MyCRA Specialist Credit Repair Lawyers

Tag: credit repair

  • 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

  • New Credit Laws Pass House of Representatives

    Australia’s new Privacy Laws, which include a credit reporting law overhaul are coming to fruition. Amendments to the Privacy Act 1988 passed through the House of Representatives yesterday. What will this mean for you, your credit file and will it make it easier to remove bad credit?

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

    The Attorney-General announced late yesterday that the House of Representatives had passed reforms to the Privacy Act 1988. The Privacy Amendment (Enhancing Privacy Protection) Bill 2012 – which includes major amendments to Australia’s credit reporting laws –will now be introduced in the Senate where it is currently being considered by the Senate Legal and Constitutional Affairs Legislation Committee. The Government may make further amendments in the Senate in response to the Senate Legal and Constitutional Committee’s report, which is due to report shortly.

    “The House Committee has found that the reforms should be passed in their current form and the Government has moved quickly to implement those wishes,” Attorney-General Nicola Roxon said in a statement to the media yesterday.

    Ms Roxon says the reforms will focus on giving power back to consumers over how organisations use their personal information. The power will be extended to consumers in the area of credit reporting.

    “These changes will also provide much more power to consumers to be able to access and, if necessary, correct their credit reports,” Ms Roxon said.

    Through the reforms the powers of the Privacy Commissioner’s will also be enhanced to improve the Commissioner’s ability to resolve complaints, conduct investigations and promote privacy compliance. For example, the Commissioner will also be able to apply to the court for a civil penalty order against organisations for credit reporting breaches. Penalties for an individual range $2,200 to $220,000 and for a company they range from $110,000 to $1.1 million.

    We welcome the changes in the area of credit file correction. The new laws will most importantly enable consumers to force their Creditor to justify a disputed listing; and give consequences for credit reporting breaches. This is important in correcting credit listing complaints.

    Whilst the changes should make a positive difference in ease of correction, what can make or break a credit listing complaint – is the individual’s knowledge of credit reporting law. In order to make a successful complaint to justify removing a credit listing, the individual must show that the Creditor has unlawfully listed it. The complainant must also be able to give evidence to show how that occurred, which means providing supporting documentation from the Creditor– which can also be difficult for the individual to obtain. Then there’s marrying the two together. Then, there’s negotiating with the Creditor.

    All of these aspects of disputing a credit listing could still see a valid complaint come unstuck if not performed correctly.

    In addition to this, there are a myriad of reasons why a credit listing may be unlawful which are not immediately evident by the individual. Creditors can and do make mistakes with credit reporting. They don’t give the right notification to the consumer; they don’t give them adequate time to remedy the arrears; they don’t update contact details for the client; they don’t get the account right in the first place.

    So it will still give you the best chance of having a disputed credit listing fall in your favour if you open your options, solidify your case, and have the matter handled by a professional credit repairer. But it will be important to choose the right kind of credit repair and make sure you’re looked after each step of the way. Visit our main site for more details www.mycra.com.au or contact a Credit Repair Advisor on 1300 667 218.

    Image: Salvatore Vuono/ www.FreeDigitalPhotos.net

  • Are you spending more than you earn? You’re not alone….

    It was reported yesterday that one in seven households in Australia is on ‘struggle street’ – spending more than it earns. It seems many Australians are living on credit, including some of our richest. We look at the concept of living on credit, and how existing this way can not only put pressure on the household, but when it all catches up and you are lumbered with bad credit history – threaten the family’s ability to get the best credit at the best rates for years to come. We look at how you get there, why you want to avoid it, and what to do about it.

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

    News.com.au featured some interesting statistics put out by the ABS yesterday in its article ‘Aussie strugglers living beyond means’:

    “One in seven Australian households is spending more than it earns, as the working poor struggle with monster mortgages and surging power bills.

    Nearly 8 per cent of the nation’s richest households were living on credit, the Australian Bureau of Statistics reported yesterday.

    Of the top 20 per cent of households earning the most money, 3 per cent could not afford to pay a gas, electricity or phone bill on time during 2009-10.

    Of the poorest 20 per cent of households, one in five could not pay their bills on time and one in four spent more than they earned.”

    Living this way is living dangerously. Often you are said to be robbing Peter to pay Paul. But if something goes wrong, you can run a real risk of getting into arrears. If your accounts fall 60 days behind, then your Creditor will place a default on your credit file – and this will impact you and your family for years and years to come. You will be banned from mainstream credit. The credit you do buy after that will be at a pretty high price. You may not even be able to get a mobile phone on a plan.

    How did we get here?

    Sure petrol prices are ridiculous, and grocery bills seemed to rise no end, and then there are reports out there that people have had to use bbq’s and eskies because they can’t pay their power bill – but the average person can afford these essentials. It’s the luxuries we have issues with – and what we consider to be luxuries and essentials today may have something to do with it.

    A while back, I blogged about the concept of “Affluenza” an idea put out there by Australians Clive Hamilton and Richard Denniss’ in their book, Affluenza: When Too Much is Never Enough.

    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.

    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.

    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.

    When I read yesterday that one in seven of us are still living on borrowed money, it makes me realise that not enough Australians understand the power of credit. It is a great concept, but 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. Not make ourselves slaves to it.

    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.

    What does your credit file say about you?

    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.

    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.

    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.

    Contact a credit repair advisor on 1300 667 218 for more information on repairing bad credit, or visit our main site www.mycra.com.au.

    Image: hin255/ www.FreeDigitalPhotos.net

     

     

  • Is Your Tax Refund Safe? Identity Theft Warning for Taxpayers

    Identity theftAt tax time, there are some things you need to know about to protect your identity from criminals. We look at the two most common types of identity fraud associated with tax refunds, and look at what you can do to ensure you don’t lose your refund, or become an identity theft statistic with a bad credit rating that will be a nightmare to recover from.

    By Graham Doessel, Founder and Chief Executive Officer of MyCRA Lawyers

    Criminals Lodging Fraudulent Tax Claims

    There have been reports over recent years of Australians unable to lodge their own tax return, because they have found that one has already been lodged in their name. Fraudsters have been able to canvas the tax file number and personal details such as full name, address and date of birth of the individual, and have lodged a claim in their victim’s name, pilfering the return before the victim has even thought about putting their tax in. These people are also vulnerable to bad credit through identity theft – if fraudsters take out credit in the victim’s name as well.

    It was reported in Ninemsn yesterday that the Australian Taxation Office (ATO) blocked payments worth $40 million last year that would have gone to criminals. This represents more than double the revenue the tax office protected the previous year in identity crime-related cases – with the reported interception of 8,000 fraudulent tax claims.

    But officials tell Ninemsn they have little idea how much money they lose to identity thieves who con them into actually paying out on fraudulent returns. Last year it was reported in The Telegraph that in the previous financial year the number of stolen tax file numbers suspected of use in identity fraud topped 31,200 – from 12,669 the previous year.

    How do criminals get your tax file number?

    The ATO recently sent out a media release warning about the recent surge in fake job adverts over the internet asking prospective employees to provide their tax file numbers as part of a job application or once they are made an offer of employment, which is later withdrawn.

    Ninemsn also reports temporary visa holders such as foreign students are offered cash for the tax file numbers they will no longer need once they leave Australia.

