Bradstreet’s CEO, Gareth Jones, the survey results indicate a worrying cycle of debt accumulation and dependency among struggling consumers.

    “Nearly one-in-three low-income households expect rising household debt levels, but with limited ability to pay this down. When consumers are increasingly forced to accumulate debt they are unable to manage, just to keep the family finances afloat, this has the potential to quickly become a vicious cycle,” Mr Jones said…

    “Before consumers apply for more credit they should assess whether or not they can afford to repay the funds and check their credit report to ensure there are no black marks listed on their file that could make it harder or more expensive to get credit,” he said.

    These statistics show that we are just not doing enough to educate large groups of the Australian population on the ramifications of increasing debt, and the importance of meeting credit commitments. Unfortunately, we can’t do anything about the rising cost of living for them, but we can help people prioritise. There needs to be a major shift in the Australian psyche about all credit and a major education campaign on managing debt. I think if we don’t want to end up with some kind of credit crisis in Australia – it is essential.

    Gareth Jones puts it finely when he makes the point about how consumers view bill payments:

    “Consumers tend to view non-core expenditure such as phone or internet bills as dispensable, however the damage to an individual’s credit history can be an issue irrespective of the type of account defaulted on. The default will stay on a credit report for five years and can severely limit a consumer’s ability to access affordable, mainstream credit in the future,” Mr Jones said.

    The ramifications of overdue accounts

    Any credit commitment which is more than 60 days in arrears – whether that is a mortgage, a credit card or a phone bill – is considered an overdue account, and a creditor will list this overdue account on the consumer’s credit file as a default.

    A default on a credit file is considered a ‘bad credit rating’ by all major lenders, as well as phone and utilities companies.

    The consequences of a consumer having a default on their credit file is refusal of applications for credit through most mainstream lenders for 5 years from the date the default is listed on the consumer’s credit file. The consumer is then forced to either seek alternative credit – often at sky-high interest rates, or do without credit for 5 years.

    We worked out consumers with defaults on their credit file or a bad credit rating will be hit with a whopping average $15,046.57 or more in additional home loan repayments over the first three years of their loan (this calculation is based on a home loan of $300,000 over 30 years on non-conforming loan interest rate of 9.5% vs standard variable rate of 7%).

    What this could mean for Australian consumers

    If, as the Dun & Bradstreet Consumer Credit Expectations Survey predicts, the number of Australians who say they have to use credit to pay down debts is increasing – and the number of Australians who say they may default on credit is also increasing – we could see more and more people thrown into a cycle of having to find alternative credit sources at high interest rates as the only means of paying down debts. Or alternatively we could see a higher rate of bad credit history – defaults, Court proceedings and Bankruptcies across the board in Australia.

    When a consumer seeks credit rating repair, often times they have been uneducated on how they should have handled their difficult circumstances and particularly financial hardship, prior to the default being issued on their credit file. In this instance I believe the job of a credit rating repairer can be two-fold, in one instance we are repairing the credit rating, and in the second we are educating those consumers on what the correct procedure should have been when faced with that scenario.

    If more and more people are in crisis,  then the finance industry, credit industry and government as a whole need to tell struggling consumers about their options for managing debt.

    Consumers need to know throwing away their financial futures by defaulting on repayments is the last option, not the first when they are struggling with their debts.

    For more information on obtaining and managing credit, or for information on clearing credit rating inconsistencies through credit rating repair, contact MyCRA Credit Rating Repairs tollfree on 1300 667 218 or visit our website www.mycra.com.au.

    Image: renjith krishnan/ FreeDigitalPhotos.net

    Image: Pixomar / FreeDigitalPhotos.net

  • Slam Scams! Anyone can end up a victim of scams and identity theft

    Scams are not just reserved for the elderly or the technologically unsound – although these people can be vulnerable. In reality, scams are so prevalent and can be so sophisticated that anyone can find themselves a victim of a scam. For National Consumer Fraud Week, myself and my team at MyCRA Credit Rating Repairs want to help promote the realisation in the community that scammers are out there every day draining bank accounts and leaving you with a bad credit history for years to come.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au .

    ‘Slam scams’ is the theme for National Consumer Fraud Week 2012 run by the Australian Consumer Fraud Taskforce (ACFT).

    Their aim is to educate Australians on the prevalence of scams in everyday life, and the often sophisticated nature of scams.

    Here’s an explanation of the Week as featured on the ACCC’s SCAMwatch website:

    “Have you ever received a phone call or SMS out of the blue, a phishy email or ‘lucky’ letter, an unknown knock at the door or a strange request from an online friend or admirer? National Consumer Fraud Week 2012 runs from 19 to 25 March and is all about raising awareness of scam delivery methods so that you can identify and slam a scam at the point of contact.

    Scammers are increasingly sophisticated in how they deliver scams, taking advantage of new technology and communication methods to try and slip under your radar. Online platforms and mobile technology such as emails, social networking sites, smartphones and tablets make it easier to connect with people around the world and communicate in real time anonymously, privately or publicly. Unfortunately, scammers also take advantage of these benefits to target you.

