MyCRA Specialist Credit Repair Lawyers

Tag: credit history

  • Brokers and clients disadvantaged by clients navigating the ‘minefield’ of credit reporting

    Media Release

    Brokers and clients disadvantaged by clients navigating the ‘minefield’ of credit reporting alone

    Brokers who don’t have contact with a reputable credit rating repairer to refer bad credit clients to, may be missing out on valuable commission through lost deals, and in some cases may also be doing their clients a disservice, says a leading credit rating repairer and advocate for credit reporting accuracy.

    CEO of MyCRA Credit Rating Repairs, Graham Doessel says whilst many people whose credit history shows up with defaults have obtained that default justly, there are also many whose credit file contains errors and omissions and he says those people should be given the chance to clear their name.

    “I would like to say it is as easy as calling the Creditor to sort out the mix-up, but in reality clearing bad credit is a minefield, and a credit rating repairer can be invaluable,” Mr Doessel says.

    Generally when a client presents to a broker with bad credit they have two options:

    (1) Send them packing to resolve the mix-up or to wait until the credit listing “falls off” their credit file in 5 or 7 years before they apply again.

    (2) Organise a non-conforming loan at a higher interest rate to absorb the risk associated with lending to those with bad credit.

    When faced with a credit rating error, Mr Doessel says the clients who are sent away may not always be able to resolve their credit reporting dispute themselves.

    “Credit reporting is governed by mountains of legislation across different industries, so it is not always about right or wrong, but how the letter of the law applies in each case. We have seen many clients who are defaulted despite doing the right thing and despite working actively to try and resolve the situation themselves,” he says.

    He says many brokers put credit repair in the “too hard” basket and prefer to steer their clients to the non-conforming market – at least for the first few years of the loan when they can then refinance.

    “There are a couple of reasons why a non-conforming loan will not always be the best choice for the client. Firstly, they can lose thousands on interest even over the first three years, and secondly with the market the way it’s been more home owners are stuck, finding they can’t refinance due to lack of equity in the home,” he explains.

    Mr Doessel wants to help educate brokers and consumers alike on some of the myths surrounding credit files:

    1. Consumers always know they have bad credit before they apply for a loan.
    There can be many reasons for people not to know they have bad credit until they apply for a loan. They may have moved, been hospitalised, been an identity theft victim or even been a victim of error with their creditor. If the client was not notified prior to the default, in many instances the listing has been placed on the credit file unlawfully, and should be disputed.

    2. Credit file listings are always correctly placed on credit files.
    Credit reporting mistakes can and do happen –but most consumers are unable to recognise credit file errors. Some estimates point to as many as 34% of credit files containing errors or omissions. [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]

    Credit reporting agency Veda Advantage recently admitted about 1% of material errors detected by their system alone.[ii] But many more may go undetected by credit reporting agencies, creditors and consumers until it’s too late and the consumer is refused a home loan.

    3. Credit file complaints are easily disputed.
    Some brokers assume if the listing is there – the client must be deserving of it. But in reality, once a listing has been placed on a credit file, it is very difficult for individuals to have removed. So even if the listing shouldn’t be there, most often people are forced to put up with it. Often they are told the listing can be marked as paid, but will not be removed from the credit file.

    4. If a Default or Clear-out is on the credit file it can never be removed prior to the end date.
    Some brokers assume credit repair must be a ‘con’, as in their experience listings are never removed. In truth, unless the client can show why the listing was placed unlawfully on the credit file it will not be removed. It is up to the client (or the credit repairer acting on their behalf) to show reason as to why the listing was placed unlawfully, and negotiate its removal.

    The process of credit repair involves an audit-like investigation of the entire case to determine, based on legislation whether the credit listing was placed unlawfully on the credit file. If this is determined, the credit repairer will formally negotiate the removal of the listing from the credit file on the client’s behalf.

    5. A bad credit client should be steered to the non-conforming market.
    If a broker considers duty of care to their client, and they believe the client should be able to obtain mainstream credit, except for bad credit history – then another step must be inserted in the process – deciding on the possible validity of the bad credit before providing non-conforming finance options to them.

    “As a successful broker in the non-conforming market for many years, with many cases I was left scratching my head as to why these perfectly suitable clients who had nothing wrong bar their credit rating errors did not have other options than to enter a loan at sky-high interest rates just to break in to the property market. That is precisely why I founded a credit repair business in the first place,” Mr Doessel says.

    6. Credit repair is a waste of money.
    If a potential borrower is able to have their unfair credit listing removed, they can reduce their interest charges by thousands just by entering a loan with a mainstream lender.

    On a loan amount of $350,000, a borrower would pay $487.62 more in interest each month over the first three years in a non-conforming loan at 9% interest vs the standard variable rate of say 7%.

    When we look at that in total, the borrower would be up for a staggering $17,554.34 more just in interest alone over those first three years.

    7. All credit repairers are the same
    Consumers do need to be aware there are some agencies out there who are happy to take money, but don’t add enough benefit to be of value over what an individual could do themselves. People looking for a reputable credit repairer should ask plenty of questions, do their homework on the company, and request some testimonials from past clients before they commit.

    /ENDS.

    Please contact:

    Graham Doessel – Founder and CEO MyCRA PH 3124 7133

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

    http://www.mycra.com.au/ www.mycra.com.au.blog

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

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    [i] http://www.smh.com.au/articles/2004/02/09/1076175103983.html

    (2) http://au.news.yahoo.com/today-tonight/latest/article/-/10670080/credit-ratings-check/

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

  • More positivity for housing: ABS Housing Finance figures continue to climb for September

    Good news again for the property market, with data from the Australian Bureau of Statistics recording another increase in Housing Finance figures. Some economists say Australians are starting to make the most of interest rate cuts. We look at the ABS Statistics, and look at the importance of credit file education to a possible new buyer’s market.