    They also say sometimes rogue tax agents are involved.

    “People are trusting people they shouldn’t,” Greg Williams, a deputy commissioner in the ATO’s compliance division told Ninemsn.

    People who share the same name and birthday are also in the “at risk” category.

    But Ninemsn reports, the reasons go deeper:

    “… Brett Warfield, a forensic accountant and fraud specialist at Warfield & Associates, said the biggest threat comes from organised crime groups lifting wholesale identity and salary information on employees from private firms or government bodies, either by hacking into company databases or convincing insiders to leak it.

    They then use this pilfered data to lodge hundreds of forged submissions with the ATO, he said.

    “They tend to submit the tax returns fairly quickly after the end of June to beat the real taxpayer,” said Mr Warfield.

    He added that crime gangs still have to outsmart the ATO’s sophisticated fraud risk filters, which cross-check claims against data such as previous entries on income and expenses, mailing addresses and bank account details for wiring refunds.

    But when ninemsn used freedom-of-information laws to find out how many such fraudulent returns the ATO fails to intercept, it admitted it does not measure or even estimate its losses.

    This is despite increases in funding to detect fraud as well as criticism from the Commonwealth Ombudsman that the ATO fails to investigate or attempt to recover funds in cases of identity theft where losses were deemed “relatively small”.

    An ATO spokeswoman said its focus is on detecting fraudulent claims before refunds are paid out — a strategy they say is more effective than trying to recoup sham refunds that have already been issued.

    What to do if someone has made a fraudulent claim on your tax refund

    Contact the ATO immediately. Last year the ATO established a “client identity support centre” to assist people whose identities were stolen. You could also contact and make a formal complaint to the Commonwealth Taxation Ombudsman if you are unable to come to a solution or been able to lodge your correct refund.

    Considering the very important personal information these fraudsters have for you, you should order a copy of your credit file as soon as possible. Check it carefully to make sure there have been no attempts, nor successes in obtaining credit in your name. Notify Police if you find anything strange on your credit file – look for address changes, credit enquiries you didn’t make, and credit accounts.

    If criminals have been able to take out credit in your name, it will mean you may have incurred some repayments in arrears and Creditors could be in the process of adding a default or other negative listing to your credit file, even if it doesn’t show up as such right away. You should contact those Creditors as soon as possible to advise them of the identity theft.

    For tax crime, which is a Commonwealth indictable offence, Police may advise you that as an identity theft victim, you could be eligible to apply for a Victims of Commonwealth Identity Crime Certificate – which can go a long way in helping to prove you didn’t initiate any credit taken out in your name. This could mean you would be able to recover your ability to obtain credit in your own right and could help with debts that have been incurred in your name.

    Fake tax refund scams

    On the other side of the coin, if you have been able to successfully lodge your tax return with the ATO, beware of fake emails claiming to be from the ATO asking for confirmation of personal details in order to send your refund to you – or for you to claim your refund.

    Here’s what one of these emails might look like, but they take many different forms (picture courtesy of ATO Online Security webpage):

     

    scamWhat you should do if you receive an email like this

    The ATO advises it will never email you asking for personal or credit card details and you should never provide this information.

    One version of this scam contains an attachment infected with a virus. This email purports to be from the ATO and asks for the recipient to complete the attached form to receive a tax refund. There is zip file attached to the message that contains a malicious program. If you receive an email like this, do not open the attachment.

    Under no circumstances should you give personal information including credit card or banking details. Anyone who has received a suspicious phone call or email should contact the ATO immediately.

    A good way to stay ahead of scams and other ways your identity and credit file could be at risk, is to sign up to the Government’s Stay Smart Online alert service, which will inform you of new scams as they unfold, and hopefully prevent you from becoming a victim, losing money and incurring debt and bad credit as a result.

    To get a free copy of your credit file, or if you need help to recover your clean credit file after identity theft – we might be able to help. Contact a credit repair advisor on 1300 667 218 or visit our main site for more details www.mycralawyers.com.au.

    Image: Arvind Balaraman/ www.FreeDigitalPhotos.net

  • Lost your job? Three things you need to know to prevent bad credit haunting you long after you get a new one

    unemployedJob hunting and credit files seem unrelated – but they are connected for three reasons. We tell you how when you have lost a job, or when you are in the process of finding a new one, there are some things that impact your credit file that you need to know about. If heeded – they can help you avoid bad credit.

    By Graham Doessel, Founder and Chief Executive Officer of MyCRA Lawyers

    Yesterday, an article from SavingsGuide.com.au What To Do When You Lose Your Job caught my eye. It went through the things you need to do to make sure you remain in the black with your finances after you have lost your job. This article is the inspiration for the first piece of advice:

    1. If You Have Lost Your Job – Sit Down and Work Out What You Owe and What is Owed To You

    Even if you think the situation is very temporary – you don’t have a crystal ball. Put measures in place straight away to protect yourself and your family from debt and bad credit.

    Savings guide recommends taking advantage of any insurance policies of income or mortgage protection that you have in place immediately. It could take a little while to process the claim. If you don’t have insurance, don’t be too proud to apply for assistance with the Department of Human Services. The sooner you do this the better, as it could take up to a few weeks to process the claim.

    You will also need to work out how much disposable income you have now, and tally up all of your bills that you consider will appear in the future.

    ASIC’s MoneySmart Website has some great advice and specific links for further information on what to do if you find yourself unemployed. Here is an excerpt from their web page titled Losing Your Job:

    Knowing where you stand financially

    You will feel able to make clearer decisions once you know how much money you really have. Find out what you have in savings, then list every expense you’ll have to meet for the next 2 months. Use our budget planner and include necessities like mortgage payments, loans, health care, medicines, car and home maintenance, and insurance premiums.

    What you want to do is avoid getting in arrears with your accounts at all costs. It only takes 60 days in arrears on any account to get into ‘default’ with creditors, and this notation on your credit file will mean you will probably be blacklisted from credit for 5 years – even if you find another job and get everything back on track a month or two later.

    Once you have worked out how long your current funds are going to last, you will be in a good position to do the next task…

    2. If You Have Lost Your Job – You Need to Put Your Hand Up and Tell Your Creditors

    Don’t wait until you are in arrears (or in debt up to your eyeballs!) to let your Creditors know. As SavingsGuide recommends, negotiating with Creditors early is the smart thing to do:

    “Whether it’s your mortgage or a monthly gym membership fee, you’re going to need to address these payments before they get out of hand,” writer Toria Phillips advises.

    Financial hardship variations are encouraged in many industries, with new regulations having just been brought in for both the finance and telco industries.

    Money Help, a website run by the Victorian State Government offers more help on how to apply for hardship with creditors in the correct way. They advise people to work out what they can afford to pay prior to requesting a hardship variation – so if you have done this you will have a better chance of coming to a more affordable arrangement with your Creditor.

    The Creditor may be able to offer reduced payments and in some cases could stall any movements to default your credit file if you happen to get in arrears.

    Creditors are legally required to consider a person’s request for variation on payment arrangements, but are not obliged to agree to any hardship variation proposal put forward. But there is a trend towards offering help before defaults – so it is crucial to ask.

