MyCRA Specialist Credit Repair Lawyers

Tag: credit checks

  • How will the changes to the Privacy Act coming in 2014 affect borrowers?

    Privacy Laws March 2014Recently I was asked to participate on a panel of finance and credit experts, answering consumer questions on aspects of credit impacting credit card users. The question, ‘How will the changes to the Privacy Act coming in 2014 affect borrowers?’ is a really important question – but one which many Australians don’t think to ask. Thankfully someone did. Read what our panel of experts has to say about how the changes can impact you and your credit rating.

    By Graham Doessel, Founder and CEO of MyCRA Lawyers.

    This interesting article has been extracted from creditcardoffer.com.au website – a subsidiary of Credit World.

     Ask An Expert: How will the changes to the Privacy Act coming in 2014 affect borrowers?

    Written by Kalianna and posted on November 28, 2013

    Expert Opinion: In our inaugural ask-an-expert question, we asked about a serious change to credit reports that we know will affect a wide range of credit card applicants;

    How will the planned changes to the Privacy Act commencing March 2014 affect someone applying for credit? Will people be labelled as bad credit who were not before? 

    There are some changes coming in March 2014 that will impact everyone in Australia with a credit file – especially those looking to apply for a new credit card or loan in the next few years – so most adults aged 18-55. For a start, lenders will be able to see much more information than they can now when they request your credit file after you apply for a new card or loan.

    Australia is moving towards a ‘positive’ credit reporting environment, where a good history with repayments and signs that you are reducing your overall debt will be rewarded and viewed positively by lenders. At the moment, lenders can see ‘negative’ information on a credit file. This includes:

    • Accounts that have been applied for (but not, for example, credit limits on credit card applications all of the time)
    • Defaults – where a payment is more than 60 days late
    • Default judgments or bankruptcy where a person has been the pursued through the courts in a debt collection action

    The system will be similar to what exists in the United States, and the third credit reporting agency to enter Australia, Experian, may also have an impact. In general Australia’s credit reporting agencies have stated that they believe it could take around 12 months before the same level of data is reported on Australian borrowers as what the US FICO system provides for borrowers there.

    Members of our expert panel agreed that those who want to apply for new credit in 2014 will be most affected by the changes, rather than those who already own their own home etc, though applications for refinancing or adding to your existing debt will not be immune to credit checks.

    If you are wondering whether you might be considered ‘bad credit’ from next year, then pay close attention to the advice given below and start doing your research into ways to improve your credit file and keep your score high enough to get approved for the amount you want when it comes time to borrow. Our experts have highlighted areas to watch, and what lenders will be interested in so you know where to concentrate your efforts.

     Graham Doessel

    Non-Legal Director,  MyCRA Lawyers

    Someone applying for credit after March next year will have more information about them shown to lenders who request a copy of their credit report.

    There will be five new data sets available to lenders,

    1. repayment history information;
    2. the date on which a credit account was opened;
    3. the date on which a credit account was closed;
    4. the type of credit account opened;
    5. and the current limit of each open credit account.

    Quite possibly there will be more people considered to have ‘bad credit’ after March 2014, once new laws are implemented. The most significant credit rating damage could come from repayment history information.

    Australian consumers are currently under the microscope with their repayments. Since December 2012, individuals who are more than 5 days late in repaying licenced credit (eg credit cards and loans) have a late payment notation marked against their name. This information will be available to lenders on the individual’s credit report from March 2014. This is in addition to the current default information which is shown after repayments fall more than 60 days in arrears.

    While many have argued that only a pattern of late payment notations would hinder access to credit, I have maintained that even one or two late payment notations could at least affect the interest rate an individual is offered.

    This change could trip up many Australians and mean people are unnecessarily banned from credit due to simple billing mistakes, lost paperwork and other payment mishaps.

    A history of applying for the ‘wrong’ type of credit could also be detrimental and possibly pull down any credit score calculated on the individual.