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

    Figures released today by the Australian Bureau of Statistics on September 2012 Housing Finance figures show owner occupied housing commitments rose 0.9% from August to 46,395, up from an upwardly revised 45,983 in August.

    An increase of 1.0% was predicted by economists.

    CommSec chief economist Craig James (featured in The Australian today) says the ABS data suggests home loan value could be on the rise.

    “The data shows that loan value is rising at a faster rate than the actual number of loans,” he said.

    “That suggests that there’s increased confidence by borrowers, or that home prices are edging a little higher.”

    Here is an excerpt from the ABS release:

    SEPTEMBER KEY POINTS

    VALUE OF DWELLING COMMITMENTS

    September 2012 compared with August 2012:

     The trend estimate for the total value of dwelling finance commitments excluding alterations and additions rose 0.7%. Investment housing commitments rose 1.1% and owner occupied housing commitments rose 0.5%.
     In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions rose 3.8%, with investment housing commitments rising 8.6%.

    NUMBER OF DWELLING COMMITMENTS

    September 2012 compared with August 2012:

     In trend terms, the number of commitments for owner occupied housing finance rose 0.5%.
     In trend terms, the number of commitments for the purchase of new dwellings rose 3.0%, the number of commitments for the purchase of established dwellings rose 0.5%, while the number of commitments for the construction of dwellings fell 0.3%.
     In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 19.3% in September 2012 from 18.6% in August 2012.

    Over the past six months, the Reserve Bank of Australia has shaved a full percentage point from the key interest rate. As a result, standard variable mortgage rates have on average come down by 55 basis points to 6.85 per cent.

    This seems to finally be making an impact on Housing Finance, with both August and September data showing a recorded increase in commitment numbers.

    The ABS reports that in original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 19.3% in September 2012 from 18.6% in August 2012. Between September 2012 and August 2012, the average loan size for first home buyers rose $400 to $289,300.

    As more buyers enter the market, we feel it is worthwhile to ramp up our education efforts around credit history. Many people do not know what a credit file is – many more don’t know the process for being listed with bad credit, and more again assume that if there was something amiss with their credit file, that they would somehow be informed. They don’t realise that the onus is on them to check their credit history on a regular basis (at least once per year) just to make sure that errors have not been made on the credit file. Errors can happen to anyone – from all walks of life.

    People may believe their credit history is clean, but creditors can and do make mistakes with credit reports, and often it is not until people apply for finance that they have any idea they have bad credit. At this time the process of investigation and complaint can be stressful and can sometimes mean the prospective borrower misses out on the home loan while the discrepancy is addressed.

    The process of clearing an unfair credit listing can sometimes be very time consuming – especially if the creditor has not cooperated with requests to supply documentation in a timely fashion, or the matter has to be referred to a third party for investigation.

    So the message is, if people are thinking about buying a home in the near future – they should grab a copy of their credit file, and make sure it has the “all clear” before they apply for finance, and before they get their hearts set on any particular home. This is free for all credit active Australians once every year and we encourage any home buyer to request a copy of their credit report. It takes 10 working days or for a fee to the credit reporting agency, it can be sent urgently. But what it does is give peace of mind – not only to the Purchaser, but to the Broker or Bank Manager, and in some cases a clear credit file can help get the deal over the line with the Agent and Seller.

    If there are any inconsistencies or out and out errors on the credit file, the advantage to getting those removed is generally thousands and thousands of dollars in interest saved. A clear credit file allows purchasers to capitalise on those interest rate cuts with the mainstream lender of their choice rather than being forced into the non-conforming sector at much higher interest rates.

    To find out more about the benefits of using a credit rating repairer to dispute credit listings, see our recent post How Do I Fix My Bad Credit? Or contact a Credit Repair Advisor at MyCRA Credit Rating Repairs on 1300 667 218 or visit the main site for more information www.mycra.com.au.

    Image: Idea go/ www.FreeDigitalPhotos.net

  • First home owners trapped in their current home loan and locked out of refinancing

    Despite massive interest rate cuts, and the positive jump in the number of first home buyers entering the market, those that are looking to refinance are getting rejected at a rate of knots due to reduced equity in their homes, according to JP Morgan. Banks are being choosy about who they lend to, and those that are trying to refinance their first home are doing it tough. They say this will dampen our housing market for some time. We look at this issue, and other issues around credit history which may impact on a successful refinance.

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

    The ‘JP Morgan Mortgage Industry Report Vol 16′ focuses on recent mortgage approvals data. It paints a rather gloomy view of our housing market in Australia.

    The executive summary of the report details that although lower mortgage rates have meant borrowers have been able to reduce debt, the cuts are not spurring on mortgage approvals.

    “Interestingly, not only are the volume of approvals weak, but the average value of approvals is declining. While this may simplistically be dismissed as a broader indication of stalled house prices, we conclude that a degree of tightness for refinancings is evident – particularly for First Time Buyers,” it is reported…

    “Growth in the average value of each form of owner occupied approval is now in negative territory. This is the first time this has occurred since data became available in the early 1990’s! One key reason we offer is a significant reduction in the LVR at which refinancings are taking place.”

    Housing credit growth is at its lowest level since the mid-1970s, and JP Morgan is expecting low rates of credit growth to continue or to at worst decline rather than do a “quick rebound off the back of lower interest rates.”

    They say first home owners are facing the bulk of the rejections. They are increasingly finding themselves trapped in their current home loan as banks refuse their applications for new ones.

    “Specifically they haven’t absorbed enough loan devaluation ratio in terms of the house prices being flat and they haven’t had sufficient time to actually make a dent in the mortgage through repayments,” Scott Manning, Banking Analyst with JP Morgan told ABC’s The Business last week.

    This report is in keeping with RP Data information released in July that showed more home owners were slipping into negative equity. The Sydney Morning Herald reported in it’s story ‘More homes slipping into negative equity as prices fall’ that in the three months to December last year,  6.4 per cent of homes were valued at less than their purchase price, a rise of 1.5 percentage points.