    Having your current debts at a more manageable level will allow you to concentrate on the actual process of finding a job. But beware (as if you didn’t have enough to worry about) whilst you are looking for a job you also need to look out for fraudsters…

    3. Job Seekers Scam Warning – Be Wary of Giving Away Your Personal Details To Scammers

    Last week the Australian Taxation Office issued a warning to job seekers that they were the target of scams. It reports they have received more than 10,000 reports on a wide range of scams including fake job advertisements, emails and bogus phone calls.

    Tax Commissioner Michael D’Ascenzo explains the job seeker scam – that bogus job ads are being posted on recruitment websites by scammers, and that people are even being asked to provide their tax file numbers.

    “Personal information can be used by scammers to lodge false tax returns in your name, enable the use of your credit cards or even result in people taking out a loan in your name. In some cases, identity crime can take years to resolve,” Mr D’Ascenzo says in a statement to the media.

    Becoming a victim of identity theft is the last thing a person who has lost their job needs. This crime could mean what little money you may have left in your bank accounts is drained by fraudsters; or a much-need tax return is pilfered; or it could even mean you have debts in your name you did not initiate and your ability to obtain credit is compromised for years to come.

    Don’t ever give a potential employer your Tax File Number, banking details or any other crucial personal details until you begin work with them! If you’re not sure – you can always contact the Australian Competition and Consumer Commission (ACCC) to dispel any suspicions before you give away your personal information. You can call them on 1300 795 995 or visit the ACCC’s SCAMWatch website www.scamwatch.gov.au.

    Let’s hope your unemployment is only very temporary and you are able to keep your credit file free from bad credit during the process!

    If you are currently experiencing bad credit due to a temporary financial hardship such as a job loss, it may be worth assessing whether your credit history can be reviewed by a professional credit repairer. Any listings which are deemed unlawfully placed for whatever reason could be required to be removed by your Creditor. Contact a Credit Repair Advisor on 1300 667 218 or visit our main website www.mycralawyers.com.au for more information.

    This week running 2-8 September, is MoneySmart Week – Australia’s first ever national, not-for-profit, financial literacy awareness week. For more details visit the Australian Government Financial Literacy Board initiative www.moneysmartweek.org.au.

    Image: winnond/ FreeDigitalPhotos.net

  • Telco bill shock should in theory now be a thing of the past

    The Telecommunications Consumer Protection (TCP) Code came into effect on September 1. We look at what this means for telco customers and the possibility that less consumers could be subject to bill shock and subsequent credit rating defaults due to sky-high bills they had not budgeted for.

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

    Currently approximately 26% of our credit repair clients have suffered bad credit from telcos (telecommunications providers). Not all of that bad credit should be there. Whilst mistakes and mis-communications are frequent in the industry, as they are in many others – one of the major significant differences we have noticed with the telco industry compared with other industries issuing credit file defaults, is more clients are in dispute over excess charges.

    Excess charges or “bill shock” can occur when the actual bill the customer receives is significantly higher than what they understand it should be. Issues like international roaming charges, excess data charges and customers going over plan allowances (especially when the plan had the term “cap” within it) seems to be a frequent source of dispute amongst customers.

    Unfortunately sometimes the customer is unable to come to an agreement over these charges before they are issued with a credit rating default. These issues can be hard to fight. Often the customer will say what they had first understood the plan to be for, or what they wanted the phone to do, was not what eventuated.

    Resolutions with telcos over these billing issues can be difficult to come to. Sometimes consumers have reluctantly paid the bill, thought the matter was settled, only to find they were defaulted anyway, and others have just refused to pay the bill until they got some resolution. Either way, customers have been faced with at least 5 years of bad credit from the episode unless they have been able to make a successful complaint.

    The telcos – with all the power on their side can often come out on top.

    Escalating levels of telco complaints in Australia, resulted in a major public inquiry by the Australian Communications and Media Authority (ACMA) and the report – Reconnecting the Customer. This examined the root causes of the industry’s poor customer service and complaints-handling performance. The telco industry was asked to regulate or be regulated – and so the Telecommunciations Consumer Protections (TCP) Code was developed by the Communications Alliance (CA), and a final draft was registered in late July.

    That TCP Code came into effect on 1 September 2012. If the code proves to be effective, and if the ACMA does as it says it will and come down heavily on those that don’t comply with the TCP Code, there will be significant positive changes for telco customers.

    What the Code provides for.

    The ACMA outlines the basic benefits for consumers in its article Fair call—new telco code to benefit consumers. Here is a breakdown of consumer benefits of the TCP Code:

    • Telco providers must be clear about what they are offering in their phone plans and stop using confusing terms like ‘cap’ (unless the offer refers to a ‘hard cap’—an amount that cannot be exceeded).

    • Better spend management tools designed to avoid ‘bill shock’.Including improvements in billing processes and credit management, and the introduction of notifications about data usage and expenditure thresholds.

    • From 27 September telcos will be required to provide unit pricing for national calls, standard SMS and downloading 1 MB of data in advertisements.

    • From 1 March2013 customers buying a new service will receive a two-page document called the ‘Critical Information Summary’. This includes essential information about service, pricing and complaints-handling, as well as volumetric information so consumers can easily understand how many two-minute calls or texts they can make under their plan.

    • Faster, better complaints-handling, with urgent complaints resolved within two days. All of these new measures will be monitored and the telcos subject to new benchmarking standards.

    • For customers having difficulty paying their bills or meeting unexpectedly high bills, telcos must advise consumers about spend management tools, hardship advice and options to restrict a service.

    • A new industry compliance body is being formed to ensure all industry participants comply with the new code.

    According to IT Wire in its story New telco code toughens up consumer protections, Optus jumped the gun ahead of the introduction of the Code, and launched its new usage alert service which it says gives its customers greater transparency in managing spending on their mobile accounts. The new Optus service sends text alerts to Optus’ customers on most post-paid mobile plans when they reach 50 per cent, 85 per cent and 100 per cent of their voice, text and data allowance.

    IT Wire also reports ACMA Chairman Chris Chapman as saying the ACMA will put the industry on notice, advising they would take a “far more robust approach” to ensure the industry’s compliance with the new Code and had “resourced up in this space.”

    “We will conduct more audits and investigations dealing with key areas of consumer detriment and expect substantial changes in industry practices,” Mr Chapman says.

    For consumers who consider that their service provider is not complying with the code, Chapman says they “may make a complaint to the provider in the first instance and if they are not satisfied with the resolution, they should contact the Telecommunications Industry Ombudsman.”

    And, if telecommunications service providers do not comply with the code, Chapman says they faced a direction to comply from the ACMA, “while further breaches could lead to Federal Court action where civil penalties of up to $250,000 are possible.”

    We will be following these telco improvements with great interest as they relate to the volume of credit file defaults due to telco customer service issues and bill disputes.

    For those consumers currently facing what they consider to be excessive charges, or other issues with their telco which have resulted in bad credit – it is possible MyCRA Credit Rating Repairs may be able to help.

    If a credit listing has been placed unlawfully, it may be required to be removed from the consumer’s credit file. Consumers can contact a credit repair advisor 1300 667 218 to assess their suitability for credit repair. There are no guarantees of success, but the specialised knowledge of credit reporting and industry law means engaging the services of a professional credit repairer gives the consumer the best chance of having bad credit removed completely and permanently from their credit file. Visit the main website for more information www.mycra.com.au.

