MyCRA Specialist Credit Repair Lawyers

Tag: credit in Australia

  • Credit reporting in Australia your questions answered on bad credit

    credit in AustraliaAustralia has just undergone a major credit reporting change. If you don’t know much about credit reporting, then you could be at risk of  messing up your credit rating. Yesterday, we answered your basic questions on credit reporting. Today we answer more of your questions on bad credit and what to do about it.  Find out what you may not know about credit in Australia.

    By Graham Doessel, Non-Legal Director of MyCRA Lawyers www.mycralawyers.com.au.

    I have paid my credit card bill late, what are the consequences of this?

    Accounts like your credit card, your personal loan, your mortgage or your car loan are provided by ‘licenced’ credit providers. These providers are required to hold an Australian Credit Licence. They are also able to record and access repayment history information, include late payment history. If you are more than 5 days behind in your repayments it could be noted on your credit file. So in a nutshell, if your credit provider has previously informed you that it will be collecting repayment history, expect that notation to show up against your name, including the date the account was paid. This information will stay on your credit file for 2 years. It is unclear what the consequences of one late payment notation will be. Certainly it has been said that several late payment notations will impact your ability to obtain credit.

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

    If you discover you have a bad credit file, you will find it very difficult to obtain credit in the future. Generally this problem will keep occurring for the 5 years the default is on your credit file. This will probably prevent you from obtaining a home loan with most lenders and possibly lead to credit refusal of many kinds from loans right through to phone plans. A default is not removed unless it can be shown it was placed in error on your credit file or was placed unlawfully.

    A record of good repayment history information may ease the severity of having a default on your credit file, but as defaults are not removed for 5 years, there is no guarantee you will be granted approval. You may also be offered a higher interest rate while the default is on your credit file.

    What can I do if there’s something I don’t agree with on my credit file?

    If there are errors on your credit file, be aware you do have the right to have them rectified. Likewise, if there are numerous strange defaults and or applications for credit that you don’t recognise you would need to immediately investigate these and notify Police in case of identity fraud.

    If you don’t agree with a credit listing that has been placed by your credit provider, and you want to dispute it, the new laws allow you to ask the credit reporting body which holds your credit file to note a dispute against it.

    Some people choose to go through the process of disputing their own credit listing, and other people prefer to leave it to a third party. Both options are there. Often it depends on a) how savvy you are b) how much time you have c) how complicated the process of dispute is going to be.

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

    If you are looking at choosing a third party to dispute your credit listing, make sure you choose wisely. You can contact the Credit Repair Industry Association of Australasia (CRIAA) for help with selecting a reputable and ethical credit repairer.

    MyCRA Lawyers is a firm focused primarily on credit disputes. Not only can we work to repair and remove your bad credit by disputing your credit listing, we can also work on your behalf in legal matters as they arise (which they frequently can).

    Images: Stuart Miles/ www.FreeDigitalPhotos.net

  • 16-25 and “drowning in debt” Your guide to make credit work for you.

    drowning in debtIn the news this week, we are told that the 16 to 25 age group are getting way over their heads with debt in relation to income. A News Limited story yesterday  reveals that this age group carry a much higher proportion of debt to income.  This is a worrying trend – and one that can be prevented by reaching out and educating young people on the ins and outs of credit. If you are in this age group – we give you the low-down on some important things to know which you may not have been told about credit in Australia. We show you why you don’t want to get in too much debt, and how being in control of some simple things can save you and your credit file well into your future.

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

    The stats

    The News Limited story “Young adults drowning in debt” featured Roy Morgan data showing one in three in the 16-25 age group carries more than $2500 forward in credit card debt each month and those aged 21 to 25 had an average income of $791 a week.

    The data also found 215,000 Australians aged 18-24 had a personal loan for a car and the average amount owed was $11,010.

    Why should you be concerned about too much debt?

    If you have debt which you are struggling to pay back right now – this can affect you this year, next year and for years to come. If you have ever taken out a mobile phone plan, a credit card or loan, you will have a credit file in your name. If you fail to pay your credit back on time, you will probably have notations put against your name by your Credit Provider – eg Telstra, Westpac, Energex etc.

    If you are more than five days late paying back your credit cards or personal loans – you will have that noted on your credit file as repayment history information. If you are more than 60 days late in paying ANY credit – from mobile phone bills to electricity accounts and loans, you will be issued with a default or other negative listing on your credit file.

    Defaults

    If you are issued with a default, this will have very serious consequences for years to come. You won’t be able to get credit at normal interest rates for between 5 and 7 years! You will most likely be refused major credit, and if you aren’t you will have to pay thousands more in interest. This is not the best area to go ‘alternative’ in. You want the most affordable interest rates – not paying in some cases tens of thousands more in interest just because you didn’t pay your mobile phone bill 3 years before.

    Think to yourself…what do you want to be doing in two or even five years? Maybe own a house, a car, or travel overseas? Having a default against your name can spoil all of those dreams.

    Young people in default

    Credit reporting agency Veda Advantage recently released some of their data from the last three years, which showed that Gen Y holds 60% share of all credit defaults. From telco defaults through to loan defaults – Gen Y tops the list in every category. Find out more.

