MyCRA Specialist Credit Repair Lawyers

Tag: bad credit rating

  • 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

  • Credit – friend or foe? 6 tips to make credit work for you

    Credit – friend or foe? Yes you should take advantage of credit, and we show you how to do that without blowing out repayments, and preventing a bad credit history.

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

    It is no secret that in this day and age many people are struggling with credit.

    Currently we are seeing lots of people running into trouble with their credit rating and the trouble sticks for 5 -7 years

    You could be forgiven for thinking that credit is the enemy…

    But we need to develop the ethos that credit is not something that is granted, it is something that is earnt. At one point banks were practically throwing money at us. Now it’s tough and you have to prove yourself.

    There is absolutely nothing wrong with using credit provided you make it work for you.

    In fact, if you have wondered ‘credit – friend or foe?’ consider what having no credit history will do for your ability to obtain credit. Not having a credit repayment history in this day and age can be just as difficult as having a bad credit rating when it comes to getting finance – especially a home loan.

    Where people come unstuck with credit is getting to a stage where they are forever chasing their tail with repayments, falling behind. Or getting blasé about repayments and not understanding what the consequences can be.

    Credit can be useful provided you make it work for YOU.

    If you can’t afford it now you can have the privilege of paying for it later – but understand that you will pay at some point. So if you don’t make your payments on time now – your credit file – your ability to take out new credit – will suffer for years to come.

    A bit about how a bad credit rating originates…

    Payments on any bills which are more than 60 days late can be listed as a ‘default’ on your credit file.

    This default can remain on your credit rating for 5 years, and can mean you are refused credit for this time. Even if the account was later paid, the credit reporting agency generally does not remove the default but can mark it as paid.

    Even defaults that you have paid still show on your credit report, and are considered bad credit history by most lenders. It is extremely important to keep a clear credit file because the repercussions will be felt for 5 years.

    Here are our 6 credit success tips…

    1. DO USE CREDIT: Having no credit history means there is nothing to calculate and the risk appears high to lenders. Start by borrowing something small. Repaying mobile phone plans, internet accounts, or store credit on time will appeal to anyone checking your credit score. Smaller purchases paid correctly contribute to approval for larger loans such as homes, vehicles and businesses in the future because they show a person’s ability to repay.

    2. MAKE REPAYMENTS ON TIME: Repay any bills received by the due date. Repay over the minimum amount required on credit cards. If you are having trouble paying on time, contact the creditor as they may be able to work out a payment plan rather than listing the non- payment as a default.

    3. HAVE A STABLE ADDRESS: Lenders like to see stability. Furthermore, defaults are easy to come by when bills are sent to the wrong address. If you do travel frequently, consider a trusted family member’s address for all bills.

    4. APPLY FOR CREDIT WITH CARE: You should only apply for credit if you feel you have a very good chance of being approved. Declined credit applications on a person’s file can hinder their chances of obtaining a loan. Likewise, you should only apply for credit you have full intention of pursuing. Every application is noted but does not stipulate whether it was approved or not. If you go shopping for credit and apply everywhere – it may look like you were declined everywhere.

    5. CHECK YOUR CREDIT FILE REGULARLY: You should check your credit file before you need to apply for credit. That way if there are any problems you can sort it out while there is no urgency, and save yourself embarrassment and disappointment from having credit declined. It is free once per year from the credit reporting agencies.

    6. DON’T LEAVE DEFAULTS TOO LATE: If there are defaults, don’t put up with them for 5 years – you may be suitable for credit repair. People can check with a credit file repairer if they can be removed.

    What about credit repair…

    Begin by obtaining a credit report – which you are entitled to do for free every 12 months via the major credit reporting agencies Veda Advantage, Dun & Bradstreet and Tasmanian Collection Service.

    If you find a default, writ or Judgment on your credit file which you believe is there unfairly, unjustly or just shouldn’t be there at all – it may be possible to have it removed.

    Credit repair is a difficult process. Time and again people are disheartened from trying to deal with creditors themselves to have the default, writ or judgment removed from their file. Most are told that default listings never get removed but can be marked as paid.

    Unfortunately, this is not enough to ensure credit is obtained in this current economic market. So basically those black marks mean you are stuck with a bad credit rating for 5-7 years, unable to borrow for homes, cars, businesses and take out simple accounts like mobile phone plans.

    Then the key is to establish a good track record on your credit file, using the above 6 credit success tips.

    Good luck!

    If you need help with repairing your bad credit history, contact MyCRA Credit Rating Repairs on 1300 667 218 or visit our main website www.mycra.com.au.

    Image: Stuart Miles / FreeDigitalPhotos.net

  • How healthy is your credit rating?

    Your credit rating is just like your health.  You can get regular check- ups and maintain it, or you can wait until something goes wrong before you get it fixed. Knowing what’s on your credit file is the key to your financial freedom. Maintaining that credit file health will ensure you are able to continue to enjoy the benefits of obtaining credit now and for years to come.

    Graham Doessel, founder and CEO of national credit repair firm MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au addresses some common questions about your credit file.

    WHAT is my credit rating?

    Your credit rating is really a file on your credit history, and is collated by the major credit reporting agencies on anyone who has ever been credit-active.

    Your credit file is then checked by any credit provider and is used to assess both the amount you are able to borrow and your ability to repay the loan.

    How do I find out what’s on my credit file?

    There are four major credit reporting agencies in Australia: Veda Advantage – which holds the credit file of over 14 million Australians, Dun and Bradstreet, Experian Australia and Tasmanian Collection Service (TASCOL) if in Tasmania.

    By law you are entitled to write to or email one of these agencies and request a copy of your credit file for free. It will take 10 working days from application to receive this information, or for a fee it can be provided within 3 working days.

    What is defined as a ‘bad’ credit rating?

    In broad terms, any defaults, clear outs, court Judgments or writs, external administrations and bankruptcies are all recorded on your credit file and would be considered ‘bad’ credit history by most credit providers.

    In this current economic climate basic defaults and even too many credit enquiries or applications for credit may be considered to be bad credit history.

    How do I get a bad credit rating?

    What is not realised by many people is how easy it is to have a default slapped on your credit file – which will show up as bad credit history.  If a bill is more than 60 days late, (including rates, power and mobile phone bills) then a credit provider has the right to notify you of their intentions to record this default on your credit file. Even if this bill is paid, the default usually remains on your record for 5 years.

    What are the repercussions of having a bad credit rating?

    A bad credit file can severely hamper your chances of obtaining any credit. Your credit health can determine whether you can take out credit cards, personal loans, car loans, enter into mobile phone plans, and of course take out a mortgage.

    What can I do to fix my credit rating?

    After checking your credit file, there are three things to consider:

    1. The accuracy of the report.  If there are errors, however small, you have the right to have them rectified.  Likewise, if there are numerous strange defaults and or applications for credit that we don’t recognise – contact Police immediately in case of identity theft.

    2. Check you were informed of any intention to list.

    3. Check the fairness of the listing.

    If your file does contain defaults, writs or judgments that you believe are incorrect, unjust or just shouldn’t be there, there is a good chance they can be removed.

    You can work with your own credit file to have the defaults removed, or you can contact a third party ‘professional credit repairer’ to help you.

    How can a professional credit rating repairer fix my credit rating?

    If people find inconsistencies on their credit report, in the past they have run into difficulty trying to get the offending black marks removed.

    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. Many individuals find it extremely difficult to apply the letter of the law in their own circumstances and so end up seeking someone out a professional credit repairer, who can work on their behalf.

    Credit repair requires knowledge of the legislation, lots of evidence, tenacity and perseverance – which a good quality professional credit repairer will have.

    Professional credit repairers have also built successful relationships with agencies and creditors alike, and have a better ability to negotiate the listing’s removal on the client’s behalf.

    What can I do to ensure I maintain credit file health?