  • What Is Credit Repair? How you can fix a bad credit rating

    Many people have only a vague idea of what a ‘credit rating’ is or how they get one, until they are banned from credit.

    If you are refused credit because of your credit rating, then you find out quite quickly what that elusive credit file really does, and why a clear credit rating is so important. Lenders or ‘Creditors’ that you have borrowed from have the ability to report about your repayments on a central national database – called your credit file. What Creditors say about you determines whether or not someone else will lend you money or services in the future.  This system is not always accurate. So we look at what happens if you are given a bad credit rating, have a negative listing on your credit file, or also commonly termed a ‘bad credit score’ and how credit repair may be appropriate to fix your bad credit.

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

    Recently, A Current Affair ran a story about well-known Australian actor, John Jarratt and his bad experience with fixing his credit rating after a listing was placed incorrectly on his credit file. The story, titled Phone Bill Fiasco demonstrated the difficulty John had in dealing with his Creditor and recovering his good name. John said he wanted to tell his story for all those ‘little guys’ that find it difficult to stand up to these companies over billing mistakes that see them refused credit.

    We look at what John could have done, or anyone else facing a similar situation, could do to resolve those credit listing complaints and fix their bad credit that shouldn’t be there.

    Can a bad credit rating happen to you?

    You’re sitting in front of your mortgage broker, heart in your throat, being told that the house you spent months searching for, the house you paid hundreds for inspections for, the house that your family is head over heels for, is not going to be yours.

    “I’m sorry mate, your credit file shows up with a default listing, and the lender is not willing to lend you the money based on this,” your brokers says.

    “What!” you reply. “I haven’t ever defaulted on my payments, it must be a mistake – what was it for?”

    “Well unfortunately your credit file only gives the amount, an account number and a business, so you will need to research it from there,” your broker explains.

    Once you pick yourself up off the floor, you begin to try to get to the bottom of what’s happened to your credit file.

    You call the credit reporting agency, and they give you a copy of your credit file.

    After what seems like days on hold to the company in question, you have no luck resolving this so-called outstanding account. You feel like you are just going around in circles with no joy – until finally someone from the company tells you to pay the outstanding amount (of which you’re not even sure you owe) and the matter will be settled.

    So you do, of course, expecting the matter to be at an end. Only to find your listing has merely changed to ‘paid’. Your broker says this will probably not change the outcome of your borrowing capacity with the lender.

    So you spend more hours on the phone with your Creditor, before being told that default listings are never actually removed, but can be marked as paid. That is the best they can do.

    For 5 years this listing will haunt your dreams – well your financial dreams anyway – as you are refused not only the home loan, but even a new credit card, a car loan or mobile phone plan.

    What is the solution to bad credit?

    The best solution to fix bad credit is to have it removed from your credit file.

    Contrary to what your creditor may have told you, bad credit can be removed, if it should not be there in the first place. If a listing has been placed unlawfully on your credit file, or it contains errors, then it needs to be removed from your credit file.

    You just need someone on your side, who can give you a hand with all of the legislation mumbo-jumbo, look over your records and see what went wrong, spend time dealing with your creditor for you (which includes knowing who to talk with and how to talk to them the right way so you get the best result), and working on your behalf with all parties – including the credit reporting agencies to give you the best chance of actually having that listing off your credit file permanently. This is what professional credit repairers can do for you.

    I can’t afford a lawyer!

    Many of the more reputable credit repairers will have one or more lawyers on staff, but their services come at a fraction of the cost a Solicitor would. It is a specialised field – we know a whole lot about one aspect of the law – as it applies to credit reporting. This allows us to pass on our knowledge at a fraction of what it would cost you for a Solicitor. We also have a working relationship with most Creditors, and have spent the time to know how to negotiate with them most effectively to get the best outcome for listing removal.

    Some credit repairers work differently to others. At MyCRA Credit Rating Repairs, payments are made in stages. We charge an assessment fee, which is fully refundable, in which we obtain and review your credit file. Next, once we determine you are actually suitable for credit repair, you are charged the next stage of fees – to actually prepare your case for the listing or listings to be removed from your credit file, and present that case to your Creditor and any appropriate higher authorities. As no cases can be absolutely guaranteed, we reserve the final stage of payment for when your listing is actually removed from your credit file. See a schedule of MyCRA’s current costs.

    Where are the savings in using a credit repairer?

    We outlay on average 20 working hours per default. Not only will you save yourself this time, but in comparison to legal costs – at say, $250 per hour (you could be up for about $5,000 per default) you will save money. If you are lucky enough to be successful in having the listing removed, you will also save thousands in interest as you will be able to borrow with a mainstream lender, rather than go into a non-conforming loan at a high interest rate.

    Families with a bad credit rating who enter into a $300,000 loan with a non-conforming lender will be paying a staggering $15,046.57 or more just over the first three years of the loan. This is credit repair saving is calculated based on a standard variable rate of 7% versus a non-conforming interest rate of 9%.

    Why can’t credit repair be guaranteed?

    It would be nice to guarantee every client that they will have their bad credit rating removed. But although we have a previous track record of up to 91.7% of removal in cases we take on, there are people who unfortunately don’t get the outcome we hope for. At rare times, despite our best efforts, and despite sometimes there being moral grounds for removing the listing, there can be found no legal avenue for requesting your Creditor remove the listing from your credit file, or we simply run into a stalemate with our negotiations with your Creditor. Unfortunately despite a whole lot of work on your file, sometimes after a final Management Review we are forced to close it. For this reason, we reserve the final stage of payments for once the listing has actually been removed.

    How long does credit repair take?

    If we had a crystal ball we could tell you how quickly your Creditor is going to respond to our requests to supply the documentation on your account, or how quickly they will respond to our formal complaint, whether they will dispute the complaint and if so, whether we will need to escalate the complaint to the Creditor’s Ombudsman and also how much legislation we will need to review to formulate your case. Since there are so many unpredictable factors to credit repair cases, we can’t give you a firm time. What we can tell you is that we aim for 45-60 days for our cases. But do understand there is no onus on the Creditor to remove the listing. Most times we give them the best persuasive case so they are encouraged to do so, or we can help encourage the removal via their industry Ombudsman but at times, they can really drag the chain in helping us help you – so do bear that in mind.

    What do I need to do to get started repairing my credit rating?

    We can do it all – from requesting a free copy of your credit file on your behalf, to requesting your account information, to dealing with your Creditor. All you need to do once the listing is removed, is to call the credit reporting agencies and confirm you clear credit file and you are on your way again with a clean slate.

    For a consultation, call us tollfree on 1300 667 218 or visit our main website www.mycra.com.au.

    What we ask from you, is your complete honesty in regards to your case, and the belief that we will do our utmost to make sure you have your financial freedom back again.

    Image 1: photostock / www.FreeDigitalPhotos.net

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

  • Charging for credit repair – What method is best?

    Credit repair is a fairly new phenomenon. But it has been borne out of a real gap in the ability for the average consumer to handle the information on their credit report as it relates to agencies, the creditor and credit reporting legislation. So we are very much needed. But we also need to act with integrity. So what is the best way to charge clients for the service of credit repair? What is in the best interests of the consumer – a fee for service approach or a no-win-no fee approach? And what are the rules for how to best help consumers ethically?