    “Within the 6.4 per cent, 27 per cent of people who owned a home for one to two years had properties worth less than their purchase price.

    By contrast, only about 1 per cent of owners holding their property for between nine and 10 years were in the same situation, according to property analysts RP Data.

    So with many consumers experiencing reduced equity which is leading to more rejections by lenders, the other factor that comes in to play is rejection for refinancing because of bad credit history.

    Surprise bad credit that prevents refinancing

    Many times people don’t know they have bad credit history until they apply for finance.

    Bad credit history can ruin plans to refinance even if people think they have been up to date with all of their repayments – due to errors or inconsistencies on the credit file.

    Phone companies, utility companies and stores can all default consumers for late payments. The consumer may or may not be aware this has occurred (although they should be) and it may or may not be a legitimate listing (but it should be). Yet once that default, or other credit listing is placed on the consumer’s credit file, they are locked out of credit for the term of the listing – between 5 and 7 years – even if they have plenty of equity in their home.

    This can be a valid reason why people can apply to refinance and be declined, despite being able to demonstrate consistent repayments on their current home loan.

    If banks continue to err on the side of caution with their lending criteria – then a clean credit file will remain essential to meeting any risk assessment a bank can put up.

    So how many credit files contain errors? The volume of credit file errors on Australian credit files is uncertain.

    A spokesperson from credit reporting agency, Veda Advantage 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.

    And the real numbers? They may be somewhere in between.

    Approximately 63% of the incoming clients with MyCRA Credit Rating Repairs 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.

    Listings such as defaults, writs, Judgments and clearouts are not removed by creditors unless the credit file holder can provide adequate reason and lots of evidence as to why the listing should not be there.

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

    If you need help with credit repair call us on 1300 667 218 or visit our main site: www.mycra.com.au.

    Image: YaiSirichai/ www.FreeDigitalPhotos.net

    Image: David Castillo Dominici/ www.FreeDigitalPhotos.net

  • Consumer groups push for changes to new credit laws

    In a final attempt to plead for correction of what many are calling some glaring mistakes for consumers within Australia’s new credit laws, a coalition of consumer groups is urging the Federal Government to make some changes before they pass the Privacy Amendments (Enhancing Privacy Protection) Bill 2012. We look at what this group is proposing, and how the new laws, if they are passed as is, could affect you and your credit history.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs

    A coalition of consumer groups is hoping the Federal Government will make some changes to their new credit reporting laws prior to the Bill’s passing by both houses. One aspect they are opposed to is the minimum debt amount for credit listings – which currently stands at $100 .Various recommendations to increase the minimum amount were submitted to The Senate Legal and Constitutional Affairs Legislation Committee recently. Consumer groups believe the minimum should be increased to $500.

    The consumer groups are: Financial Counselling Australia, Australian Privacy Foundation, Consumer Credit Legal Centre NSW, Consumer Action Law Centre

    Here is an excerpt from the group’s media release, which featured on Financial Counselling Australia’s website Small debts lead to big problems:

    Spokesperson Kat Lane of Consumer Credit Legal Centre, said ‘under the current proposal someone’s ability to access a home loan could be ruined by one overdue electricity or phone bill.’

    ‘It’s easy to fall 60 days behind on an energy bill—it could be something as simple as the bill being sent to the wrong address or the account holder being away from home for an extended period. I don’t think many people would think this should affect someone’s ability to get a home loan,’ said Ms Lane.

    ‘If the amount for which someone could have a default listed on their credit report was increased to $500, people would be far less likely to be overly penalised for one overdue bill or for making one simple mistake.’

    Ms Lane said many small debts listed on credit reports were utility or phone debts and didn’t necessarily reflect a person’s suitability for credit. She also said that smaller debts, such as phone or utility debts, are often disputed by consumers.

    ‘We’d hate to see someone’s credit history affected because of an outstanding bill which they don’t even owe. Billing mistakes do happen and, as the Government’s plan currently stands, these small mistakes could have big consequences.’

    The group is also concerned about the additional information which will be available to lenders once the new laws are introduced, and particularly repayment information. They recommend the Government do more to educate consumers on their rights and obligations under the new laws:

    ‘If comprehensive credit reporting is introduced, Government and industry needs to make efforts to explain the new regime to consumers, especially that repayment information such as whether you repay your loans on time each month will be now listed on credit reports, and consumers’ rights to make complaints if there are disputes,’ Ms Lane says.

    We agree with the group’s proposals in the interests of consumer rights. The Government must do more to educate consumers on their rights if they are going to insist that more information about them be made available to lenders. In my experience, many consumers collectively:

    1. Do not know they can apply for a free credit check every year.

    2. Do not know that their credit file could contain errors and that they are responsible for ensuring their credit file accurate.

    3. Are not finding out they have credit listings in many cases until they apply for major credit and are refused.

    4. Are suffering mistakes with their credit listings which they have very little knowledge of how to rectify – this can go from a disputed bill, right through to blatant mistakes such as wrong names and wrong addresses.

    5. Do not know that if they pay a bill late in the very near future, that this could impact their ability to obtain.

    6. Have had very little explanation from the Government on precisely how correcting credit file mistakes will be made easier with the new credit laws

    We wait in hope that many of the current issues will be rectified following the introduction of these new credit laws. In the meantime, we will continue to try to educate consumers on how to navigate Australia’s credit reporting laws, and continue to insist on credit reporting accuracy by contesting disputable credit listings on behalf of our clients though our business of credit repair.

    For more information on credit repair, contact a Credit Repair Advisor on 1300 667 218 or visit our main website www.mycra.com.au.