    1. Pay all accounts on time. This is the easiest way to ensure there are no adverse listings on your credit file.  If you are struggling to make repayments – contact the creditor about a repayment scheme.

    2. Regularly obtain a copy of your credit file – once a year is recommended to ensure accuracy.

    3. Be aware of excessive credit enquiries. If you are not sure about your credit health, you should get it checked before applying for new credit.  Some lenders are rejecting loans for as little as two enquiries in 30 days, or six enquiries within the year. Also avoid ‘shopping around’ for credit, as whether or not the loan was approved doesn’t show up on your credit report – only the fact that you made the enquiry.

    If you are seeking advice on credit file health from a professional credit repairer, contact MyCRA Credit Rating Repairs on www.mycra.com.au or tollfree 1300 667 218.

    Image: Imagerymajestic/ FreeDigitalPhotos.net

  • Refinancing plans could be ruined by errors showing bad credit history

    Consumers have been urged to move their mortgage away from the ’big four’ banks  as a response to the raising of home loan rates this month, despite record profits. But any home owner looking to refinance needs to consider they could have a surprise bad credit history. It is important for them to check their credit history prior to making any finance application, even if they think their repayments have always been met on time.

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

    This month all four of the big banks – ANZ, Commonwealth, Westpac and NAB – raised their interest rates despite the Reserve Bank of Australia keeping the official rate on hold.

    Consumer watchdog ‘Choice’ launched a  campaign ‘Move your Money’ recently, urging Australians to change from the big four banks to save money and drive competition.

    “The CHOICE Move Your Money campaign is about consumers standing up and saying ‘enough is enough’, sending the big four bank CEOs a message in a language they understand,” says Christopher Zinn, CHOICE director of campaigns and communications.

    “The major banks rely on perceptions that switching is too much hassle or that there are no better deals out there. But experience shows that consumers can save by also ‘thinking small’, and moving your money is now easier than before,” says Mr Zinn.

    But rushing in to refinancing may not be sensible for everyone in today’s market.

    Home owners need to calculate the in and out fees that may be present on any new loan prior to making the switch.

    Also prior to making a re-financing application, home owners should check their credit file, as their credit history could contain inconsistencies they aren’t aware of.

    Regardless of whether people have been diligent payers, creditors can and do sometimes make mistakes with credit files and they can end up with black marks against their name that just shouldn’t be there.

    Sometimes people don’t know their good name is compromised until they apply for finance or in this case re-finance and are refused.

    The reason home owners should perform a credit file check prior to finance application, is because sometimes too many credit ‘enquiries’ can also hinder finance approval.

    If a credit enquiry from a lender finds a default against a person’s name, warranted or not, they will be refused finance. That lender’s ‘enquiry’ now shows up on the credit file for 5 years along with the default, creating two negative entries instead of one.

    A bad credit rating can result when a bill or repayment goes unpaid past 60 days. After this time, a creditor has the right to list that non-payment as a ‘default’ on the person’s credit file.

    In the current finance market, any black mark generally results in an automatic decline with the major lenders.

    The volume of credit file errors on Australian credit files is uncertain.

    A Veda Advantage spokesperson recently estimated 1% of the 250,000 credit reports they give out as a credit reporting agency to Australians every year contain a material error on the credit file.

    But the Australian Consumer Association (now Choice) survey from 2004 revealed that 34% of the credit files surveyed in their small scale study contained errors or inconsistencies.

    Approximately 63% of the clients who request credit repair have defaults, writs or Judgments which are listed in error on their credit file.

    We have clients who are facing identity theft; some are caught in issues over separation from their spouse; some have been disputing the bill which went to default stage and many people are just victims of the fallout from inadequate billing procedures – wrong names, wrong addresses, human and computer errors.

    Under current credit reporting legislation, consumers are entitled to obtain a copy of their credit report from the credit reporting agencies once a year. A person requesting their own credit report does not generate a ‘credit enquiry’ on their credit file.

    People need to contact all the credit reporting agencies to request their report – as creditors have access to 3 agencies within mainland Australia and 4 in Tasmania. The report must be provided to them in writing within 10 days of the request.

    Listings are not removed by creditors unless the file holder can provide adequate reason and lots of evidence as to why the listing should not be there.

    Credit repair requires knowledge of the legislation, lots of evidence and perseverance. But for those people whose financial freedom is hindered because their credit file contains errors, it is a point worth fighting for.

    People can contact MyCRA for help with getting a free copy of their credit file on 1300 667 218 or visit www.mycra.com.au.

    Image: Salvatore Vuono/ FreeDigitalPhotos.net

  • What you may not know about taking out credit in Australia

    Many Australians are very unaware of what happens behind the scenes when they take out credit. We break it down and show you what it involves, and how your good name and ability to continually obtain credit all  hinders on what creditors say about you on your ‘credit file’.

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

    What is being ‘credit active’?

    When you take out your first piece of credit – you become ‘credit active’. This could be a mobile phone plan, a loan with a bank, a credit card, or even a utility account. The creditor opens up a credit file in your name with one or more of Australia’s credit reporting agencies – Veda Advantage, Dun & Bradstreet, Tasmanian Collection Services TASCOL (if in Tasmania) or new entrant Experian Australia.

    What is on my credit file?

    Your credit file details all of your personally identifiable information including full name, date of birth, current address and also the type of credit that has been taken out now and in the past. Also recorded, are any times you have applied for credit ‘credit enquiries’ and any negative notations put there by creditors during the course of the credit agreement.

    What is a credit rating?

    Your credit rating is a term used for what happens when a potential creditor makes a request to see what is reported about you on your credit file. The creditor uses the information on your credit file to determine the amount you are able to borrow and your ability to repay the loan.

    What is defined as a ‘bad’ credit rating?

    In broad terms, any credit defaults, court actions or writs, external administrations and bankruptcy are all recorded on your credit file and would be considered ‘bad’ credit history by most credit providers.
    In this current economic climate basic defaults and even too many credit enquiries or applications for credit may be considered to be tarnishes on your credit rating.

    How do I get a bad credit rating?

    If you fail to make repayments on any credit account past 60 days, then by Australian law the creditor has the right to notify you in writing of their intention to list the non-payment as a default on your credit file. This default remains present on your credit file for 5 years, after which time it drops off. If the creditor can’t contact you, and suspects you have left the premises or tried to avoid contact – they may list the non-payment as a ‘clear-out’ which means you would incur 7 years of bad credit.

    How do I know if I have a bad credit rating?

    Most people know they have a bad credit rating, because the creditor has advised them in writing that they intend to list something negative on their credit file. But many times, people are not aware they have a bad credit rating until they apply for a loan and a ‘surprise’ default or clear-out shows up.

    If you are unsure what is on your credit file, you should take the time to find out.

    The three major credit reporting agencies in Australia hold the credit file of millions of Australians. Veda Advantage alone holds over 14 million credit files.

    You can write to or email one of these agencies and request a credit report, which is a copy of your credit file.  If you are not in a hurry then under Australian law your credit report is free, and will be sent within 10 working days from application to receive this information. There are further charges for a faster service with many agencies.

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

    If you discover you have a bad credit file, you will find it very difficult to obtain credit in the future. Generally this problem will keep occurring for the 5 years the default is on your file. This will probably prevent you from obtaining a home loan with most lenders and possibly lead to credit refusal of many kinds from cards to phone plans. Even if this bill is paid and noted on your file, this default usually remains on your record for 5 years and will be a detriment to any further credit you wish to take out during this time.

    What can I do to fix the default on my credit rating?

    Once you have obtained a report there are three things to consider about the negative listing:
    1. Is it accurate?
    2. Was I informed?
    3. Is it fair?

    If the report contains errors, or inconsistencies with the credit reporting process, be aware you do have the right to have errors rectified.  Creditors do make mistakes in credit reporting. The way we handle it can be make-or-break for our good credit rating.