     Nick Vamvakas

    Chief Risk Officer, ME Bank

    With the introduction of the privacy act more information will be recorded about a person’s credit history. This includes positive credit behaviours, which were never previously recorded and some negative behaviours that weren’t previously recorded such as late credit card repayments (previously only credit card defaults were recorded). Overall this new, more complete, approach gives credit providers a better picture of a person’s credit history and has significant benefits for people applying for credit. Their credit history will be more accurate and provide a truer and fairer reflection of their ability to manage the credit for which they’ve applied.

     Dominique Bergel-Grant

    Founder, Leapfrog Financial

    Without doubt there are changes around the corner that will significantly impact all those applying for credit after March 2014.  The changes to the Privacy Act will enable prospective lenders to know more about you than you probably even do.  From details about account repayment history, types of accounts and detailed credit information about the account status.

    This is far more detail than what they currently have access to and will ensure nothing unwanted slips through.  A big difference is the repayment history of up to 24 months being provided is a significant increase to the typical 3-6 months most lenders currently require.  So being well behaved with your credit will be even more important than ever otherwise you will find yourself needing to explain any inconsistencies which could lead to a loan application being declined.

     Heidi Armstrong

    CEO, State Custodians

    The changes to Australia’s credit reporting system will have a greater impact on those applying for credit. Not only will credit providers be able to see any repayment defaults, bankruptcies or past credit applications, but they will also have access to the past 24 months of your credit repayment history going back as far as December 2012.

    This can be either a good or bad thing, depending on your financial situation. If you are diligent with your repayments and always pay bills on time, it could help improve your chances of success when applying for credit. However, if you have been late or missed repayments in the past 24 months, lenders will be able to see this and may factor this into their decision whether to approve or decline your credit application. Therefore, it is more important than ever to make an effort to keep your repayment history clean.

     Steve Brown

    Director, Consumer Risk Solutions at Dun and Bradstreet

    The changes to Australia’s credit reporting system will improve the detail and accuracy of the information used to assess applications.

    For those applicants with a history of sound financial management, the additional information will provide a more detailed view of their creditworthiness. The addition of repayment history data will also allow individual’s with a previous credit slip-up to demonstrate they have rectified their credit position by making regular and on-time repayments.

    Equally, with provisions to record payments made five-or-more days late, changes to Australia’s credit reporting system mean that those people who regularly make late repayments will become more visible to credit provider.

    If you would like to know more about upcoming Privacy Law changes, visit our blog www.mycra.com.au/blog.

    Image: Stuart Miles/ www.FreeDigitalPhotos.net

  • Commercial defaults: don’t risk it with your small business

    Media Release

    small business creditCommercial defaults: don’t risk it with your small business

    12 September 2013

    Credit to fund small businesses can be difficult to obtain, and a credit expert warns it is important to stay under the radar when it comes to your credit file to ensure you are not defaulted when you need it most.

    CEO of national credit repair company, MyCRA Graham Doessel, says small businesses can sometimes find repayments a juggling act but when it comes to maintaining a clean credit file it is essential to make sure all accounts are paid on time.

    “Running a small business can be a bit of a juggling act especially if revenue isn’t consistent, but despite this, it is essential that systems are developed to ensure accounts are paid prior to the due date regardless,” Mr Doessel says.

    He says many people don’t realise the ramifications of paying accounts late. Whether it be a business account or a consumer account – if it more than 60 days late you will likely end up with a default on your credit file. Even one account in default could mean you are either refused credit altogether, or offered a much higher interest rate.

    “Many businesses can find the higher interest charges alone can set them back way too much to make expansion or starting up viable,” he says.

    “I have a current client trying to fight a mistake on his business credit file which has seen a $1,000 default hinder a $1.4 million loan. Although he has been offered a loan, the 2% interest rate increase for bad credit will mean he has to pay a staggering $28,000 per year in additional interest.”

    He adds, that defaults can be made quickly, with less protection for SME’s in the commercial landscape.

    “Although many Credit Providers adhere to the 60 days in arrears rule before placing a default on your commercial credit file, technically, they don’t have to. The normal protections consumers are afforded in the Credit Reporting Code of Conduct are not extended to commercial credit,” he warns.

    Despite the laws, many of the Ombudsman Services do encourage Credit Providers to give adequate written notice to remedy an account in arrears prior to listing a default.