    Image: renjith krishnan/ www.FreeDigitalPhotos.net

     

  • ID scanners in nightclubs are boosting the risk of ID theft says Privacy Commissioner

    Their purpose is to crack down on crimes of violence in pubs and clubs. But according to the Privacy Commissioner, an increasing number of complaints have been made to his office about the use of ID scanners in licensed venues. We look at what the issues are with ID scanners and whether your personal information is safe to hand over.

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

    It’s Friday night, you’re heading out to meet a group of friends in a nightclub. You head to the door, and are asked to hand over your ID to be scanned in to the venue’s ID scanner. Do you do it? Do you ask what’s happening with that information? Or do you merely let them whisk it through – knowing you’re not one of the troublemakers they’re looking for, and happily meet your friends in the club?

    Most young people would just hand over their ID, and this technology is being used in plenty of venues around Australia – with the intention of finding those holding fake ID cards, or those patrons who have been ‘banned’ or ‘flagged’ as unwanted.

    But many are calling for action over the use of identity scanners, because of the increase in risk of identity crime.

    Privacy Commissioner Timothy Pilgrim says there are a number of issues and risks associated with using ID scanning for this purpose.

    “If organisations are going to require to collect that information for reasons like that, it needs to be very clear at the point of entry that people will be asked for that information,” he told ABC’s World Today yesterday.

    “And people need to be told what will happen to that information once they hand it over. How is it going to be kept? Is it going to be kept securely? Is it going to be kept for a limited period of time, and who else may get access to it?

    “People have the right to know these things.”

    Mr Pilgrim says the use of ID scanners at pubs and clubs is increasing the risk of identity crime.

    “The more and more we’re being asked for information, the more and more it’s being stored in databases,” he said.

    “It leads to almost a honey pot sort of situation, where people who have malicious intent-criminal groups, for example, can see value in breaking into those systems.”

    The Privacy has been given new powers of penalty for businesses which breach privacy regulations, in the Privacy Amendments (Enhancing Privacy Protection) Bill 2012, which is currently before the Senate. This will include allowing him to penalise businesses which breach privacy regulations.

    “I would hope that organisations take the responsible step of putting in place proper protections for people’s personal information,” he said.

    “However, if there are serious and repeated breaches of the Act, I won’t hesitate to use the powers that I will have.”

    However, Victoria’s acting privacy commissioner, Dr Anthony Bendall, estimated more than 90 per cent of Australian businesses were not covered by the regulations in the Privacy Act because they had an annual turnover of less than $3 million.

    He says Privacy principles were unclear on businesses’ obligations if the information is compromised.

    ”If you do hold personal information and [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”][it is] breached in some way you’re not required to notify people that’s happened, and if it’s something like your licence there’s a good reason you should be telling them and to be taking steps to helping patrons protect themselves,” he told The Age on Sunday.

    Here’s more from The Age story, ‘ID scans raise privacy fears’:

    ID scanner company Scannet gives venues the rights to their own databases, and allows them to share the photos – but not the licence details – of banned patrons with other venues.

    Scannet director Joel Sheehan said it had 45 systems operating in Australia since it began selling them last year.

    Mr Sheehan said machines were password protected, with patrons generally more willing to scan their licences at clubs and pubs now.

    ”Now people that aren’t troublemakers that want to go out and enjoy themselves are all for it,” he said. ”At the end of the day the system’s voluntary, they don’t have to have their ID scanned as a condition of entry but at the same time if somebody’s not going out to cause trouble they shouldn’t have any problems having their ID scanned.”

    He said ID scanners had had a deterrent effect in clubs and pubs, as venue owners could pass on records to police of violent customers. He credited the machines with improving the safety of nightlife in Newcastle, where the company launched…

    While the Scannet website says the machines can help venues ”forecasting future business”, Mr Sheehan said that it was up to venues to comply with the Privacy Act and avoid abusing customers’ details.

    Australian Privacy Foundation board member Dr Katina Michael, said ID scanners were not effective in detecting fake IDs or deterring violent behaviour but put the majority of people at risk of identity fraud.

    ”When you’re talking about private entry to pubs and clubs … they may turn personal information into ones and zeroes at the back end and these stored identities in the future can be stolen … How do you reclaim your identity?”

    Some important points have been made here.

    1. When we are told identity crime is on the rise and is fast being used as part of the ‘repertoire’ of criminals around the world – why should people be parting with personal information unnecessarily? Especially when that information is a direct copy of an identifying document?

    2. It’s not a matter of crime groups not having the capabilities to hack into these databases…but more that it is not worth it…yet.

    3. If a data breach did occur, would those small businesses using the scanner even be required to be subjected to the big stick of the Privacy Commissioner?

    So what could happen if someone misused your identity? Your name could be attached to criminal activities; fraudsters could request tax or Centrelink payments on your behalf, as well as taking out credit in your name.

    If you have credit taken out in your name, you will often unknowingly incur debts with Creditors issuing defaults against your name on your credit file. People could be chasing you for credit you didn’t initiate, and if you apply for credit in your own right – you will be refused. This will continue for 5 years while you have bad credit.  You will be locked out of mainstream loans, credit cards and even mobile phone plans. So it’s important to protect your good name and prevent bad credit through fraud.

    My advice? Think twice before you scan your ID in next time you’re clubbing. If it was me, I would say no, or go somewhere else 🙂 Because you do have something to hide, and that’s your personal information.

    For help recovering your good credit history following identity theft, contact MyCRA Credit Rating Repairs on 1300 667 218 or visit our main website www.mycra.com.au.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

  • Are you ready to buy a home? Read this first

    Saving for a home? We tell you what you might need to know to put you in the best position to get the best loan out there for you. We show you what the lenders might be looking for, and how they calculate risk by looking at your credit history.

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

    In the 21st Century, being approved for a mortgage is a complicated affair. Not only are savings, income and debt level all taken into consideration, but also how your credit rating appears. It is all about risk calculation. The lender is gauging the likelihood you will default on your repayments. Banks have tightened their belts in the wake of the global financial crisis, so risk assessment plays a big part in home loan approval.