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

    Can I employ someone to fix my bad credit?

    If you have a default, writ or Judgment that has errors or just shouldn’t be there – there is a good chance that a professional credit repairer can actually remove it – meaning your financial future is looking a whole lot brighter.

    A professional credit repairer works with creditors to negotiate on your behalf and work for your best outcome based on the creditor’s compliancy with the current legislation. They will also look at any other extenuating circumstances to determine if there is an avenue that can be investigated which results in having the listing removed.

    Can I make positive changes to my credit file?

    As the legislation currently stands in Australia, there is no way of off-setting bad credit history with ‘good’ credit history. Currently only negative entries are recorded – so you are considered to have good credit history if your credit file is essentially clear.

    Australia is moving towards a form of positive credit reporting this year – but we believe banks will still not take kindly to any form of negative entry on a person’s credit file in this current economic climate.

    How do I keep a clear credit rating?

    To avoid a bad credit rating, it is essential to make repayments on time! If there is a problem with a bill, you still need to pay it on time. If there is hardship and you are finding repayments difficult, tell creditors. Most creditors have policies in place to assist with financial difficulties – but you must tell them to be eligible for this.

    Keep your contact details current with your creditors so if there are problems they can contact you.

    And make sure there are no mistakes on your credit file…

    The best thing every credit-active person can do is to keep abreast of what is being said about them on their credit file with those free yearly credit file checks. This way, if there’s anything that appears on there that you are not sure about, you can look into it and get your credit file cleared if it should not be there BEFORE you front up to apply for any new credit.

    If you have a bad credit rating, go through these 6 simple steps to see whether you may qualify for credit repair, or contact us tollfree on 1300 667 218 or visit our main website www.mycra.com.au :

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  • As confidence returns, home buyers need to fix credit problems

    Good news may be on the horizon for the Aussie mortgage market. Mortgage sales for January 2012 have revealed a significant return in confidence for home buyers. But with that renewed confidence should come a forewarning for home buyers about how to make the most of preparations of savings records, wages and stability through matching it with a credit ‘clean up’ for easier finance approval.

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

    According to AFG (Australian Financial Group), mortgage sales for January 2012 have soared above figures for last year. It released its AFG Mortgage Index last week in which it showed national mortgage sales increased by 40% this January compared to last year. AFG says the changes mark a return to more normal trading levels.

    Sales in Queensland were up 80.6% and in South Australia 84.5%, with other states showing significant uplifts compared to January 2010 ? WA (+ 37.4%), Vic (+25%), NSW (+14.5%).

    January also saw WA take over from NSW as the most popular state for First Home Buyers. Almost one in five new mortgages (19.1%) in WA was arranged for First Home Buyers compared to 14.0% in NSW. Through the second half of last year, NSW led the country as the most active First Home Buyers market.

    However NSW retains its position as the most popular state for investment, with 40.2% of loans there arranged for investment purposes, compared to 36.8% in Victoria, 34.9% in Queensland, 32.6% in Western Australia and 32.0% in South Australia.

    Although confidence might have returned, there will still be a significant number of home buyers who fail to realise their home ownership dreams due to a bad credit report. It is estimated there are approximately 3.47 million Australians who have a bad credit rating (negative listings on their credit file). (Veda November 2008).

    As credit repairers, we meet many people who seek help to fix credit problems, and astoundingly, many of those people should qualify for a home loan. It may surprise people to know that many prospective borrowers we see have significant savings records, or even currently own property and have good income. They can be knocked back for finance by a bad credit history that should not be there.

    Do you need a credit clean up?

    Many credit files contain errors or inconsistencies due to simple human error from creditors, or from creditors simply not complying with credit reporting legislation. Often it is not until people apply for a home loan that they find out about them. Even if people already own property, they can be banned from refinancing, investing, or from upgrading their home due to credit rating defaults or other credit file problems.

    Any negative listing – from defaults, to Judgments and even excess credit enquiries will stop most people from getting a home loan in this market, or force them into a high-interest loan, costing them thousands more in interest.

    Negative listings remain on a person’s credit file for 5 -7 years, depending on the listing type. These black marks can show up for outstanding bills as low as $100.

    Credit file errors

    A survey by Choice Magazine as far back as 2004 points to approximately 30% of the credit files in the survey likely to contain errors. That’s a staggering amount of credit file errors potentially out there.

    Recently Channel 7’s Today Tonight interviewed Veda Advantage’s Head of External Relations, Chris Gration on the possible number of errors on credit reports. He admitted errors within their system alone amounted to 1%.

    “We give out about 250,000 credit reports to consumers every year. But only in 1 per cent of cases is there a material error on the file, so a default or an enquiry that’s incorrect,” Mr Gration told Today Tonight.

    Even if as little as 1 per cent of those 14 million credit files contained errors, that would still currently leave 140,000 credit files in Australia containing errors that just shouldn’t be there.

    The nature of credit reporting is that there is much opportunity for human error and these errors are usually not uncovered until people go about checking their credit file. Often people are unaware of their responsibility to maintain the accuracy of their own credit file – and so they don’t find out about their credit issues until they apply for a home loan.

    Then, once people find problems with their credit file – they often find the process of removal of errors from their credit report difficult.

    What is the best way to fix credit problems?

    Current legislation does allow people to have inconsistencies removed from their credit file, but in reality many people are not successful when they attempt to fix it themselves.

    Often it is because they are not schooled enough in the legislation or can’t devote the necessary time to it to ensure a successful credit repair. Sometimes people who attempt to fix credit problems themselves can do more harm than good through lack of knowledge, or difficulty in negotiating with creditors or by alerting them too early to mistakes on the credit file.

    A borrower’s credit file is one of the key factors to home loan approval. People should not underestimate this factor.

    Make it right with a credit file check and credit clean up before you apply for a home loan

    It is important to get it right, and the onus is on the credit file holder to maintain its accuracy. House hunters can and should request a free copy of their credit file every year from one or more of the credit reporting agencies such as Veda Advantage, Dun and Bradstreet or Tasmanian Collection Services (TASCOL) if Tasmanian.

    A free copy of their credit report will be mailed to them within 10 working days. A creditor may have place a negative listing with all or one of these credit reporting agencies. If there are any inconsistencies, they should seek a reputable credit repairer for a credit clean up.

    ABS Statistics differ

    AFG statistics are currently projecting significantly more confidence than the latest data from Australian Bureau of Statistics figures shows, particularly in Queensland.

    The November Lending Finance Statistics show the number of owner occupied housing commitments in Queensland stayed flat in October to November, recording a 0.0% change in Queensland.

    We will watch avidly to see if data from AFG matches with the ABS’ review of January housing finance and lending statisitcs due out in March.

    For brokers, agents and property owners – rising mortgage rates in many states and particularly in post-flood ravaged Queensland, would be very good news indeed.

    Image: Danilo Rizzuti/ FreeDigitalPhotos.net

  • Helping clients save money through credit repair

    As brokers we are continually faced with meeting clients whose credit report lets them down. These clients stack up financially on all levels…until that last minute credit check reveals they have an adverse listing on their credit file.

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

    Many brokers who come across clients with a bad credit rating either turn them away or if they are otherwise suitable for finance, guide them into a more flexible non-conforming loan.

    But many brokers may be surprised to know it can be cheaper for the client to undergo credit repair  – and if the client identifies errors or inconsistencies in their credit report – it could ethically be the best option for the client.

    For instance, let’s calculate the figures on an average loan of $400,000 over 30 years, comparing non-conforming loan interest rate of 9.5% with a standard variable rate of 7%. The client would be paying a staggering $702.71 per month with non-conforming loan interest rates. They will be hit with $22,867.15 more in home loan repayments over the first three years of the loan.

    Credit repair would not be suitable for those people who demonstrate an inability to make repayments. But as credit repairers many times we find the client has errors on their credit report, or the listing is unjust – and that we can rectify. Often we can determine that the file can be completely cleared, allowing the client access to a whole range of loans they were previously unsuitable for.