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

    Recently I read an article in the Sydney Morning Herald Tougher Stand Taken on Credit Files about the new credit laws currently in Parliament and how they could help consumers. But it came with it a warning at the end about credit repair companies. It seems on the whole we don’t get a good rap out there. Consumers are warned against credit repairers because we are charging for something people can technically do for themselves.

    Yes, technically they can. There is no secret to that. But in reality, this is not happening.

    Consumers we meet are getting told that they can’t get their listings removed – at best they can be marked as paid if the debt has been settled. They have been told the debt is valid when it isn’t; they have also had information changed on their accounts; they have not been given the right amount of notice and more.

    Consumers are meant to know how to tackle these big guys without knowing the legislation. With this in mind, how are they meant to have success in removing their own credit rating errors?

    However NSW Consumer Credit Legal Centre, Karen Cox, in this article reports on some pretty dodgy practices amongst credit repairers out there, and this is also a concern of mine.

    “Some have used aggressive tactics to try to persuade the lender or credit reporting agency to remove legitimate listings.
    And in some instances that Cox’s staff have dealt with, the credit repair company has persuaded the consumer to enter Part IX insolvency arrangements, which they subsequently administer for a fee,” the SMH reports.

    So how do we rise out of these criticisms as an industry and provide the much-needed ethical version of credit rating repair? By addressing our fees and in turn our ethics.

    Earlier this year, I wrote an article on fee structure in the credit repair industry http://grahamdoessel.com/wp/credit-rating-repair-customer-costs-a-tale-of-two-business-models/, investigating the two customer payment business models current in the credit rating repair industry, ‘fee for service’ and ‘no win no fee’ payments.

    I also found in my research that the credit rating repair industry was falling way down in its credibility. Some companies weren’t advertising their fees, some were charging way too much and delivering too little – and this was creating mistrust across the board and tarnishing the reputation of what is actually a necessary service.

    Here are the two types of payment structure I investigated:

    Fee for service
    ‘Fee for service’ in the credit rating repair industry, means a fixed amount charged to a client for an agreed level of service. This is charged based on the level of service and or performance. This means that the fee structure is provided to the client up front, and as the client approaches each stage of service, the fee for that service will be due.

    No win no fee
    ‘No win no fee’ cost agreements are also known as conditional cost agreements. No win no fee broadly means that the client only pays credit rating repair costs if their claim is successful. I found that the definition of a “successful claim” varied greatly between credit rating repairers.

    I found that no one single method suited the industry entirely. Both had their merits for consumers and should be allowed to co-exist alongside some basic best practice methods which crossed both approaches.

    Pros of fee for service
    Upfront fees give the consumer more reassurance they will be told what they are going to get, how much it will cost, and because money has changed hands – the credit rating repairer will be bound to deliver what they have promised.

    This model allows the credit rating repairer to give better service to the consumer, through the increased level of commitment by the consumer.

    What I found important in a fee for service model, was the refundable assessment fee. This takes the benefits of fee for service to another level – by assuring those that enter into this business payment model are refunded any monies should they not proceed beyond the assessment stage of credit rating repair.

    Cons of fee for service
    The difficulty in a fee for service model is its restriction on consumers who can’t afford upfront payment, and can’t borrow due to a bad credit rating. At the same time, the fee for service credit rating repairer would likely impose less ‘defaults’ on consumer credit files.

    Recently MyCRA Credit Rating Repairs (who runs a fee for service model) implemented a payment plan system, to accommodate those clients who couldn’t afford to pay a large sum up front.

    Cons of no win no fee
    I found hidden costs let down this customer payment method significantly from a ‘best practice’ standpoint. Extra costs; and hidden costs dumped on consumers regardless of their success in credit rating repair can lead to confusion and anger over fees and charges.

    There is also the potential to skip vital steps in assessment which can lead to an inadequate volume of information prior to the engagement of credit repair – potentially leading to promises of credit repair not based in fact.

    Furthermore, should non-payment arise, the company may be forced to place defaults on credit files– a woeful situation that no credit rating repairer wishes to be in.

    Pros for no win no fee
    I found the no win no fee business payment model had merit due to the ability to help those people who otherwise could not afford credit repair.

    Other industries
    In deciding which customer business payment model to adopt for the credit rating repair industry, I address other professions where these debates have occurred.

    The financial planning industry is on the cusp of streamlining a fee for service payment model across the entire financial planning sector. This has been in response to demand for better transparency to combat criticism of conflict of interest – and uses a ‘best interest’ approach.

    This consumer ‘best interest’ approach has strong merit when constructing any best practice customer payment model in the credit rating repair industry.

    In the legal arena, the no win no fee model popular in personal injury claims has been criticised for misleading advertising and hidden costs, something which the credit rating repair industry should keep in mind when making any reforms.

    Recommendations for payment models
    I found both business models had merits for credit rating repair, provided these changes were made:

    – Refundable upfront fees
    –  Full disclosure of all fees, charges, terms and conditions on advertising.

    These changes would make customer payments fair and simple to understand.

    These best practice reforms would create transparency and credibility and would vastly contribute to providing a valid place for credit rating repair in Australasia’s credit reporting landscape in the future.

    Ethics in credit rating repair
    Ethics in credit rating repair should not be an anomaly.

    ”It [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”][credit rating repair] is a completely unregulated area,” Ms Cox says in the SMH article.

    But this is no longer true. The necessity for regulation has prompted an industry body to form – the Credit Repair Industry Association of Australasia (CRIAA).

    The newly published CRIAA Code of Conduct for the credit rating repair industry gives weight to ethical practice, fee structure and advertising, and sets some benchmarks in this area. See their website for more details as well as the full CRIAA Code of Conduct www.criaa.org.au.

    The opinion of Graham Doessel reflected in this article is personal and does not necessarily reflect the opinion of the CRIAA or any of its members.

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

  • Australia has new privacy legislation to fight worldwide cybercrime

    New laws passed the Senate yesterday changing Australia’s privacy legislation to bring us in line with other countries and pave the way for Australia to accede to the Council of Europe Convention on Cybercrime – effectively allowing Australia to work alongside other countries to share and access information to aid in investigations of cybercrime. We look at the implications for this new bill, and the benefit in investigating fraud cases which can not only lead to loss of monies but negatively impact the victim’s credit file.

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

    We have been following the passage of this Bill through Parliament for over 12 months, since its introduction into the House of Representatives in June. See http://mycra.com.au/blog/2011/06/government-brings-laws-war-cyber-crime-identity-theft/ and http://mycra.com.au/blog/2011/11/bill-fight-global-cybercrime-coming-year/ and looking at the possible impact these changes could have on identity theft numbers.

    The Cybercrime Legislation Amendment Bill 2011 amends the Mutual Assistance in Criminal Matters Act 1987, the Criminal Code Act 1995, the Telecommunications (Interception and Access) Act 1979 and the Telecommunications Act 1997.

    The Government amended the Bill in the Senate to address some of the recommendations made by the Joint Select Committee on Cyber-Safety, including privacy protections and aspects of the provision of assistance to foreign agencies. The Government has agreed in principle with 12 of the Committee’s 13 recommendations.