    8 things you need to know before you apply for a home loan

    The first three on the list are generally viewed together. The trifecta of savings, income and debts….

    1. Savings.

    Many people are saving 5-10% deposit prior to applying for a home loan. In many areas of Australia houses are so expensive this can take years to achieve. In fact, it was revealed in The Australian newspaper last month, it takes the average first home buyer in Australia a long five years to save up enough deposit for a home.

    In the same paper today in the story ‘Savings the key to first home – survey’ we see that most buyers are in fact saving up to 10% deposit before entering the market:

    RAMS head of brand and marketing Chris Thornton said first home buyers appeared to be saving more now for a deposit than in previous years.
    “A few years ago deposits were around five per cent for the average first homebuyer, and now it’s often more than 10 per cent that people are saving for,” he said.

    “People are really very serious about saving before they jump in.
    “In the past, people have really squeezed themselves to get over the line, but now, they’re just being a bit more cautious.”
    Living with parents and using high-interest savings accounts appeared to be key in the savings process, Mr Thornton said.

    If your income isn’t high or if you have more debts you may actually require a higher deposit of say 10% to ensure approval.

    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 have a lower income, it may be worth paying off existing debts before applying for a home loan. Also, the more deposit you have saved, the lower the income requirements on the same loan.

    According to Homeloanfinder.com.au in its article ‘How Much Salary Should You Have for a Home Loan,’ lenders use two different formulas to determine how much people can borrow:

    1. Front end ratio. “The front end ratio method will determine how much of your income will be used on the repayments of the home loan. Most people will agree that when using this method you should not exceed 28% meaning only 28% of your income should be used paying off your home loan.”

    2. Back end ratio. “The back end ratio method will consider all debts when determining how much money you will have free to pay off the loan. When using the backend method, most people will agree that you will only want about 36% of your income going on debts and expenses,” the article says.

    3. Debts and credit limits

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

    Part of this debt calculation also includes the credit limits which are present on any credit cards or line of credit loans you may hold. This credit limit will be used to determine the debt amount based on the amount of money you have access to, rather than the actual amount the loan or card currently has owing on it.  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 – even if the actual amount you owe on that card is only $5,000.

    So seek to reduce the credit limits on any cards or loans prior to applying for a mortgage.

    4. Stable employment.

    Generally lenders are requiring 6-12 months with the same employer. So think twice about changing jobs if you also want to buy a home in the future, even if the wages are significantly better in the new position.

    5. Credit checks.

    When you put in your application for a home loan, the lender will perform a routine credit file check on you to make sure there are no adverse listings present. An adverse listing can be a default, clear out, Judgment, Writ or bankruptcy which is placed on a person’s credit record by a creditor.

    The most common type of adverse listing is a default, which can be placed on a person’s credit file if they fail to make repayments on any form of credit past 60 days. This includes telecommunications and utilities bills.

    Defaults need not be for big amounts – late payments on bills for as little as $100 can be listed on people’s credit files. Defaults and Judgments remain there for 5 years, with clear outs, Writs and bankruptcies remaining for 7 years.

    Any adverse listing, even an unpaid phone bill will have a huge impact on a person’s home loan approval. Most of the major lenders will refuse to lend to someone who has an adverse listing. In fact, that person 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 record – that enquiry is recorded against your credit file. Currently there is no way of seeing on someone’s credit report if the loan was approved or not, only that the application was made.

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

    If you decide to shop around for the best deal, beware of excess credit enquiries. You could find too many enquiries can mean you blow your chances of approval – even if you would have been approved for every deal. So while it is great to talk a variety of brokers or lenders prior to making an application, you must stress to them that they are only gathering information and are not wishing to make an application until you have decided on a lender.

    7. Obtain a credit report

    If you intend to purchase a home within the year you should request a copy of your credit file. This report is free for the credit file holder every 12 months – and tells you what the lender will see about you when you apply for credit.

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

    There is the potential for creditors to make mistakes when adding credit listings to credit files. So regardless of how diligent you think you may have been with your repayments, it is important to get hold of a copy prior to applying for a loan.

    Adverse listings can sometimes occur due to identity theft; some people are caught in issues over separation from their spouse; some have been disputing the bill which went to default stage and many people are just victims of the fallout from inadequate billing procedures – wrong names, wrong addresses errors with creditor computer systems, and sometimes human error.
    Many times people are unaware they have adverse listings on their file until they apply for a home loan. Unfortunately at that time it can be stressful, and they can lose the home, or be forced to choose a different loan with a higher interest rate.

    8. Dispute any inconsistencies on your credit file.

    If you find inconsistencies on your credit file, or a credit listing which is wrong, unfair or you believe it simply should not be there, current legislation allows for you to have those inconsistencies rectified.

    If you have settled the account, it can be updated to ‘paid’ status, but this may not be enough to ensure finance approval.

    Credit listings are not removed by creditors unless you can provide adequate reason and lots of evidence as to why the listing should not be there. Credit repair also requires knowledge of the legislation and perseverance. But for those people whose financial freedom is hindered because their credit file contains errors, it is a point worth fighting for.

    Most people have neither the time nor skills to get up to date with the full barrage of credit reporting law if they want to fight a credit listing which has been placed on their credit file.  They are also unwilling or unable to attempt to negotiate with creditors on their own behalf.

    Often a credit repairer is the best person to give you the best chance of having inconsistencies completely removed from your credit file, because similarly to trying to fight your own case in Court, if you don’t get it right, often you don’t get another chance to clear your name, and can be stuck with the bad credit for the term of the listing (5 to 7 years depending on what it is).

    A clear credit record can allow you the option to choose the best loan to suit you, with the best interest rate so it is vital it reads as best as possible to allow as many options as possible – and ultimately save you money.