    Ideas to minimise your risk of defaults

    1. Pay all accounts on time. You need to have systems in place whereby credit cards and all bills are paid on schedule. If the business is running behind, Creditors need to be contacted and payment plans possibly worked out before the due dates to best avoid a default listing on your credit file. Be aware, that repayments to licenced Credit Providers (loans, credit cards etc) which are more than 5 days late will be noted missed on your credit file and listed as a ‘late payment’. These remain on your credit file for 2 years.

    2. Ensure all accounts are paid to you on time. Chase up bounced cheques and failures to pay immediately.  Too many accounts left unpaid can leave you short and run your business into the ground if left to continue. Regard any client non-payment as potential risks to your credit rating.  Develop a tactful system for retrieval ahead of time – reminding clients of the risks to their credit rating by defaulting on payments to you. If overdue accounts go beyond 60 days, notify the account holder in writing you will be referring the non-payment to a credit reporting agency.

    3. Consider credit checks for all potential account holders. Anyone who requests an account of significant proportions could be required to submit a credit application before the account is instigated. This involves you running a credit check on them with one of the major credit reporting agencies.

    4. Regularly obtain a copy of your credit file – once a year is recommended to ensure it is all as it should be. If there are any discrepancies or listings which you believe should not be there, address them prior to needing the extra credit for your business. This will mean less stress for you. You can do this by visiting www.freecreditrating.com.au.

    5. Minimise credit enquiries. If you are not sure about your business’ credit health, run your own check before applying for new credit.  You should also minimise credit applications. Some lenders are rejecting loans for as little as two credit enquiries in 30 days, or six enquiries within the year – so it pays to only apply for credit you intend to pursue.

    6. Safeguard your consumer credit file. Business is touchy and subjected to many unknowns, but the family home and your consumer credit file should be kept protected. If some major clients go under, and payments are not made – who’s going to help fund your now over-extended mortgage? Not only can your credit rating be compromised for five years, but your spouses’ as well. Any new credit will be at sky-high interest rates. You might lose the business, and any opportunities to borrow again for business in the future, but worse, you might lose your family’s ability to borrow at good rates for a mortgage, personal loan, credit cards and even mobile phones.

    7. Monitor your accounts regularly.  If you are the owner of the business but not the person responsible for accounts, ensure you still have hands on knowledge of the business’ expenses.  Check accounts are being paid; check receipts and credit card statements regularly.

    Mr Doessel says in the current economic climate with businesses potentially more likely to pay accounts late, there has never been a more important time to protect your credit rating.

    “Choose your credit wisely, choose your clients wisely, and make paying your debts a priority – regardless of the size of your business,” he says.

    You can find more information on your credit rating at www.mycra.com.au.

    /ENDS.

    For further comment:

    Lisa Brewster – Media Relations Ph 3124 7133     media@mycra.com.au

    Graham Doessel – CEO MyCRA Ph 3124 7133     www.mycra.com.au   www.mycra.com.au/blog

    246 Stafford Rd, STAFFORD Qld

    Photos available on request.

    This Image: David Castillo Dominici/ www.FreeDigitalPhotos.net

  • Employee fraud: what could it cost your small business?

    Media Release

    employee fraudEmployee fraud: what could it cost your small business?

    2 September 2013

    When it comes to employee fraud, a national credit expert warns small businesses they are particularly vulnerable to “losing it all” if fraud strikes, and cannot afford to be complacent about checks and procedures regardless of business size.

    CEO of MyCRA Credit Rating Repair, Graham Doessel says SME’s can easily lose their good credit rating right under their noses if an employee chooses to pilfer funds.

    “Many SME’s run on credit, having a smaller amount of capital – and it can mean some months are a delicate balancing act to get accounts paid on time.”

    “Even a single instance of fraud can mean accounts go unpaid, posing a great risk to the business’ credit rating. In some cases it can also seep through to the owner’s personal credit rating which can also be tied up with the business,” Mr Doessel says.