    The passing of the Bill means Australia is one step closer to acceding to the Council of Europe Convention on Cybercrime, meaning it would join 34 other nations that have already become a party to the Convention. The Convention is the first international treaty on crimes committed via the Internet and other computer networks, dealing particularly with computer-related fraud, child pornography and violations of network security.

    Attorney-General Nicola Roxon said in a statement to the media yesterday that the Convention will help make it easier for police to track down cyber criminals around the world.

    “In particular, this will help combat criminal offences relating to forgery, fraud, child pornography, and infringement of copyright and intellectual property.

    “The Convention promotes a coordinated approach to cybercrime by requiring countries to criminalise these computer related offences. The Convention also establishes procedures to make investigations more efficient to improve international cooperation,” Ms Roxon says.

    Privacy Protection or Privacy Invasion?

    One well publicised change to Privacy Law will be the increase in police powers of surveillance. Police will be able to enforce the retaining of data by internet service providers on persons of interest even before they have an arrest warrant.

    Whilst these legal changes are widely approved, some raised concerns during a Senate inquiry into online privacy that this part of the law threatens the Privacy of individuals and threatens human rights and civil liberties.

    There are so many reports that the world is effectively chasing the tail of cybercriminals – the extent of which is far-reaching and difficult to combat. Australia is reportedly now a prime target for fraud with many accounts of scams, bugs, phishing attacks etc etc often instigated from overseas shores.

    To find out more about how we as ordinary Australians fit into the cyber-crime puzzle, you can read our blog post about the ‘Dark Market’: http://mycra.com.au/blog/2011/09/insight-%e2%80%98dark-market%e2%80%99-cyber-crime-underworld/.

    And often by the time people know they have had fraud committed against them the dust has long settled on any trace.

    But the effects can be felt for years by their victims, especially if the fraudsters are able to steal an identity, and take credit out in their victim’s name. The victim is then not only faced with a mountain of debt, and a series of defaults against their credit file. Both of which are not easy to recover from. They have to prove it wasn’t them that initiated the debt – pretty hard when there is no actual ‘perpetrator’ that anyone can see.

    For the sake of people in this situation, and victims of other cybercrimes – in particular, child pornography which is possibly more rampant, more damaging and more difficult to investigate – we need to get united as we are on the Web.

    It may be a bitter pill to swallow for Australians to give up some of their rights to Privacy to be replaced with more privacy protection but we may all have to swallow it regardless.

    What you can do to protect your credit rating from identity theft

    Our message at MyCRA Credit Rating Repairs is: please take steps to protect your credit rating from fraud!

    Educate yourself – visit the government sites like SCAMwatch, Stay Smart Online, and the Attorney-General’s website. If you are interested in keeping up to date with what could be occurring – say in cyber-circles you can visit technology sites like ZD Net Australia, or Computerworld or even subscribe to MyCRA’s RSS Feed for updates on security issues affecting credit files.

    Know what’s on your credit file – grab a free copy of your credit file today from one or more of Australia’s credit reporting agencies, Veda Advantage, Dun & Bradstreet, and TASCOL in Tasmania which will be mailed to you within 10 days.
    Your credit report is free every 12 months – take advantage of this by ordering a copy every year. Make sure there are no defaults currently attached to your file. If they shouldn’t be there or there are errors – you may be eligible for credit repair.

    If you feel vulnerable to fraud, for a fee credit reporting agency Veda offers an ‘alert’ service, which informs you of ANY changes to your credit file such as a change of contact details or a credit enquiry, which would point to you being a victim of identity theft – possibly BEFORE there are harmful defaults put against your name.

    For more information on identity theft, or help with credit repair following identity theft, contact MyCRA Credit Rating Repairs tollfree on 1300 667 218 or visit our website www.mycra.com.au.

    Image: Victor/ www.FreeDigitalPhotos.net

    Image 2: thanunkorn/ www.FreeDigitalPhotos.net

  • New Credit laws passed Parliament yesterday which may protect those who need it most

    It’s not the long awaited comprehensive credit reporting, but it is the Consumer Credit Legislation Amendment (Enhancements) Bill 2012 passed by Parliament yesterday and waiting for Royal Assent. The reforms will among other things, alter laws around financial hardship, and put the first national cap on payday loans – which should assist those people who are struggling with credit and access to credit. We look at what this Bill will and won’t do for people on the fringe, or people who are under hardship, and what the implications will be in terms of their credit file and maintaining a good credit rating.

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

    For someone who is struggling with debt, keeping your head just above water and avoiding defaults is the best thing you can do for yourself. This is why the ‘streamlining’ of laws around financial hardship is so important. For someone who is suffering temporary hardship to be able to discuss alternative arrangements with their lender other than being hit with a default on their credit file is so vitally important because if they are unable to secure a hardship variation, the consequences can be dire – which starts with defaults, and can end with more debt and defaults.

    The consequences of having a negative credit listing, whether that be a default, a Judgment, a writ or a Clearout is generally a ‘lock-down’ of mainstream credit services for the term of the listing which is between 5 and 7 years. Once that lower-interest option is no longer available to you, it’s time to seek aid in other areas, especially in times of emergency. So that is where the payday lenders come in, or non-conforming lenders in the mortgage marketplace. These lenders have a bigger ‘risk’ because you may have a bad credit record, so they charge more in interest to offset that risk.

    The Government has decided to crack down on payday lenders and cap their interest rates. Minister for Financial Services Bill Shorten said in a statement to the media yesterday, that these reforms will stop loan sharks from exploiting vulnerable Australians:

    “These laws will place reasonable limits on what lenders can charge. The cap on costs appropriately balances consumer protection while still allowing lenders a return that is commercial.”

    “The Gillard Government has moved to reduce the financial harm caused by lenders who ruthlessly impose excessive fees and charges simply because vulnerable consumers cannot obtain alternative access to credit. These reforms continue the Gillard Government’s ongoing commitment to deliver a fair go for all Australians,” explained Mr Shorten.

    The Enhancements Bill introduces a cap for small amount credit contracts where the amount borrowed is $2000 or less, and the term is 1 year or less. For these loans the maximum any lender can charge is an establishment fee of 20 per cent of the amount of credit upfront and 4 per cent for each month of the loan. This provides for maximum charges of $72 on a loan of $300 over 1 month.

    The legislation will also introduce a number of other reforms according to Mr Shorten:

    • Applying a cap to other credit contracts based on the 48% cap currently in force in some Australian States. The Commonwealth cap addresses the range of avoidance techniques lenders currently have devised to avoid that cap.
    • Responsible lending obligations to address high risk conduct by small amount lenders.
    • For seniors who use reverse mortgages, greater certainty as to future outcomes when they enter into such contracts that the amount they are required to pay cannot exceed the value of the equity in their home (through a no negative equity guarantee).
    • Simplifying the procedures for borrowers to apply for a variation to their repayments on the grounds of financial hardship, as it is in the best interests of both parties to try and resolve these situations as quickly and simply as possible.

    Some objected to the Bill, saying the Government had effectively gone soft on the payday lenders.

    In The Australian, Greens Senator Sarah Hanson-Young said the final version was so weak it could have been written by the loan sharks.

    As a credit repairer, I am of the view that any restriction on interest rate for pay day loans is a welcome move. But I see the bigger picture. Some people who are forced into these situations are there because the system has failed them. Not all defaults deserve to be there, but they all have the same outcome for prospective borrowers. They are banned from obtaining mainstream credit.