    For more information on credit repair, contact our Credit Repair Advisors on 1300 667 218 or visit our main site www.mycra.com.au.

    N.B. This post is intended as information only, and should not replace seeking professional financial advice for your situation.

    Image: digitalart/ www.FreeDigitalPhotos.net

  • Carbon price scam warning for Australians. Advice to protect your good credit history

    The ACCC’s SCAMwatch has released a warning for Australian consumers and businesses about carbon price scams. Fraudsters are out there trying to pilfer personal information and banking and credit card details from unsuspecting recipients under the guise of pretending to be helping them recover carbon credits and compensation. We explain what this scam is in detail, and how your credit file could be compromised.

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

    Carbon price scammers are out in force again. The scam may come in a number of forms, targeting consumers and businesses across the country.

    Here are some examples for you to look out for provided by SCAMwatch:

    • People are telephoned and asked to provide their bank account details to a caller claiming to be from the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA). They are offering a grant for mortgage assistance under the Federal Government’s Household Assistance Package of up to $100,000. These offers are false.
    • People have had phone calls seeking their personal banking details to pay carbon ‘tax’ compensation into their bank account – these are likely to be a scam.
    • Scammers may also know people’s names, addresses and phone numbers and may try to make an appointment to visit them in their home.
    • Scammers may set up fake websites which look very similar to official Australian Government websites. The sites may ask people to enter personal or financial details, or offer to sell people fake carbon credits.

    Here is how SCAMwatch recommends consumers and businesses protect themselves from these scams:

    Protect yourself

    The Australian Government will never call you to ask for your bank account details or to receive the Household Assistance Package. Government services are never paid via money transfer services, nor will they ever ask you to send money this way. The Australian Government website www.australia.gov.au is a safe portal for finding government services.

    If you receive a phone call or letter asking for personal information such as your Tax File Number, Veteran’s Affairs client number or banking details, do not answer straight away. Contact the Australian Taxation Office on 13 28 61 or your nearest DVA office on 133 254 (or 1800 555 254 if in regional Australia) to confirm that the source is legitimate.

    Never provide or confirm your personal or business details over the phone (including banking details or identification numbers) unless you made the call using contact details you found yourself and you trust the information.

    If you think that a call might be a scam hang up and check by using official contact details which you have found independently such as through a phone book or online search. Never use phone numbers, email addresses or websites provided by the caller.

    Never enter your credit card or banking details on a website unless you have checked it is authentic and secure. Legitimate websites which ask you to enter sensitive personal or business details are commonly encrypted to protect your details. A secure site is usually identifiable by the use of “https:” rather than “http:” at the start of the internet address, or by a closed or unbroken key or padlock icon at the bottom right corner of your browser window.

    If you are a business, make sure you only deal with people you know and trust. Avoid having a large number of staff authorised to make orders or pay invoices. This will reduce the risk of your business paying for something that it is not required or is not legitimate.

    If you think you have provided your account details to a scammer contact your bank or financial institution immediately.

    Further to this, if people think they may have provided personal information to scammers then they may be vulnerable to identity theft.

    Apart from contacting their bank, here are three more things which are imperative for people to do if they think they might be vulnerable to identity theft:

    1. Contact Police. They can take some information about what happened and file a report – which you may need later if you do find your accounts and or your credit history compromised.

    2. Request a copy of your credit file. Check that everything is up to date, addresses are correct for you, and that there are no suspicious entries – like strange credit enquiries, or loans you have no knowledge of.

    3. Contact the Credit Reporting Agencies. Contact Veda Advantage, Dun & Bradstreet and Tasmanian Collection Services (if in Tassie). Let them know that you may be vulnerable to identity theft. They should be able to alert you to any new entries if they arose that could point to someone attempting misuse your good credit history.

    You may also wish to contact the ACCC to report the scam.

    If you are having trouble recovering your ability to obtain credit following identity theft, we might be able to help. Contact a Credit Repair Advisor on 1300 667 218 to discuss your circumstances.

    Image: Stuart Miles/ www.FreeDigitalPhotos.net

    Image 2: David Castillo Dominici/ www.FreeDigitalPhotos.net

  • Debt Struggles Plague Queenslanders and threaten their credit history

    Queensland is according to those in the know, still experiencing the economic implications of disaster following the recent floods. Ratings agency Fitch has released its latest study which still shows the State as the worst-performing in the nation. We look at why this may be occuring, and the ramifications of mortgage delinqency for the credit file.

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

    A mortgage ‘delinquency’ – is classified as such when a borrower is at least 30 days behind in repayments. According to Fitch, Queensland has more delinquencies than any other state in Australia.

    According to The Australian yesterday, Queensland has six out of the 10 worst-performing regions in the nation led by Ipswich, Gold Coast east and west, Logan City, Caboolture Shire and the Sunshine Coast, which has experienced major property market “volatility”.

    It also reports Queensland has the highest rate of 90-day delinquency in the country (mortgages about to default) – that rate is 0.78 per cent vastly more than the national average of 0.63 per cent.

    Fitch analyst James Zanesi said the Reserve Bank’s interest rate cuts in May and June would help ease the mortgage stress but the benefits were yet to be felt by home owners.

    Fitch estimates there is a four-month lag between rates being cut and troubled mortgages starting to improve.

    Mr Zanesi said the unemployment rate was one of the most important factors in directing the future of the property market and mortgage stress. The Fitch report showed the Western Australian market was performing well, with the state’s delinquency rate below the national average.

    According to a story Borrowers Struggling in tourism areas in the Brisbane Times, the large proportion of Queensland arrears also has to do with investment and tourism in sea-side suburbs along the east coast.

    Here is an excerpt from that story:

    RP Data research director Tim Lawless said the biggest falls in the ”lifestyle” market had occurred in Queensland and NSW.