    AMP financial planner Dianne Charman told News Ltd access to credit has been made much easier for the younger generations compared with a few decades ago, which has allowed them to run into debt more easily.

    “Access to credit a few decades ago just wasn’t as easy as it is now,” she says.

    “We didn’t have mobile phone access to accounts that you can run up bills on, so our kids today are faced with decisions which can rack up bills more easily, and credit cards and personal loans are far more accessible than what they have been previously.”

    What you need to know

    top five

    Here are our top five things you need to know to avoid bad credit.

    1. Be careful with all of your credit.

    It doesn’t have to be a big account to have an impact on you. Accounts which for as little as $100 which go unpaid can see you defaulted and banned from mainstream credit for five years. Likewise, any credit account can see you lumbered with a default if it goes unpaid – this goes for mobile phone accounts, electricity accounts as well as credit cards and personal loans. Paying on time, every time is your first line of defence against bad credit.

    2. If you can’t pay for it – let your Credit Provider know.

    If you run into money troubles – the WORST thing you can do is pretend like it’s not happening. If you lose your job, or run into temporary financial difficulty – the smart thing to do is contact your Credit Provider to work out alternative arrangements to bridge the gap. Asking for a financial hardship variation may save your credit file even if you are struggling to make payments. MoneySmart’s  senior executive Robert Drake also recommends contacting a financial counsellor to work out a plan.

    “The earlier you tackle the problem the better, whether it’s by getting in touch with the lender and telling them you have some problems you’re dealing with or by talking to a financial counsellor,” he told News Ltd.

    3. Tie up all financial loose ends when you move or go overseas

    A really common way that young people can find themselves in trouble with their credit file – sometimes without even knowing it – is when they move house or go overseas for extended periods. Typically an account gets sent to your previous address and remains unpaid and then listed as such on your credit file. This can occur frequently with electricity accounts. If you move around a lot, consider a P.O. Box for all your mail or alternatively a parent’s address. Likewise, make sure you contact your Credit Providers to inform them of your new address when you move – or if going overseas, have someone keep an eye on your mail. Parents are good for this!

    4. Check your credit statements and order a credit report.

    Many people of all age groups have the mistaken view that if something wasn’t right with their credit accounts or something was listed incorrectly on their credit file – that someone would inform them. This is seldom the case. It is your responsibility to check that your accounts are running right by checking your statements when they come in. Review each phone bill. Query anything you’re not sure of.

    In addition to this, you should also regularly check what is being seen by lenders by ordering a copy of your credit file. It is free once every year from Australia’s credit reporting agencies – and you should order it annually to make sure everything reads as it should.

    Young people need to insist on account accuracy and credit reporting accuracy. With defaults almost seemingly a ‘dime a dozen’ in the 16-25 age group, it is important accuracy does not take a back seat and see defaults pile up on Australian credit reports without an understanding of what constitutes a lawful listing.

    Order a free credit report.

    5. You have a right to correct mistakes

    Every Australian needs to know that mistakes can happen on credit reports. Likewise, bad credit can be listed on credit files unknowingly.

    A credit listing that you feel is inaccurate or unfair should be tested against the appropriate legislation for its validity and its accuracy. The process of dispute is not easy, but Creditors should be called to account for any inconsistencies. You should also know Creditors have a legal obligation to remove a listing which was placed incorrectly.

    Changes for the better are coming in Australian credit reporting particularly around correction of credit reporting mistakes, but education is key for every credit active individual to make best use of these changes, aware of the action they need to take to ensure their rights are upheld.

    Where to go for money help

    AMP’s Charman suggests younger Australians find themselves a money mentor to help them when facing important financial decisions, such as parents, aunts or uncles. This is a great idea. Having someone to bounce decisions off can really improve your chances of making the right decisions for you not just for now, but for later as well.

    Also go to the MoneySmart Rookie website for under 25’s, and get help with a range of financial decisions including handling credit and debt, getting a car, starting work, moving out of home, understanding mobile phone deals and plans and online transactions. You can also visit savingsguide.com.au – a great advice centre and blog for all-things money which is focused not only on saving money – but also on repaying debt. Their motto is ‘it’s not how much you earn, it’s how smart you are with what you have’.

    As a young person, getting to know your rights around credit and your obligations will empower you well into the future, and set up habits which will see you in good stead for your whole financial future. You can find more information on your credit file or disputing a credit listing on our website www.mycra.com.au  or by subscribing to our blog www.mycra.com.au/blog.

    Image 1: artur84/ www.FreeDigtalPhotos.net

    Image 2: tungphoto/ www.FreeDigitalPhotos.net

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

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

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

    What is being ‘credit active’?

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

    What is on my credit file?

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

    What is a credit rating?

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

    What is defined as a ‘bad’ credit rating?

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

    How do I get a bad credit rating?

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

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

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

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

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

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

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

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

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

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

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

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

    Can I employ someone to fix my bad credit?

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

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

    Can I make positive changes to my credit file?

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

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

    How do I keep a clear credit rating?

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

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

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

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

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

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