    Where people are getting let down is in copping the mistake in the first place, and also in the correction of the credit reporting mistake. Whilst the powers that be say that there is a legitimate avenue for correcting credit reporting mistakes for the individual, any consumer who has had the pleasure of dealing with a big company for even small issues will attest to the difficulty in getting a straight answer, getting someone who knows what they’re talking about first time, and ultimately correcting the mistake. This is a common complaint of many of our credit repair clients. Most people are told if it’s paid up they can mark it as such but that’s about it. It’s a bit like David and Goliath, and in the end many just go away believing they are in the wrong.

    So in an emergency situation, people who are stuck with bad credit must turn to payday loans. Including those people that aren’t able to obtain a hardship variation for their circumstances, and have a default or other negative listing placed on their credit file.

    So I do applaud the new laws, but it’s not over yet.

    I am still waiting to see how the new credit laws within the Privacy Amendment Bill will impact on the ease of correction of mistakes in credit reporting as well as how overdue payments are going to impact their ability to get mainstream credit before I hang my hat up and say that the Government has done all it can to help vulnerable consumers and give a ‘fair go for all Australians’.

    If you are struggling with obtaining credit after being defaulted, and you believe the listing may be incorrect or unjust in any way, consider credit repair as an option to get an expert on your side who can help permanently remove unlawfully placed Defaults, Writs, Judgments and Clear-outs from your credit file. Call a Credit Repair Advisor today on 1300 667 218 to discuss whether you might be a suitable candidate for credit repair.

    Image: Daniel St.Pierr/ www.FreeDigitalPhotos.net

  • Fixing credit mistakes with a credit repairer – 15 common concerns

    Credit rating repair is a relatively new field and has been fuelled by just how difficult it can be in this economy to obtain credit. The loops and hoops people have to jump through – on top of the massive deposit they need to save, means people can’t afford for bad credit to stand in their way – particularly when they suspect it shouldn’t be there in the first place. If you are one of those brokers or prospective borrowers who are unsure whether credit rating repair is a legitimate option for you or your clients – we might be able to alleviate some concerns.

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

    15 COMMON CONCERNS WE HEAR EVERY DAY AS CREDIT REPAIRERS…

    1. Does the debt need to be paid?

    As we are an evidence based firm, it doesn’t matter if the debt was paid or unpaid. The service is in looking for whether the listing was legitimate or not rather than necessarily appeasing a creditor’s request for payment initially.

    2. Won’t just paying the listing allow me (or my client) to obtain finance without needing credit repair?

    Most clients believe that paying the default or judgment will “make it all right again” only to find out that a PAID default is almost as bad as an UNPAID default to many lenders. Only a CLEAN credit rating will ensure your options are not unnecessarily limited.

    3. When can a listing be removed from my credit file?

    If a listing has been placed correctly, it cannot be legitimately removed. However, in as many as 91.7% of cases the listings HAVE NOT been placed correctly and in accordance with legislation and are successfully removed.

    4. If the creditor says “no” is their decision final?

    Most definitely NOT! In fact in most cases, the Creditor will say No, No, and No again…this is why most times it is difficult for an individual to dispute their own credit listing themselves. The difference in using a credit rating repairer is based on our thorough knowledge of credit reporting legislation and industry legislation, we go about proving that the Creditor has NOT complied with the legislation and the default has been placed unlawfully and requires immediate removal.

    5. Is a default with a small debt amount easier to remove?

    Unfortunately this is not always the case. The dollar value of the debt makes very little difference – there can be just as much work in removing a small debt as a large one – as in most cases it is about doing the work to show unlawful placement of a credit listing. This is why MyCRA does not charge per debt amount. Because as you may already know – defaults for as little as $100 can stop someone from getting a home loan.

    We use a tried and tested system that has seen the successful removal of defaults from $100 to one at $750,000.00.

    6. Can you provide a time frame on removal?

    We’d love to say that all creditors follow the rules and comply with our requests within the legislated timeframes but hey, we’re here because in so many cases they DON’T comply.

    In most cases the delays are directly attributable to further non-compliance by a creditor – we can never know how long they’ll take to respond. The best anyone can do is give average timeframes.

    7. What are the average time frames?

    We have removed listings anywhere from 12 hours and 23 minutes (business hours) right through to almost a year.
    On average, we let clients know they should aim for 45 – 60 days. But of course this is no guarantee, as every case is different, and we don’t know how long it will take until we actually get the word that we’ve got the creditor to agree to remove that listing.

    8. How do I measure the costs involved?

    We like to think we offer excellent value with our rock solid commitment to ride the creditor (as much as we legally can) until ALL possible avenues are fully investigated to the maximum extent commercially open to us. Like a dog with a bone, we don’t give up. If you were to engage a Lawyer at say $350 per hour, it’d cost more than $5200 per default and still have no guarantee of success, so yes, we’re great value.

    Some people feel if there listing is only a small $$ value listing, that it should be easy and cheap to have it removed. The process for removal often includes Legislative Compliance Officers reviewing hundreds of pages of documents for each separate default listing and then comparing them to more than 2000 pages of legislation looking for that one (sometimes very small) point that would deem the listing unlawful and require its immediate removal. Our fees are fixed so there is no risk of them “blowing out” no matter how many hours we work on the case.

    To look at costs in another way, you can compare them with the amount you would pay in interest on a non-conforming loan.

    If you were to enter a non-conforming loan of $350,000 on a 30-year term at 9%, versus a standard loan at 7%, you would be up for an additional $487.62 per month. Over the first three years of the loan, that adds up to a staggering $17,554.34 just in interest alone – without taking into account set up fees etc. You can verify this and measure it against our costs here on the  MyCRA Credit Repair Calculator

    What can be removed???

    9. Can you remove commercial listings?

    Yes – we’ve had great success in removing commercial listings. Though a point to remember is that as there’s much less legislation protecting businesses, so in some cases it can take a bit longer.

    10. Can City Council Judgments be removed from my credit file?

    City council judgments can and do get regularly removed and in almost all cases, the process is sped up by our dedicated Judgment and Court Action Legislative Compliance Officers and full-time in house Legal Counsel.

    11. Can you remove credit card listings from my credit file?

    Credit Card listings are just like any other listing and can be removed as easily as any other.

    12. If I have paid the listing, does that mean it can’t be removed because I have effectively claimed fault?

    In a large number of the clients we help, many didn’t know they had an actual default until they were refused further credit. They may have had a rough spot or a disagreement with their creditor over the bill but it was all sorted out, the bill was paid and the client moved on. There still may be grounds for removal in many situations, and paid listings are removed just as regularly as any other listing type.

    13. If there is an unpaid amount, wouldn’t the creditor refuse to remove my listing?

    The creditor may not WANT to remove an unpaid listing, but if the creditor has not complied with the legislation relating to that default type, they have no choice – it MUST be removed.

    14. Can a discharged bankruptcy be removed from my credit file?

    Any acts of Bankruptcy, which include Part IX and Part XIIII Debt Agreements, are controlled by ITSA (Insolvency Trustee Service Australia) and the Acts of Bankruptcy are permanently recorded on the NPII (National Personal Insolvency Index). We do not remove bankruptcies.