    The popularity of credit repairers is due to a large volume of errors made by creditors on credit files, and a system of redress which is often difficult for the credit file holder to navigate.

    The number of errors on credit files in Australia is astounding. Many of our clients thought they had impeccable repayment histories and would have never dreamed they would end up with a default. Let me tell you mistakes do often happen. Sometimes simple human error by the creditor leads to defaults incorrectly listed.

    Whilst paying bills on time is the best way to ensure a clear credit file, it does not guarantee a clear credit report.

    Statistics released by the Australian Consumer Association (now Choice Magazine) from a study conducted in 2004 showed around 34% of the clients surveyed had credit files which potentially contained errors in some way.

    Recently Channel 7’s Today Tonight interviewed Veda Advantage’s Head of External Relations, Chris Gration on the possible number of errors on credit reports. He admitted errors within their system alone amounted to 1%.

    “We give out about 250,000 credit reports to consumers every year. But only in 1 per cent of cases is there a material error on the file, so a default or an enquiry that’s incorrect,” Mr Gration told Today Tonight.

    Even if as little as 1 per cent of those 14 million credit files contained errors, that would still currently leave 140,000 credit files in Australia containing errors that just shouldn’t be there.

    The nature of credit reporting is that there is much opportunity for human error and these errors are usually not uncovered until people go about checking their credit file. Often people are unaware of their responsibility to maintain the accuracy of their own credit file – and so they don’t find out about their credit issues until they apply for a home loan.
    Then, once people find problems with their credit file – they often find the process of removal of errors from their credit report difficult.

    Current legislation does allow people to have inconsistencies removed from their credit file, but in reality many people are not successful when they attempt to fix it themselves. Often it is because they are not schooled enough in the legislation or can’t devote the necessary time to it to ensure a successful credit repair. Sometimes people who attempt default removal themselves can do more harm than good through lack of knowledge, or difficulty in negotiating with creditors.

    One thing brokers can do to encourage a better transaction is to refer clients to us to have their credit checked prior to applying for finance. They can take advantage of their yearly free credit file check, which would uncover any problems with the credit file prior to finance application, and ensure the client is in the best possible position for qualifying for a loan. Plus a client does not generate a credit enquiry when they request a copy of their own credit file.

    Brokers can also potentially save thousands in lost commission by helping those that may otherwise be turned away to get a clear credit file.

    Once the credit file is repaired the client is then passed back to the referring broker to be fitted to the loan of their choice.

    For more information for brokers on the benefits of referring clients, contact MyCRA Credit Repairs or call tollfree 1300 667 218.

  • MyCRA clients tell their stories: Telco mistakes threatening home ownership

    Two of our credit repair clients share their stories on how their good credit rating suffered at the hands of Telco mix-ups. Their stories demonstrate how bill and service disputes can be difficult for customers to resolve, and can ultimately lead to a bad credit rating.

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

    DANIEL

    A NSW client, Daniel and his young family were shocked when they applied for a home loan last year to find they were refused due to a whopping $8,000 debt and five years of bad credit when a botched phone plan with Telstra in 2006 came back to haunt them.

    Daniel was told by the lender there was no way he would be given a home loan with a black mark against his name – a mark Daniel says was a huge mistake.

    “I was on a 10MB plan initially, but wanted to start using the internet from my phone. I contacted Telstra to get upgraded to 1GB, which the operator agreed to. It wasn’t until I got the bill for $4,000 that I saw the operator hadn’t changed the data allowance and I was still on 10MB,” he explains.

    Daniel says he spent more than 3 months in contact with Telstra attempting to resolve the problem, and was passed on from one person to another.

    “All the operators said they didn’t have the authority to remove this bill or change it. No one was willing to help they all just kept passing me around operators which lead to hours on end being caught up on the phone without getting answers,” he says.

    “After a few months they disconnected my phone, but I had no idea they had referred the debt to a collection agency, and banned me from credit for 5 years.”

    Thousands of Telco customers are living with negative listings on their credit file that just shouldn’t be there, and this should serve as a warning to all credit active individuals to check the accuracy of their own credit rating.

    Consumers need to know that mistakes do happen for a variety of reasons, and often it is not until people apply for credit in a separate instance that they find out – by then it is too late.

    An annual report released November last year by the Telecommunications Industry Ombudsman (TIO) reporting on the number and nature of consumer complaints in the 2010-11 year, revealed a staggering 18 per cent increase in complaints from the previous year.

    The TIO report attributes the rise in complaints to them to mobile phone service faults and increased smart phones use.

    “The record number of complaints made to the TIO is disappointing. Customers who have complained to us have been frustrated not only by mobile telephone problems, but also by deficient customer service and complaint handling,” Ombudsman Simon Cohen said.

    Daniel says trying to get the mistake fixed up and rebuild his credit file himself, was problematic.

    “I tried to clear it with Baycorp, they told me if I paid the debt they would reduce it to $6,000 – which I did. Unfortunately that didn’t clear my credit file, it was only marked as ‘paid’ and was no use to me getting a home loan,” he says.

    Many people have trouble resolving errors themselves, because they aren’t familiar with the legislation and find it difficult to negotiate with creditors.

    Customers can often be given the run-around by creditors, and can find it difficult to apply the letter of the law to their own circumstances when they have no knowledge of what the rules are. Sometimes that can do their case more harm than good.

    Daniel’s case has since been resolved, and MyCRA Credit Repairs have been successful in recovering the $6,000 he paid out to Baycorp.

    “We’re relieved to be finally getting a home, but the whole thing has left us very disappointed in big corporations – you really don’t get looked after,” he says.

    BRENT

    Another client, Brent from Western Australia had a contract with provider, ‘3’ in 2009 that went badly.

    About 3 months into his phone contract, Brent experienced numerous problems with his phone, sending it to be repaired 3 times before requesting a replacement. He posted the phone back to Sydney and received a new phone.

    A month later Brent’s phone was barred, and he received a phone call from 3 stating that he owed $1200 for the phone which 3 said was never returned.

    Brent spent a few months dealing with 3 trying to track down the phone in their warehouse and the postal system, before they eventually located it.

    It wasn’t until he applied for a loan and was turned away that he found out 3 had placed a default on his credit file anyway, despite an agreement to put a note on the account so that the outstanding amount for the missing phone did not get referred to a debt collector.

    MyCRA Credit Repairs fought for Brent to have the default removed from his credit file.

    It is so important for people to cover themselves when resolving bill and service disputes with Telcos or any creditor for that matter.

    People should never assume mistakes are rectified until they have confirmation in writing from the company. If you have a problem with a bill or service, take extensive notes and names and request confirmation of all decisions and outcomes in writing.

    If people are worried about what may have been reported about them on their credit report, they are entitled to obtain a copy of their credit file for free from the credit reporting agencies in Australia once every 12 months.

    The report is mailed to the credit file holder within 10 working days. If consumers find errors, or listings which they believe are inaccurate or unjust they have the right to have them removed.

    For help with rebuilding a credit history and repairing your bad credit rating contact MyCRA Credit Repairs tollfree on 1300 667 218 or visit the main website, www.mycra.com.au.

    Image: Stuart Miles / FreeDigitalPhotos.net

     

     

  • 5 things every young person needs to know about credit

    It’s back to school for most teenagers in Australia. Here is a lesson you might not learn there…Just because you currently aren’t credit active, does not mean you can’t learn about how to make credit work best for you when you are. We show you how the actions you take NOW could lead to being unable to get a phone, a home, a car in the future because of a surprise bad credit rating.

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

    We believe this important financial information should be taught in high schools across the country. So if you know a student or young adult, flick them this link or print this page. We want all young Australians to have the luxury of a clear credit rating when they turn 18 and beyond.