    Prices of units in Cairns have fallen 22.2 per cent from their peak, while units on Victoria’s Surf Coast have lost 6.8 per cent.

    ”All these markets really have quite a similar performance in the sense that we’ve seen some material declines in values,” Mr Lawless said.

    The ongoing sharemarket slump has also choked off housing demand from some Australian retirees, many of whom have deferred plans to retire on the coast, he said.

    ”All those people that were aspiring to put their feet up at the Gold Coast and retire, a lot of them are rethinking because they’ve seen a halving of their share portfolio and their retirement savings aren’t what they used to be,” Mr Lawless said.

    The ongoing weakness in beachside regions suggests the poor performance of regional tourism is hurting the value of holiday home investments.

    On the Gold Coast, for instance, Fitch analyst James Zanesi said many of the borrowers who were falling behind on their repayments were investors, rather than owner-occupiers.

    ”When house prices are going down you might have a borrower who is trying to hold onto a home because they don’t want to make a loss.”

    For investors – a housing market slump can significantly hurt their chances of staying in the clear with their credit file. But it often comes down to decision making.

    When property prices go down and buyers are scarce, many struggle with repayments. Add perhaps a little drop in employment in an area meaning perhaps rental rates come down when more people choose to live where the work is, and you have a property worth less, with no tenant or rental returns less than than forecasted. Many investors feel they are in a no-win situation – so they figure the best thing to do is wait and cross their fingers for improvement.

    But just as I advise families struggling to make repayments on their residential home – burying your head in the sand about debts is never the safest option.
    Anyone whose mortgage has gone into arrears has a serious problem if they can’t make the repayments. They have to look the situation square in the face – without pride getting in the way and make some tough decisions on what to do next.

    For investors, it might mean cutting their losses and selling for less – yes less than what they purchased the home for. If the alternative is to suffer bad credit from mortgage arrears – then it can often be the kindest option. When the opportunity arises they can easily re-enter the property investment market without any credit blemishes. If they wait around for the bank to take the home, not only will there be defaults against their name, but there could also be a bigger debt from the bank once costs are incurred.

    For those families struggling to pay the mortgage on their residential home, it is a similar issue. If the reason for arrears is simply due to unemployment or illness, the family needs to contact their lender and attempt to work out a variation on their repayments – preferably prior to any arrears – and certainly prior to a default. See more on how to apply for a financial hardship variation with your lender.

    If the problem gets bigger, less temporary, then the best thing for them could be to sell. It is certainly preferential to going Bankrupt and having their credit history scarred for life. It is also better than facing 5 to 7 years without access to credit through having a default or similar listing noted on their credit rating.

    Defaults – which are noted after a repayment is more than 60days in arrears effectively destroy a person’s credit rating for 5 years. They are not only refused a home loan, but most mainstream credit including mobile phone plans. It’s pretty serious.

    Anyone who is finding it hard to meet mortgage repayments should contact creditors and attempt to work out a payment plan.

    Most banks want to work with people to help them out of a rough patch. But if they fail to contact, and fail to pay, they will be defaulted.

    Image: Kittikun Atsawintarangkul/ www.FreeDigitalPhotos.net

    Image 2: jscreationzs/ www.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

  • 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

  • Experian given green light by ACCC to enter Australian credit reporting

    Credit active individuals will have yet another company to contact when obtaining their credit history, and it will be as important as ever for people to check their credit file regularly.

    There is a new player in the credit reporting game, and it has some of Australia’s biggest lenders as its shareholders. Back in May, we blogged about the possibility of U.K. giant Experian entering Australian credit reporting, and speculated on what the issues may be for credit file holders in this country.

    Today newly appointed ACCC Chairman, Rod Simms announced his approval of Experian’s entrance into the Australian market. The Sydney Morning Herald ran a story titled Experian is allowed to report for duty. The article says Experian will challenge the other two major credit reporting agencies, Veda Advantage and Dun & Bradstreet for Australia’s major credit reporter.

    “The Australian Competition and Consumer Commission chairman yesterday decided there would be no substantial lessening of competition if Experian became the third sizeable in the Australian market – even if the big four banks and two other big US-backed lenders (Citigroup and GE Capital) are minority shareholders.

    Veda and the Dun and Bradstreet group have been the big players until now, and the banks are among their largest customers. There was a fear that the banks now have a financial incentive to put all their business through Experian, or at least choke off the supply of customer credit information to service providers that will in future be competitors.

    Sims and the ACCC accepted the banks’ argument that their backing of a new entrant to the market in Experian was in fact designed to increase competition by adding some pricing tension for services,” the article says.

    So where do consumers stand amongst this change? According to the ACCC, they are in an improved state. They acknowledged Experian’s argument that the benefits to having a new credit reporting agency like Experian, is the greater competition for accuracy and efficiency that will result.

    In addition to this, Australia’s move to new positive credit reporting laws will be enhanced by a company like Experian which is experienced in this type of data collection in the U.K.

    But what about the accuracy of credit reporting – will this be enhanced?

    Currently, there are several pieces of legislation, including the National Consumer Credit Protection Act and the Credit Reporting Code of Conduct 2009 which have gone a long way to improving the accuracy of credit reporting, by imposing tougher penalties for creditors who don’t comply with the Acts. The ACCC Chairman, in all likelihood probably found that legislation was strong enough to combat any conflict of interest that could have resulted from having the creditors also being minor shareholders in the credit reporting agency.

    Whilst Experian will be bound to comply with this legislation as the other agencies are, the onus is on the consumer to check the accuracy of their credit report. This is where the system could fall down – through simple lack of public education. Yearly credit file checks are currently not in abundance for most credit active individuals. 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 if they feel there are errors on their credit file.

    Current statistics from Choice Magazine from 2004 point to up to 34% of credit files in Australia likely to contain errors.