    The Australian Financial Review reported last month that close to one in two Australian businesses reported at least one incident of economic crime in 2011, with 16 per cent of respondents suffering losses in excess of $5 million. (1)

    The AFR featured PricewaterhouseCoopers’ Global Economic Crime Survey, which has been undertaken every two years since 1999.

    The survey showed it’s rare that fraud is committed by someone outside an SME. In a small business, employees tend to be given control of cash, inventory and accounts receivable and there are few monitoring systems to check on them.

    “Operators of small and medium enterprises tend to believe, often incorrectly, that risk management to limit potential theft and fraud is too costly to implement. Other SMEs don’t have the resources to respond adequately to crime and can be heavily damaged, or even bankrupted, by a single incident,” it was reported.

    Mr Doessel says if the business owner is not made aware of the fraud right away it can lead to defaults on the business credit file or the owner’s credit file. The business can then face great difficulty obtaining any credit.

    “Most businesses can’t expand, they can’t buy vehicles, or even take out mobile phone plans once there are black marks on the company credit file,” Mr Doessel says.

    He goes on to say, that instances of fraud, as with any negative listing which shouldn’t be there, can be difficult for the individual or business to resolve.

    “The onus is on the credit file holder to prove the listing has errors or shouldn’t be there. Clients can often be given the run-around by Creditors, and there is less legal obligation on the Creditor in the commercial credit landscape,” he says.

    How To Prevent Fraud In Your Small Business     

    1. Reference Checks for Potential Employees

    ASIC Spokesperson Joanna Bird recently told Australian Broker that in a review of industry practice they found there weren’t enough businesses conducting thorough reference checks as part of pre-employment screening.

    “Nearly everybody did a police check, but in fact not everybody did reference checking,” she said. (2)

    2. Credit Checks for Potential Employees

    A Survey of Fraud, Bribery and Corruption in Australia and New Zealand published by KPMG earlier this year showed one of the top motivators for fraud was personal finance pressure. (3)

    Mr Doessel says employers should consider doing a credit check on potential employees.

    “A credit file check where appropriate, would certainly alert the employer to any major debts which could possibly provoke an employee to undertake fraudulent activity,” he says.

    Accountancy and Advisory firm William Buck also recently gave some insight into fraud prevention. Here are some ideas Director Grant Martinella offered to prevent fraud:

    3. Check financial statements for any adjustments.

    “Look out for any unauthorised accounting adjustments to financial statements and consider using software to report on any source data changes and discrepancies,” Mr Martinella told Business Insider Australia. (4)

    4. Be wary of key people who refuse to take annual leave.

    “Fraudsters may be reluctant to go on leave to avoid having someone else take over their responsibilities and look over their work while they’re gone.”

    “Enforce compulsory annual leave, segregate duties so people aren’t acting alone, and ensure that there are clear reporting channels,” Martinella says.

    SME’s who need assistance with their business credit rating following fraud can contact MyCRA tollfree on 1300 667 218 or visit their website, www.mycra.com.au.

    /ENDS.

    For media enquiries, please contact:

    Lisa Brewster – Media Relations  Ph 3124 7133     media@mycra.com.au

    Graham Doessel      – CEO Ph 3124 7133  

    http://www.mycra.com.au/  246 Stafford Road, STAFFORD QLD. Ph: 07 3124 7133

    MyCRA Credit Repair is Australia’s number one in credit rating repairs. We permanently remove defaults from credit files.

    (1) http://www.afr.com/p/sticky_fingered_employees_found_KPZjUqkaEcB8m8YhKHZatL

    (2)http://www.brokernews.com.au/news/breaking-news/employee-fraud-the-red-flags-you-need-to-identify-now-178606.aspx?utm_source=Australian+BrokerNews+eNewsletter&utm_campaign=bb8879c81a-ABNewsletter&utm_medium=email&utm_term=0_7af1e9f6de-bb8879c81a-43569498

    (3) http://www.kpmg.com/AU/en/IssuesAndInsights/ArticlesPublications/Fraud-Survey/Documents/fraud-bribery-corruption-survey-2012v2.pdf

    (4) http://www.businessinsider.com.au/five-signs-that-you-might-be-working-with-a-fraudster-2013-8

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