    1. What is a credit rating?

    Once you turn 18, and become ‘credit active’, a credit file is initiated in your name. This contains all financial information on you, including any credit you have taken out, the amount of credit, and any negative listings – like court Judgments, writs, bankruptcies, clear outs, and defaults. A default occurs when an account has not been paid more than 60 days, and the creditor (bank, telephone company, electricity company etc) places a record of this ‘default’ on your credit file to alert future creditors. A clear out is when the creditors are unable to get hold of you over late payments, agents have been sent to your house and they record this as a ‘clear out’. By accessing your credit file, a potential creditor can assess your credit rating, based on any negative listings which are present there.

    2. What happens to me if my credit file has negative listings on it?

    Generally, a negative listing on your credit file tells banks or other people you might want to borrow money or services from, that you have had problems repaying credit in the past. They will most often decide that you are a bad ‘risk’ to lend money to, and will refuse you the car, money, credit card, electricity account or mobile phone plan.

    A negative listing stays on your credit file for 5-7 years, depending on the listing and ‘drops off’ after this time. A negative listing will affect you for the entire time it is present on your credit file. You need to ask yourself: what do I want to be doing in 5 years????

    3. How do I end up with a negative listing on my credit file?

    It is estimated there are approximately 3.47 million Australians with negative entries on their credit file. (Veda Advantage 2008).
    The most common negative listing is a default. This is put there when you don’t pay your bills on time.
    But there are other reasons why you could have a negative listing, which are not always completely your fault.

    Change of address. Sometimes people move and their mail continues to be sent to the old address. This is a really common scenario, particularly for young people who tend to move around a lot, or go overseas. The problem is – you don’t know your bills are late and don’t know you are being defaulted. It is important to update contact information regularly with anyone you have taken credit out with. No news is not good news!!!

    Identity theft. Sometimes people’s personal information can be used for purposes of fraud – for crooks to construct a fake identity, and use it to take out credit. The thing is, they are using your name so you are the one that ends up with the bad credit rating, and it can be a nightmare to recover the good credit rating you once had.

    It is important to keep all your personal information as secure as possible. One important change you can make right now, is to change the way you use the internet.

    Keep your passwords and social networking settings as strong as possible.

    The information you post today, could come back to haunt you in a big way.

    There are reports from Australian Federal Police of the likelihood of crooks scrolling through thousands of social networking pages looking for personal information from young people – who usually have the most lax privacy settings. That information is not used right away, but the data is ‘warehoused’ until the young people turn 18. They can then use that information to construct a fake identity (identity theft) and go on a ‘spending spree’ with the young person’s clean credit file. You could be ruined by identity theft before you even take out your first piece of credit yourself.

    Share accommodation. Any accounts which have your name on them, regardless of who intends to pay them are your responsibility – this includes rent. Sometimes people get caught out sharing houses, and someone leaves bills unpaid which then have dire consequences for your future.

    Mistakes. Sometimes mistakes happen. The wrong person gets the bad credit rating. The wrong details get put in the computer. Creditors are human. Don’t let a mistake affect your credit file.

    Too many credit enquiries. Only apply for credit you feel you have a very good chance of being approved for, and only apply for credit you have full intention of pursuing. Sometimes too many credit queries are enough to get you declined for credit.

    4. How do I know what is said about me on my credit file?

    Many people don’t know this, but it is so important for everyone to keep track of the accuracy of your own credit file. To avoid the disappointment and embarrassment of finding out about your bad credit rating only after being declined credit, we recommend you check your credit file every 12 months to ensure there are no black marks against your name, just as you would check your bank statements or your super account.

    You can request a copy of your credit file for free from the major credit reporting agencies – Veda Advantage, Dun & Bradstreet, or Tasmanian Collection Services (if you are Tasmanian). Your credit report will be provided within 10 working days – or for a fee it can be provided urgently.

    5. What do I do if something is not right – there are errors on my credit report?

    Don’t put up with any errors or inconsistencies on your credit report – a clear credit rating is your ticket to financial freedom.

    Most times a credit reporting agency will tell you that defaults are never removed, but can be marked as paid. You are then stuck with a dodgy credit rating for 5 years. But you shouldn’t have to put up with it, as it is possible to have many defaults removed.

    If there are errors, inconsistencies, or the listing should not be there, you do have the right to have it removed. The best course of action is to ask for help from a credit rating repairer. They can then use their knowledge of credit reporting legislation to see where any errors in credit reporting were made, and help to enforce the legislation that creditors are bound to comply with. If they are successful, you not only get help with removing credit file errors, but many times you are able to start off with a completely clean credit rating. You have a clean slate and can go for any credit you need.

    For more information contact MyCRA Credit Repairs tollfree on 1300 667 218 or visit the main website.

    Image: imagerymajestic / Freedigitalphotos.net

    Image: David Castillo Dominici / Freedigitalphotos.net

  • How to prevent identity theft and keep your clean credit rating

    Identity theft is an ever-increasing cause of a bad credit rating. We answer some of the most common questions people have about identity crime and explain how it can affect your credit file. By GRAHAM DOESSEL CEO of MyCRA Credit Repairs and www.fixmybadcredit.com.au.

    8 Most Common Questions about Identity Crime Answered

    1. Who is affected by identity crime?

    It is reported that 1 in 6 people in Australia is a victim or knows someone who has been a victim of identity theft or fraud in the past 6 months.

    Victims are not always ‘gullible’ as may be the impression in the wider community. Many experts say it is not a matter of if you experience an identity theft attempt, but when.

    2. Who commits identity theft or fraud?

    It can originate from someone you know – for example an acquaintance obtains identity documents or credit card details to impersonate you. Or more increasingly it comes from professional fraudsters whose main occupation is to steal personal information and financial details in order to commit fraud.

    3. Where does identity theft originate?

    Fraudsters are after your personal information. The internet is a big source of personal information and its ever increasing use makes you more vulnerable to identity crime than ever. This means identity crime can have very long arms – often it originates from overseas crime syndicates. Social networking, online banking, company databases and email scams can all be havens for today’s cyber- criminal.

    You can also fall victim to a number of rampant telephone scams, credit card skimming, or criminals can also take to going through your rubbish bin for anything they may be able to use to steal your identity.

    4. Why is identity theft increasing?

    The pay-offs are huge for criminals. It is estimated identity crime costs Australians $1 billion a year.* In cyber circles alone, world estimated costs for cybercrime are staggering.

    Cyber-crime expert Mischa Glenny says that while there are no precise figures out there, the White House suggested in 2009 that cybercime and industrial espionage inflicts damage of around U.S.$1tn per year, which is almost 1.75% of GDP.

    “Traditional bank robbers must be absolutely gobsmacked when they hear sums like this being hoovered up by cyber-criminals week in, week out,” he says.

    5. How can I be affected by identity crime?

    We consider if someone is alerted to having money stolen from credit cards early, or perhaps is able to call their bank and stop fraud in its tracks – that they are the lucky ones.

    The unlucky identity theft victim is unaware of the fraud until their identity is misused, and their credit rating with it. When identity theft damages your credit rating – it is because the fraudster has been able to overtake credit accounts, or has gained access to enough personally identifiable information about you to forge new identity documents.

    This gives the fraudster access to credit cards, loans, even mortgages which allows them to extract significant amounts of money without you realising it straight away.

    If credit accounts are not repaid – after 60 days you may be issued with written notification of non-payment and the intention for the creditor to list a default on your credit file. It is at this moment that some people who were previously unaware of any problems find out they have been victims of this more sophisticated type of identity theft.

    But often the credit file holder has also had their contact details changed – and this means it is not until they apply for credit in their own right and are refused that they find out about the identity fraud. This can be a significant time after the initial crime.

    6. When would I know if I have been a victim of identity theft?

    Some signs to watch out for include:

    Strange unaccountable withdrawals on credit or personal bank accounts. It may not need to be a big amount to indicate fraud. Many criminals do ‘test’ amounts to begin with before extracting more significant amounts.

