MyCRA Specialist Credit Repair Lawyers

Tag: credit file check

  • 8 things you need to know before making a home loan application

    In the 21st Century, ensuring approval on a home loan application can be complicated. Not only are savings, income and debt level all taken into consideration, but also if the person has a bad credit history. We tell you 8 things you should take into consideration before submitting a home loan application.

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

    1. Savings.

    Today’s mortgage market is much more conservative, and you may require more savings than you did, say 5 years ago.

    People with a lower income or who have more debts may be required to save closer to 10% deposit -and should enquire with a lender on where they stand in the current market.

    2. Income amount.

    The amount of income required is generally determined by the amount of income earned relative to debts and expenses.

    So, the more you earn, and the fewer debts you have, the more you will be able to borrow. If you are on a lower income, it may be worth paying off existing debts before submitting a home loan application. Also, the more deposit you have saved, the lower the income requirements on the same loan.

    3. Stable employment.

    The lender will also want to be assured of a stable income – they want to see evidence of a stable amount with a stable employer.

    Generally lenders are requiring 6-12 months with the same employer. So if you’re thinking about buying a home, best to think twice about changing jobs, even if the wages are significantly better in the new position.

    4. Debts and Credit limits.

    The lender will generally assess your debt level to determine the amount you are able to borrow. Reducing your debt can increase borrowing power.

    ‘Debt’ also includes the credit limits which are present on any credit cards or line of credit loans you may hold.

    So if you have a credit limit of say $20,000 on your credit card, the debt amount on that card will be stated as $20,000, regardless of the actual amount owing on the card.

    With this in mind, it might be a good idea to reduce any credit limits on cards or loans prior to a home loan application.

    5. Credit file checks.

    The lender will perform a routine credit file check on you to make sure there are no negative listings. This can be a default, clear out, Judgment, Writ or bankruptcy which was placed on your credit file by a creditor.

    The most common type of negative listing is a default, which can be placed on your credit file if you fail to make repayments on any form of credit past 60 days. This includes unpaid telecommunications and utilities bills.

    Defaults and Judgments remain on your credit file for 5 years, with clear outs, Writs and bankruptcies showing for 7 years.

    Most of the major lenders will refuse to lend to you if you have a bad credit history of any kind. In fact, you would probably have difficulty even getting a mobile phone plan.

    6. Excess credit enquiries.

    Whenever a person other than you makes an enquiry on your credit history – that enquiry is recorded your credit file. Currently, Australia is under a negative reporting system, so there is no way of seeing on your credit report if the loan was approved or not, only that the application was made.

    Some lenders are refusing applications due to too many credit enquiries, such as two enquiries within thirty days or six within the year.

    Ensure when you enquire about any home loan, that the lender is not making an actual application on your behalf until such time as you want to make it official.

    7. Obtain a free copy of your credit report

    If you intend to purchase a home within the year you should request a copy of your credit report. Under Australian law, this report is free every 12 months.

    There are 4 credit reporting agencies in Australia, Veda Advantage, Dun & Bradstreet, Tasmanian Collection Services (if in Tasmania) and new entrant Experian. You can obtain your credit report from one or all of these agencies. The report will be mailed to them within 10 working days of the request.

    It is essential for you to know what is being said about you on your credit file before applying for a home loan.

    There is the potential for creditors to make mistakes with your credit file. So if you are credit active you should check your credit file, regardless of how diligent you believe you are with repayments.

    8. Repair bad credit history.

    If you find listings on your credit file that contain errors, or simply should not be there, current legislation allows you to have those inconsistencies rectified.

    Defaults can be amended and marked as paid if the account has been settled, but this may not be enough to ensure finance approval.

    Unfortunately bad credit history is not cleared by creditors unless you can provide adequate reason and lots of evidence as to why the listing should not be there.

    If you have neither the time, knowledge or patience for credit repair you can seek out a professional credit repairer who will be able to work on your behalf to negotiate with creditors to have the negative listing or default removed.

    A clear credit record will allow you to choose the best loan for you, with the best interest rate.

    Contact MyCRA Credit Repairs for help in getting your bad credit history sorted out – call tollfree on 1300 667 218 or visit our main website www.mycra.com.au.

    Image: vichie81/ 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.