    What is concerning, is that many creditors are getting away
    with not complying with Australia’s strict credit reporting legislation because consumers are simply not checking their credit file for errors. People are only finding out about any defaults, writs or judgments on their file when they apply for credit. This guarantees them an automatic decline with the bank and leaves them angry and stressed if they feel the listing should not be there.

    If more was done to educate consumers as to their right to check their credit file for free every year, then people would have time to repair any errors when it is not urgent. It could also increase pressure for creditors to enhance the accuracy of credit reporting.

    Is there a conflict of interest in terms of accuracy when many major Australian creditors will be small shareholders in the credit reporting agency? The ACCC found this was not the case.

    Currently people can obtain a copy of their credit file for free every 12 months from one of the Australian credit reporting agencies, Veda Advantage, Dun & Bradstreet or Tasmanian Collection Services.

    We recommend everyone should be concerned about the accuracy of their credit file. A yearly check should provide a picture as to its accuracy, and allow them the opportunity to redress any errors which present on their file prior to needing credit.

    And for borrowers whose lender requires a credit check to
    secure finance? We predict their application fee just got more expensive with the introduction of the new agency – potentially paying for three or four credit reports instead of two to three.

     

  • Caught affluenza? How it can affect your credit rating health

    Affluenza is a disease of the 21st Century that can make us sick, and it can make our credit file sick with it –pulling us into a crazy cycle of spending and debt. Many of us are struggling to stay happy under a pile of ‘things’ and a pile of debt.

    The Wikipedia explanation of affluenza refers to it as “a painful, contagious, socially transmitted condition of overload, debt, anxiety and waste resulting from the dogged pursuit of more.”

    It is the disease of consumerism and it is being fuelled by big corporations urging us to buy more, persuading us with clever advertising aimed at selling to our emotions. It drives us to work crazy hours leaving no time for ourselves and our families. It drives up the mental health problems, the suicide rates, the divorce rates, the drug addictions, fraud, the stress related health problems – all these things seem to be a curse of living in the 21st Century in the Western world.

    Recently Fran Sidoti from SavingsGuide.com.au posted an interesting article about this topic titled Affluenza, And What It Might Mean For You. She says it starts by wanting a big house, and then all of those things that go in it, and with it – but that when we have everything, we are still not happy. She suggests we take a step back and employ old-fashioned values like “building a strong family, especially with an awareness of role models like grandparents who wouldn’t recognise affluenza if it bit them. A respect for hard work and the money it earns is crucial, as is emphasis on philanthropy and charity.”

    Australians Clive Hamilton and Richard Denniss’ book, Affluenza: When Too Much is Never Enough, poses the question, “If the economy has been doing so well, why are we not becoming happier?”

    Here is an excerpt from that book:

    “Our houses are bigger than ever, but our families are smaller. Our kids go to the best schools we can afford, but we hardly see them. We’ve got more money to spend, yet we’re further in debt than ever before. What is going on?

    The Western world is in the grip of a consumption binge that is unique in human history. We aspire to the lifestyles of the rich and famous at the cost of family, friends and personal fulfilment. Rates of stress, depression and obesity are up as we wrestle with the emptiness and endless disappointments of the consumer life.

    Affluenza pulls no punches, claiming our whole society is addicted to overconsumption. It tracks how much Australians overwork, the growing mountains of stuff we throw out, the drugs we take to ‘self-medicate’ and the real meaning of ‘choice’. Fortunately there is a cure. More and more Australians are deciding to ignore the advertisers, reduce their consumer spending and recapture their time for the things that really matter.”

    How many of us know someone who has gotten really sick – so sick that they lose everything – the house, the car, the job. If they are lucky enough to survive it, they always seem to have this new-found view of money. They often make that life changing decision to cut back on all those material things. They say they appreciate that the real joy in this world comes from spending time with family and friends and also dedicating some time to themselves.

    A new perspective on credit

    We should think of our credit file as a mirror on our finances. It can reflect our assets, our good history, but it can also reveal our financial shortcomings. It can be a reflection of our inability to stick with something, our disregard for repayments and it shows the financial potholes we fall into that are sometimes impossible to climb out of.

    How healthy are we looking?

    It is perfectly okay to use credit, as long as we make it work for us. We should use it to enhance our lives so that we can spend time with the ones we love, or to really improve our quality of life.

    Maybe we throw that long sought after holiday on the credit card and take the family away? Or take out repayments on an educational course that will change our working lives forever? Or perhaps we do buy a home, but after years of good saving. One that fits all the requirements of what we need, rather than what we want. A home we don’t have to work 24/7 to pay off because it is priced within our means.

    What we shouldn’t do, is spend money we don’t have, on things we don’t need, and ultimately find ourselves with what we don’t want – debt, unhappiness and a bad credit history.

    A bad credit rating can completely change our financial situation. The black marks placed there by creditors show up on our credit file for 5 years. Bad credit can limit our choices and can perpetuate the debt cycle by leading us to choose loans with higher interest rates and more fees, so the struggle to make repayments can be even harder.

    A clean slate

    If we want to try and start again with credit, it may be possible to wipe the slate clean, particularly if our bad credit rating should not be there.  Firstly, we can obtain a  free copy of our credit report from one or more of the credit reporting agencies, Veda Advantage, Dun & Bradstreet and Tasmanian Collection Services (TASCOL). If after checking our credit file we find inconsistencies, we may be a good candidate for credit repair.

    A credit repairer can work with creditors on our behalf to completely clear our credit file of all defaults, clear-outs, writs and Judgments which contain errors, are unjust or just should not be there. This means we no longer have a bad credit rating, but a completely clear credit file, giving us the financial freedom to use credit whenever we need to.

    The rest is up to us.

    Visit MyCRA’s website www.mycra.com.au for more information on credit repair.

    Image: Salvatore Vuono/ FreeDigitalPhotos.net

    Image: photostock/FreeDigitalPhotos.net