    Phone calls or emails from what often appear to be legitimate companies, asking for money or personal details. If you have given bank details or personal information in this way either online or on the phone there is a high chance it was a scam. Verify with the company in question.

    Can’t log in to social networking or bank accounts.

    Credit refusal

    Bills or letters of demand sent to you for accounts you don’t know about

    Missing mail – particularly credit card statements which could indicate someone has overtaken your accounts. In this case no news is not good news.

    7. What can I do if I suspect I am a victim of identity theft?

    Notify Police immediately. Many people do nothing due to embarrassment, or because they don’t believe the fraud was significant enough. But is only through this crime getting reported that statistics get collated, and we start to have any chance of catching the criminals.

    Notify creditors. You may need to cancel credit accounts.

    Obtain a credit report. This report is free once per year for every Australian who holds a credit file. It will indicate to you whether any of your contact details have changed, or whether there have been credit enquiries on your account. If you act quickly enough, you may be able to stop your credit rating from being affected by black marks which would come from fraudsters obtaining credit in your name.

    Notify credit reporting agencies of the possible fraud. They will be able to put an alert on your credit file.

    Police may assist you in obtaining a Victims of Commonwealth Identity Crime certificate, if they believe you are eligible. You can apply to a magistrate in your State for this certificate, which may help in recovering your credit rating or credit accounts. Victims need to have had a Commonwealth Indictable Offence committed against them. For more information, visit the Attorney-General’s website www.ag.gov.au.

    8. What steps can I take to prevent identity theft?

    – Keep virus software up to date on your computer. Install automatic updates and perform regular virus scans.

    – Keep your privacy settings secure on all social networking sites.

    – Keep passwords and PIN numbers secure. Don’t carry PIN numbers with your credit/debit cards, change passwords regularly and use a variety of passwords for different purposes.

    – Check all your credit card and bank statements each time they come in.

    – Cross-shred all personally identifiable information which you no longer need.

    – Buy a safe for your personal information at home.

    – Do not give any personal information or credit card details to anyone via phone or email unless you are sure the site is secure, and or you can verify the company details.

    – Be aware of who gets our personal information and for what purposes. What can these people do with the information they are gathering? For instance, is it really necessary for the site you are registering on to have your date of birth?

    – Keep up to date with the latest scams by subscribing to the government’s ‘SCAM watch’ website. For a list of ways your computer can put you at risk, visit the governments Stay Smart Online website www.staysmartonline.gov.au.

    – Check your credit file regularly.

    If you or someone you know needs help recovering their credit rating following identity theft, contact MyCRA Credit Repairs, www.mycra.com.au or call tollfree on 1300 667 218 for confidential advice and help restoring your good name.

    * OECD Committee on Consumer Policy, Online Identity Theft, February 2009, p. 37

    Image: Salvatore Vuono / FreeDigitalPhotos.net

  • How to improve your credit score: what to do when you have a bad credit history

    Help for frustrated Australians who find out they have a bad credit rating.

    By GRAHAM DOESSEL – CEO and founder of MyCRA Credit Repairs and www.fixmybadcredit.com.au.

    There are approximately 3 million Australians* with adverse listings on their credit file, also known as a ‘bad credit rating’. Adverse listings can include, default listings, writs, Judgments, bankruptcies*, even excess credit enquiries. All of these can impact your ability to obtain credit. The consequences of having any issues with your credit file include home loan refusal, personal loan declined, and even being turned away from getting a mobile phone plan.

    One problem is many people go searching on the internet for help with ‘improving their credit score’. This is most commonly an American term which has no bearing on Australian credit reporting law.

    The Australian credit reporting system is currently a ‘negative’ reporting system. Only negative entries are included, and generally when a lender requests a credit report and sees listings on your credit file, they will be seeing these entries as negative. The laws are currently undergoing changes – but as a general rule – you don’t want late payments, defaults or credit errors holding you back from an otherwise perfect ability to service a loan or forcing you into choosing a loan at sky-high interest rates. You could pay thousands extra on a higher interest rate than your standard variable rate.

    So you may be wondering, how then, can I fix my bad credit?

    Well it depends on what comes up on your credit report….

    The first thing you need to do is request your credit report. This can be obtained from one or more of the credit reporting agencies, and is a file on all of your credit information. You can request a copy of your credit file for free every 12 months.

    If there are any adverse listings on your credit file which you believe are incorrect, contain errors or just should not be there – then you have the right to have those credit file errors removed.

    The problem with attempting to dispute errors on your credit file with creditors yourself is two-fold. Without knowledge of the legislation, people almost invariably get caught in legal ‘loop-holes’ which see the default, writ or Judgment left on the credit file, or at best see the listing marked as ‘paid’. Both of these results DO NOT give you that home or car loan as lenders still consider even a paid listing as bad credit history.

    Secondly, by talking to creditors themselves about credit file errors, people can accidentally ‘alert’ creditors to any mistakes they may have made in the initial method of credit reporting – allowing them to fix up their mistakes and negate the need to remove the credit file default which was placed in error.

    If you are just starting out and wondering “How can I repair my bad credit?” then the best course of action is to instill the help of a credit repairer before you do anything yourself. They can help you get a copy of your credit file, and go through the bad credit history with you. They can then use their knowledge of credit reporting legislation to see where any errors in credit reporting were made, and help to enforce the legislation that creditors are bound to comply with.

    If they are successful, you not only get help with removing errors, but many times you are able to start off with a completely clean credit rating. You have a clean slate and can go for any loan you choose at the best interest rates.

    Once you have those defaults removed, then you can certainly ‘improve’ your credit history in the future with these 5 easy steps:

    1. By ensuring all bills are paid on time. Keep track of and be aware of any stray bills – particularly when major changes are occurring in your life like moving house, divorcing, death, and illness.

    2. By using credit. Having no credit history means there is nothing to calculate and the risk appears high to lenders. We should start by borrowing something small. Repaying mobile phone plans, internet accounts, or store credit on time will appeal to anyone checking our credit report.

    3. Obtain a credit report every 12 months. This ensures there are no errors on your credit file. Sometimes human error means the wrong person gets the bad credit file entry, or adverse listings are entered incorrectly or unlawfully. If in doubt, talk to a credit repairer.

    4. Beware excess credit enquiries. Only apply for credit you feel you have a very good chance of being approved for, and only applying for credit we have full intention of pursuing.

    5. Show stability. If you are thinking about applying for major credit in the near future, consider that lenders are looking for a stable address, stable income stream and regular savings as well as a squeaky clean credit file to help with assessing your suitability for a loan.

    * Veda Advantage 2009

    * MyCRA Cannot remove bankruptcies from credit files

    Image: graur razvan ionut/ FreeDigitalPhotos.net

  • NCCP class action is passing the buck

    A class action against banks for irresponsible borrowing – seems unlikely when considering how hard it is for so many to get a home loan in this country – particularly for those people with a bad credit history.

    By GRAHAM DOESSEL CEO of MyCRA Credit Repairs and www.fixmybadcredit.com.au

    As discussed with Kevin Turner of Brisbane’s 4BC Real Estate Talk.

    Australian banks are being brought to answer under new NCCP legislation with a massive class action instigated by struggling borrowers, according to Broker News.

    The lawyers of 300,000 struggling bank customers are putting together a case alleging bank lending has put borrowers at risk. The case will be built around first home buyers and lower income households who have received loans since the onset of the financial crisis.

    It will allege that some of these borrowers are experiencing severe financial hardship through no fault of their own, through being allowed to enter a loan contract that they could not afford.

    The case is being spearheaded by retired international insurance broker Roger Brown, according to Fairfax Newspapers, who has been quoted as saying the way banks have been lending has been “irresponsible”.

