MyCRA Specialist Credit Repair Lawyers

Tag: credit enquiry

  • Credit enquiry scandal shows up faults with credit scoring

    credit enquiriesPress Release

    Credit enquiry scandal shows up faults with credit scoring

    20 March 2013

    Millions of Australians could potentially be unfairly rated during the credit reporting process with little to no education on how their score is arrived at, nor any chance to redeem a bad credit score, a consumer advocate for accurate credit reporting reveals.

    CEO of MyCRA Credit Rating Repair says a recent scandal over consumers being blacklisted from taking out credit because of too many credit applications – often which they have little control over, reveals a gaping hole where legislation is yet to meet current practice.

    “Before we allow consumers to get a ‘scoring’ based on their assessed potential for risk then we need to make sure the information we are using to calculate that score is both fair and accurate, and in some instances under the current system it is neither,” Mr Doessel says.

    These comments come after it was revealed on Channel 7’s Today Tonight on Monday that 5-6 million Australians are in the ‘credit dog-house’ simply because they have applied for finance.[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][i]

    The report revealed that excess credit enquiries are having a major effect on borrowers, and most don’t even realise they have credit enquiries on their credit report until it’s too late.

    Mr Doessel says credit enquiries are not always due to being refused an official credit application.

    “Sometimes banks can perform enquiries periodically on lines of credit, and another big issue is system generated enquiries through consumers investigating different credit products online,” he says.

    He says whilst in most cases borrowers have technically given permission to perform the enquiry, there is little education on the ramifications of making one.

    “Information on credit applications made stays on a person’s credit file for 5 years. But how many credit enquiries is too many, and over what period of time?” he says.

    The Today Tonight report absolves credit reporting agencies such as Veda Advantage, saying they simply hold the records.

    “It’s the current legislation that only allows negative information to appear on our credit records and loan applications are listed as negative,” Veda Advantage’s Belinda Diprose advises.

    But Mr Doessel says scoring systems such as the Veda Credit Score is far from just reporting.

    “Issuing a credit score goes further, calculating risk based on certain types of behaviours around credit and allocating a score accordingly which is used by lenders to assess whether the potential borrower is a good or bad credit risk. That’s more than reporting, that’s opinion, that’s making predictions,” he says.

    Mr Doessel argues that credit scoring should not have been introduced prior to implementation of the Privacy Amendment (Enhancing Privacy Protection) Act 2012 in March 2014, which allows for more comprehensive data on Australian credit files.[ii]

    “This new form of credit assessment should not have been introduced until comprehensive credit data was available to lenders, not just negative data. To be fair to consumers, an educated ‘opinion’ on credit-worthiness needs to be formed based on many more factors than what is currently available on Australian credit reports,” he says.

    In the meantime, he is calling for education to give consumers clear guidelines as to what constitutes a low credit score.

    “Consumers need to know how this score is calculated, what sort of information will be taken into consideration when they are given a credit score, and what they can do to prevent a score being so low they are refused credit, both in the current market and when comprehensive credit reporting comes into effect next year,” Mr Doessel says.

    Credit active Australians can check their credit file at no cost every 12 months to make sure they are not blacklisted unnecessarily. Go to http://bit.ly/My-Free-Credit-File for more information. If a credit enquiry was not authorised or was incorrectly listed, then they may have a case for requesting its removal.

    /ENDS.

    Please contact:

    Lisa Brewster – Media Relations media@mycra.com.au

    Ph 07 3124 7133 www.mycra.com.au www.mycra.com.au/blog

    MyCRA Credit Repair 246 Stafford Rd, STAFFORD Qld

    MyCRA is Australia’s number one in credit rating repairs. We permanently remove defaults from credit files. CEO of MyCRA Graham Doessel is a frequent consumer spokesperson for credit reporting issues and is a founding member of the Credit Repair Industry Association of Australasia.

     

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    [i] http://au.news.yahoo.com/today-tonight/money/article/-/16389927/ruined-credit-ratings/

    [ii] http://www.oaic.gov.au/privacy-portal/resources_privacy/Privacy_law_reform.html

    Image: Ambro/ www.FreeDigitalPhotos.net[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

  • 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.