    Scammers are also not afraid to adopt a personal touch such as contacting you at home on your phone or at your door. They will try and push your buttons by playing on your emotions to evoke a sense of guilt, anxiety or fear. They also use slick tricks such as professional-looking websites or documents, and often pose as someone or an organisation that you know and trust.

    Scammers will use any means to deliver a scam and get you to part with your money or personal details. If you receive a scam, slam it!

    Remember to press delete, throw it out, shut the door or just hang up.

    Tips to keep scammers at arms length

    DON’T RESPOND
         Ignore suspicious emails, letters, house visits, phone calls or SMS – press ‘delete’, throw them out, shut the door or just hang up

    WATCH OUT FOR SLICK TRICKS
         Scammers use sophisticated tricks to fool you such as fake websites, glossy brochures, technical jargon or posing as someone that you know and trust – don’t fall for them!

    DON’T LET SCAMMERS PUSH YOUR BUTTONS
    Scammers will play on your emotions to get what they want

    PROTECT YOUR IDENTITY
         Your personal details are private and invaluable – keep them that way and away from scammers

    Fighting fraud: we can all play a part” SCAMwatch says.

    The Sydney Morning Herald has this morning featured scams in this article titled $85m lost in business scams last year:

    “THE Australian Competition and Consumer Commission received 83,150 reports of scams from small businesses and consumers in 2011, almost double the number the year before and more than quadruple the number in 2009, according to its annual scam report, to be released today.

    More than $85 million in losses were reported, up 35 per cent.

    Michael Schaper, chairman of the Australian Consumer Fraud Taskforce and deputy chair of the ACCC, said the number of scams was likely to be higher than reported, because many victims were too embarrassed to come forward,” the Sydney Morning Herald reports.

     

    Table from Sydney Morning Herald

    Slam scams and stop credit file misuse

    People need to stop feeling embarrassed that they have fallen victim to scams, and start coming forward about their experiences. Unfortunately many people who are victims of a scam have also given over lots of personal information in the process. This can lead to identity theft and the scammers taking credit out in the victim’s name.

    Embarrassment aside, these victims are stuck unable to take out credit while their credit file shows a series of overdue accounts they had no knowledge of, and are not responsible for. . Not only are scams damaging short term, but the effects can be long-ranging. Victims are unable to take out credit for 5 years while their credit file shows this bad credit history.

    The more these victims are ridiculed for somehow being ‘gullible’ the more they will hide away and not speak out about the instances of scams. Also, the impression that these scams are easy to detect will remain in the wider community.

    We need everyone to know these scams are not obvious. Scammers are clever and they have plenty of patience.

    But if something doesn’t ring true…the best thing people can do is stop the contact, and verify the information of the person before they proceed.

    And remember the golden rule, before giving out money or personal information – no matter who it is – people should do all they can to make that transaction as secure as possible.

    For scam victims…one of the essential tasks to perform while notifying your bank is to check your credit file is not showing any bad credit history put there by scammers.

    If you think you may have been a victim of a scam, talk to us confidentially tollfree on 1300 667 218 or visit the main website www.mycra.com.au about what this could mean for you and your credit file – and how we can help you restore you good name.

    Image: David Castillo Dominici / FreeDigitalPhotos.net

  • Small business credit hard to obtain

    An interesting article featured in Broker News today, for those interested in small business lending criteria, and small business credit files.

    It is harder than ever for small businesses to borrow. The story, titled ‘Lenders blasted for small business risk sums’ features Credit Reporting Agency, Dun & Bradstreet criticising lending criteria when it comes to small business.

    D & B says up to 400,000 small businesses who should qualify for finance are missing out due to the inability of credit providers to adequately assess and price their risk.

    Here is an excerpt from that story:

    Dun & Bradstreet has said that up to 400,000 businesses would immediately qualify for finance with a risk profile ranging from minimal to low, out of more than one million unincorporated businesses.

    CEO Gareth Jones said lenders have historically been hesitant about extending credit to small businesses as many are unincorporated entities with little or no commercial credit history.

    “Previously, it has been nearly impossible to appropriately assess small business risk as small businesses are often indistinguishable from their owner – the commercial and consumer entity are the same,” he said.

    “A holistic picture of small business risk can only be obtained by acquiring an understanding of an entity’s commercial and consumer profile,” Jones said.

    The comments came as Dun & Bradstreet launched a ‘Small Business Risk Score’ that brings together information from its database on both a commercial enterprise and its owner to enable risk assessments.

    The score predicts the likelihood of a small business entering bankruptcy over a 12 month period, based on factors including business to business payments, time since the last consumer default, and the volume of credit enquiries.

    The lines between personal and small business credit files do blur quite frequently. Often one credit file affects the other when creditors are looking at suitability for finance.

    To give people the best chance at small business credit, they should remove bad credit history like defaults and even excess credit enquiries from either or both credit files prior to applying for small business credit.

    It may be that credit file errors and inconsistencies are holding small businesses back from expansion – in which case there is a good chance they can be removed.

    For more information on bad credit history, contact MyCRA Credit Rating Repairs tollfree 1300 667 218 or visit the main website www.mycra.com.au.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs, and www.fixmybadcredit.com.au.

    Image: renjith krishnan / FreeDigitalPhotos.net