    In my view, borrowers need to take responsibility for understanding the commitment they are entering. Anyone who signs a contract should not do that lightly – a loan is a serious commitment which stretches for longer than many first home buyers have been alive. Buyers need to be comfortable in it long term, allowing for future changes that no bank can calculate on.

    If people only just qualify for the mortgage with the first home buyer’s grant, and then they go and add further and further credit commitments to the mix, of course they are going to run into trouble. But how can that be the bank’s fault? The First home buyer’s grant is intended as government assistance, not as help to prop up people who would otherwise fail to qualify.

    In real terms our system makes it extremely difficult for people to get a home loan and heaven forbid them having a bad credit rating for not paying a bill on time.

    We help more and more clients with a bad credit rating every day. These people have saved for a deposit for years, only to have their dream of home ownership ripped out from under them because of something like a small Telco default.

    If the banks had in some way falsified information, then of course that would be irresponsible and deserving of a class action. But if these buyers have really just failed to fully understand their own responsibilities and the ramifications of late payments until it was too late, then I don’t believe that is grounds for suing the banks.

    What is needed is more education in general from governments and the industry, and that would be a great outcome for Australian borrowers in general.

    People need to understand credit from a young age, how it can work for them, what can go wrong and how much is too much. They need to be educated about their credit rating and how essential it is to keep a clear credit file.

    For more information on how a bad credit rating affects people’s lives, to order a free credit report or to learn how to fix a bad credit rating, visit our main website www.mycra.com.au or call us tollfree on 1300 667 218.

  • How to keep your credit rating healthy

    7 ways to keep a squeaky clean credit file and get that home loan or finance….

    By Graham Doessel.

    Many people don’t realise how easy it is to get a bad credit rating, or how difficult credit repair can be.

    A clear credit file is so important because it is the key to your financial freedom. In today’s economic times, it is essential that your credit file be kept clear of any black marks.

    Any defaults (overdue accounts which have lapsed past 60 days), writs, judgements or bankruptcies which are recorded on your credit file will remain there for 5 years.

    A bad credit rating can prevent you from obtaining a mortgage, car or personal loan with banks but many don’t know it can also prevent you from obtaining a simple mobile phone plan.

    So how do you go about avoiding a credit rating default and keep your credit rating looking as healthy as possible? Outlined below are 7 essential tips:

    1. Use credit
    It may be tempting to get rid of all credit. But it is easier to obtain credit for a mortgage or business loan if there is some kind of reference of your credit history on your credit file. Taking out small accounts such as a mobile phone plan may be a good choice as long is each payment is made on time.

    2. Pay bills on time
    If you pay all accounts on time and by the due date, there is less chance you could receive a default listing on your credit file. If you can’t pay your account by the due date don’t bury your head in the sand – call the creditor and try to work out some type of payment plan.
    This contact may be enough to ensure your credit rating is not tarnished. If you receive a bill you don’t agree with, it is still essential to pay the account by the due date to avoid a default listing. Better to make the payment and be reimbursed for the difference than be paying for 5 years for someone else’s mistake.

    3. Be smart with credit
    Credit should be the key to financial freedom, but often it is the source of a great many problems in people’s lives. Yahoo’s Money and Your Life website has help for managing debt and finances. This article has some great tips for keeping credit under control and making it work for you http://au.pfinance.yahoo.com/moneyand yourlife/managing-debt/article/-/8044026/expert-tips-for-cutting-credit-card-debt/.

    4. Be aware of excessive credit enquiries.
    You should only apply for credit if you feel you have a very good chance of being approved. Declined credit applications on your credit file can hinder your chances of obtaining a home loan. Likewise, you should only apply for credit you have full intention of pursuing. Every application is noted on your credit file, but not whether it was approved. If you go ‘credit shopping’ and apply for credit everywhere – the lender may consider you a bad risk due to those excessive credit enquiries showing up on your credit report.

    5. Educate yourself on ways your credit rating can be damaged
    It may not be simple overdue accounts which leave you with a bad credit file. People who have recently divorced or separated are particularly vulnerable to problems due to joint accounts. Also victims of identity theft can have a number of defaults on their credit file they are unaware of. Often times simple errors can occur which you aren’t aware of until you apply for credit and are flatly refused.

    6. Check your credit file regularly
    It’s important to check your credit file and understand what lenders may be seeing on your credit rating. Usually every 12 months should pick up any discrepancies that may need addressing.

    Under current legislation you can obtain your credit report for free from the major credit reporting agencies Veda Advantage, Dun & Bradstreet, and TASCOL (Tasmanian Collection Services). Your credit report will be sent to you within 10 working days.

    7. Fix credit rating
    If you do find credit rating defaults that you believe have errors, are unjust or you feel just shouldn’t be there – there is a good chance they can be removed. Many creditors will tell individuals that a default can never be removed, but can be marked as paid if it has been paid. This may not be enough to ensure credit is obtained with many lenders.

    You may be better off seeking the services of a reputable credit repair company than attempting to negotiate with creditors on your own to fix your credit rating. The credit repairer will negotiate on your behalf, working with creditors and understanding current legislation and how it applies to your credit file.
    Sometimes if individuals are unskilled in the current legislation they can do more harm than good when it comes to credit rating repairs.

    Visit the MyCRA Credit Repairs website www.mycra.com.au to get more information or help with your credit file or contact us tollfree 1300 667 218.

    Image: digitalart/ Freedigitalphotos.net

  • Australia’s Household Wealth revealed: The rich getting richer…through buying property

    Statistics show a significant increase in home equity as a contributor to household wealth. A clear credit file has never been more important.

    The Australian Bureau of Statistics released some interesting statistics yesterday on the components of wealth in Australian households. The major contributor for rising wealth in 2010 is shown to be home equity. With more wealthy Australians owning investment property than ever before, it means they are richer than ever before.

    Statistics show a 14% increase in household wealth from 2006.

    “LEVELS OF HOUSEHOLD WEALTH

    In 2009-10, on average, households in Australia held assets valued at $839,000, partially offset by average household liabilities of $120,000. After adjusting for changes in the CPI, the average household net worth of $720,000 in 2009-10 was 14% higher than in 2005-06, and 30% higher than in 2003-04.

    Net equity in home ownership in 2009-10 averaged $297,000 across all households in Australia, and accounted for 41% of total household wealth. Superannuation was the next largest component of household wealth, averaging $116,000, followed by property other than the family home ($100,000).

    HOME OWNERSHIP

    The increased value of households’ equity in their own homes accounted for nearly a third of the 30% real increase in average household wealth between 2003-04 and 2009-10. The contribution that rising home equity values made to wealth increases in that six year period were similar for homeowners living in capital cities and homeowners living outside the capital cities, with the net equity in their homes increasing, on average in real terms, by $78,000 and $75,000 respectively.

    Most Australians aspire to own their home, and home ownership rates are relatively high. In 2009-10, one third (33%) of Australian households owned their home without a mortgage, and 36% owned their home with a mortgage. For these home owners, the average value in 2009-10 was $531,000, up 15% on the CPI adjusted average in 2005-06, and up 26% on the value in 2003-04,” the ABS statistics show.

    And it seems the richest were able to accumulate even more of the lion’s share over the past 4 years:

    “DISTRIBUTION OF HOUSEHOLD WEALTH

    Between 2003-04 and 2009-10, the share of total household net worth owned by the poorest 20% of households remained at around 1%. In contrast, the share owned by the wealthiest 20% of households increased from 59% in 2003-04 to 62% in 2009-10.

    For high and middle wealth households, the primary residence was a very valuable and widely held asset. The average value of the family home for high wealth households was $813,000 (a third of their assets). With only $60,000 owing on these homes on average, equity in the family home accounted for 34% of the net worth of high wealth households, 95% of which owned their family home. For middle wealth households, slightly fewer (91%) owned the family home, but it was a more significant component of their wealth. With an average home value of $340,000 (61% of their assets) and $91,000 owing on average, home ownership accounted for 58% of the net worth of middle wealth households.

    After the family home, other property was the next largest contributor (19%) to the net worth of the wealthiest 20% of households. With their net holdings averaging $420,000, these households accounted for 84% of all household wealth held in such assets.

    Superannuation was the third largest component (17%) of the asset portfolio of the richest 20% of households. At $370,000 on average in superannuation, these households held 64% of all superannuation assets.

    Wealth in business assets was highly concentrated in high wealth households. In 2009-10, 93% of the net value of incorporated and unincorporated businesses were held by the richest 20% of households, with $289,000 on average held by these households and accounting for 13% of their wealth.

    In low wealth households, the contents of the dwelling accounted for the largest proportion (34%) of their assets, and for more than half of their net wealth. Vehicles accounted for 15% of all assets in low wealth households, but only 3% of middle wealth and 2% of the assets of high wealth households.”

    What these statistics seem to clarify for us, is the massive difference owning property can make to a person’s future accumulation of household wealth. Simply by the act of buying property, people can benefit from rising equity, and increase their overall household wealth by as statistics show on average 30%.

    So if people are not able to borrow for their own home they are missing the chances of receiving this benefit, and at the same time increasing their overall household liabilities through the payment of rent.

    Approximately 3 million Australians* are blacklisted from getting a home loan due to a bad credit rating, despite some of these people being financially able to repay a mortgage.

    We are not advocating those people who are unable to repay debt effectively go into even more debt, but there are thousands upon thousands of Australians who are banned from home ownership, or forced to pay huge interest rates on their home due to negative credit file listings that just shouldn’t be there.

    It is not always cut and dried when it comes to credit file entries. Creditors continually make mistakes with credit files, and ultimately the potential home owner pays the ultimate price for that through credit refusal from the major banks.

    According to a survey by Choice Magazine in 2004, as much as 30% of the credit files in Australia may contain errors. Adverse listings hinder a person’s credit file for 5-7 years, depending on the type of listing, so accuracy is vital.

    With more than 14 million credit files in Australia (14 million files are held by credit reporting agency, Veda Advantage alone) – transferring those figures from the Choice study could mean possibly as many as 4 million errors currently exist on credit files in Australia.

    Recently Today Tonight interviewed Veda Advantage’s Head of External Relations, Chris Gration on the possible number of errors on credit reports.

    “We give out about 250,000 credit reports to consumers every year. But only in 1 per cent of cases is there a material error on the file, so a default or an enquiry that’s incorrect,” Mr Gration told Today Tonight.

    But in our view, even if as little as 1 per cent of those 14 million credit files contained errors, that would still currently leave 140,000 credit files in Australia containing errors that just shouldn’t be there.

    Many people are often not aware across the board of their responsibility to check the accuracy of their own credit file, so many errors go undetected. Often it is not until people apply for credit that they learn they have an adverse listing on their credit file, but by then it is too late – they are generally refused a home loan.

    To get the black marks removed can be a battle. When disputing any adverse listing, it is up to the credit file holder to provide reason as to why the creditor has not complied with legislation. Unfortunately negotiating with creditors is not always easy for the individual to undertake, hence the need has arisen for credit repairers, to close that gap and enforce the legislation which creditors are bound to comply with.

    If people are eager to own their own home, have the wages and the savings, but are held back by credit file defaults, it would definitely be worth seeking advice from a credit repairer. In many cases, repairing the inconsistencies on a person’s credit file could lead to the removal of all negative listings, and the chance to apply for a home loan with a clean slate.

     

    Image: ddpavumba / FreeDigitalPhotos.net

    * 3.47 million negative listings in Australia, Veda Advantage November 2008

  • Interest rate cuts no help for millions of Aussies living with credit file defaults

    Home loan rates were reduced on 1st November, but for millions of Australians who are living with defaults on their credit file, they will be hit with $22,867.15 (1) more in home loan repayments over the first three years of the loan.

    The Reserve Bank of Australia has cut interest rates for the first time in more than 2½ years, lowering its key cash rate by 25 basis points to 4.5 per cent.

    Many big banks have already passed on the reduction, potentially saving the average householder about $49 per month. We talk about massive savings for the average Australian with these cuts, we talk about encouraging people to switch lenders to increase competitive rates, but this is not a reality for people with credit rating defaults.

    For those approximately 3 million or more* Australians who are living with defaults on their credit file, the interest rates cuts will be negligible. Most banks won’t lend them money, forcing them into non-conforming loans and paying top dollar because their credit file shows they are a bad risk – and it may not be true. *(3.47 million – Source Veda Advantage Nov 2008).

    For the five year term of the default they will be paying a staggering $702.21 (1) more per month if they enter a non-conforming loan at higher than standard interest rates.

    (1) Based on average loan of $400,000 over 30 years on non-conforming loan interest rate of 9.5% vs standard variable rate of 7%.

    And the alarming part of this is that many of the defaults sitting on Australian credit files today simply should not be there.

    There are more than 14 million credit files in Australia (14.7 million files are held by credit reporting agency, Veda Advantage alone), and approximately 3.47 million negative listings, but the number of possible errors which exist is not certain.

    The possible volume of errors on Australian credit files was exposed by a small scale study conducted in 2004 by the Australian Consumer Association (now Choice Magazine). It revealed about 30% of Australian credit files were likely to contain errors.

    “In our view, there are serious, systematic flaws which are leaving an increasing number of Australian consumers vulnerable to defamation, mis-matching and harassment,” the ACA report said.

    Transferring those figures from the Choice study to the number of credit files in Australia today, could mean potentially 4 million errors currently exist on credit files in Australia.

    Recently Channel 7’s Today Tonight interviewed Veda Advantage’s Head of External Relations, Chris Gration on the possible number of errors on credit reports. He admitted errors within their system alone amounted to 1%.

    “We give out about 250,000 credit reports to consumers every year. But only in 1 per cent of cases is there a material error on the file, so a default or an enquiry that’s incorrect,” Mr Gration told Today Tonight.

    Even if as little as 1 per cent of those 14 million credit files contained errors, that would still currently leave 140,000 credit files in Australia containing errors that just shouldn’t be there.

    Under current credit reporting legislation, it is up to the consumer to check for errors. Credit file holders are able to obtain a copy of their credit report from one or more of Australia’s credit reporting agencies for free every 12 months.

    But consumers are often not aware across the board of their responsibility to check the accuracy of their own credit file so many errors go undetected until such time as people apply for credit such as a home loan.

    But by then the matter is urgent, and they are generally forced to take on non-conforming loans at sky-high interest rates to secure the home. Or give up on their dreams of home ownership altogether, at least until the default listing runs its term. (Unless of course they or their broker are familiar with how credit repairers work).

    Many people don’t realise that any person who finds inconsistencies on their credit file has the right to have the discrepancy rectified. As many people find out – that is easier said than done.

    When disputing any adverse listing, it is up to the credit file holder to provide reason as to why the creditor has not complied with legislation. Unfortunately many people find this process difficult – negotiating with creditors is not always easy for the individual to undertake.

    That’s where credit rating repairers come in to close that gap.

    Credit repairers check the process of listing defaults for legislative and or compliance errors, any such errors could deem the credit file default listing unlawful, at which time the creditor is advised by the credit repairer to remove the default. This usually results in a clean credit record allowing people to borrow with the lender of their choice.

    So if people are forced to pay thousands more in interest due to credit rating defaults, which leaves them struggling to get ahead on their mortgage OR if a new loan applicant finds they are surprised with a bad credit report which could see them entering into a high interest loan, it may be worth contacting MyCRA Credit Repairs tollfree on 1300 667 218 to find out whether they may be a suitable candidate for credit repair.

    Image: Salvatore Vuono/ FreeDigitalPhotos.net

    Image: photostock/ FreeDigitalPhotos.net