    15. Do Default and Judgment removals follow the same process?

    We have developed very specialised proprietary systems for Court Judgment, Court Writ, Default, Clear-out and Overdue Account Listings. While many of the processes are similar in that legislation needs to be complied with, the Judgment Process stands out as being VERY different.

    We hope we have helped answers most of your common concerns. If you have any questions not covered here, please call one of our friendly and very helpful Credit Repair Advisors on 1300 667 218 for a no obligation chat. You can also find out more by visiting our main website www.mycra.com.au.

    Image1: Ambro/ www.FreeDigitalPhotos.net Image 2: graur razvan ionut/ www.FreeDigitalPhotos.net

  • RBA keeps interest rates static

    The increase in savings in Australia and trend to debt reduction, coupled with improving housing market and retail sales figures must have allayed the fears of the Reserve Bank today.

    As predicted by economists, The RBA has kept its cash rate unchanged this month at 3.5%.

    The Australian reports today:

    In a statement accompanying the rates decision, RBA governor Glenn Stevens said: “With inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate”.

    He said that global economic growth had softened in recent months and that commodity prices had declined. Australia’s terms of trade had peaked nearly a year ago, he added.

    But Australia’s labour market showed moderate employment growth, despite job cuts in some sectors, he said. Inflation also remained low, although the carbon tax would affect prices over the next couple of quarters, Mr Stevens said. A key inflation index released yesterday, the first to reflect the introduction of the carbon tax on July 1, showed that consumer prices rose only 1.2 per cent over the year to July…

    Economists expect one or two further interest rate cuts this year, not only to underpin growth at home but also to help reduce the value of the Australian dollar.

    The cuts are predicted for later in the year, which if made, could further inspire and accomodate more buyers into the housing market, and set more people up for finance approval.

    For assurance that your clients meet all the criteria for finance approval, they need to have good credit. If you have bad credit clients that should qualify for finance, they may be suitable for credit repair. Talk to a My CRA Credit Rating Repairs credit repair advisor today about referring bad credit clients for credit repair on 1300 667 218.

    Image: jscreationzs/ www.FreeDigitalPhotos.net

  • What’s the outlook for housing demand?

    Is it doom and gloom for the housing market going back to GFC-level lows? Or is the housing market stabilising? Veda says there are more mortgage enquiries for the April quarter indicating things are evening out, but the HIA has previously warned new home loan numbers will dip significantly for the rest of 2012. We consider the published figures, and look at what this may indicate for new loans and brokers and credit repairers alike heading into the second half of 2012.

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

    The results of  Veda Advantage’s Consumer Credit Demand Index for the second quarter of 2012 shows mortgage enquiries were up (+0.7%) for the quarter building on the small rise (+0.2%) seen in the March quarter.  Whilst still at historically low levels, Veda says the last two quarters results confirm that mortgage enquiries are stabilising.

    “Mortgage enquiries are a good lead indicator of housing demand. This stabilisation in mortgage enquiries suggests housing turnover is also stabilising. Lower interest rates and an improving housing affordability index align with the observed stabilisation in enquiries, after many quarters decline.” Angus Luffman, head of consumer risk at Veda says.

    Veda says the RBA’s cuts in May and June appear to have helped lift consumer sentiment close to a neutral level. However, fears about the global and domestic economic situation, in addition to share market declines and labour market uncertainty means that consumers remain cautious about credit.

    This optimism contrasts with concerns expressed earlier in the month by the Housing Industry Association (HIA) and reported in Australian Broker, which warns the second half of 2012 will see new home loan numbers dip to GFC-level lows.

    HIA is reportedly commenting on data released in conjunction with findings from the Australian Bureau of Statistics.

    HIA’s chief economist Harley Dale said it was a “disappointing result.”

    “It is evident that new home starts will bottom at GFC-equivalent levels this year, which is a very poor outcome for Australian businesses, households, and therefore the wider economy,” he tells Australian Broker.

    Figures show an overall dip of 2.4% in May, although it did show state-level growth across Queensland, South Australia and Tasmania.

    Australian Broker reports decline was recorded across NSW, Victoria and the Northern Territory, which reportedly lead the pack at an alarming 23.8% drop.

    “We needed to be seeing a strong recovery in new home lending coming through in the first half of 2012 to signal a significant turnaround in residential construction from what will historically be a very low trough,” said Dale.

    “That simply isn’t the case and government action in addition to lower borrowing costs is the combination required to restore healthy levels of confidence and activity.”

    Official figures for Housing Finance Data for May 2012 from the Australian Bureau of Statistics do indicate a fall in housing finance from April to May, but the latest figures show the number of new dwelling commitments actually rose marginally (0.8%) and the number of commitments for the construction of dwellings rose 0.3%.

    ABS HOUSING FINANCE MAY 2012 KEY POINTS

    VALUE OF DWELLING COMMITMENTS

    May 2012 compared with April 2012:

    ■The trend estimate for the total value of dwelling finance commitments excluding alterations and additions fell 0.5%. Investment housing commitments fell 0.7% and owner occupied housing commitments fell 0.3%.
    ■In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions fell 1.4%.

    NUMBER OF DWELLING COMMITMENTS

    May 2012 compared with April 2012:

    ■In trend terms, the number of commitments for owner occupied housing finance fell 0.5%.
    ■In trend terms, the number of commitments for the purchase of established dwellings fell 0.6%, while the number of commitments for the purchase of new dwellings rose 0.8% and the number of commitments for the construction of dwellings rose 0.3%.
    ■In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 17.8% in May 2012 from 16.8% in April 2012.

    So what can we expect from mortgage enquiries heading into the second half of 2012?

    Our experience in dealing with brokers daily shows that generally enquiry level and loan numbers are fairly good (within reason depending on the brokerage type) and there is much more positivity out there than there was six months ago. Most of this we assume can be attributed to the drop in interest rates earlier in the year.

    Regardless of numbers, with global economics still dim, lending criteria will probably continue to be conservative, and bad credit history will continue to be a big reason we see mortgage applications declined for some time to come.

    But it will also still be likely that applicants who present with bad credit may have grounds to dispute their credit rating if the listing is deemed to have been put there unlawfully – and there are a whole host of reasons why this may occur. You can check your client’s credit repair suitability with us any time by calling 1300 667 218. And because of the continuing difficulties faced with Creditors and the need for extensive knowledge of credit reporting and industry legislation, it will remain necessary for those people who want to dispute credit rating mistakes to have on their side a professional credit repair firm to be able to negotiate that removal effectively.

    Image: renjith krishnan/ www.FreeDigitalPhotos.net

  • Credit Repair Guide – Consumer Advocate Graham Doessel Answers Your Questions About Fixing Bad Credit

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    Credit Repair is still a relatively unknown profession outside of the finance industry.

    It is often not until a person is refused a loan due to adverse listings on their credit file that they begin to look for avenues to fix what is being said about them on their credit report – especially if they believe they have an incorrect credit report.

    Research on the subject can produce some contradictory advice, so we thought we would clarify the basics of credit restoration or credit repair as an industry in Australia, and explain the instances in which it will be the best solution for those people who are refused mainstream credit due to defaults, Writs or Judgments on their credit file.

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

    As Credit Repair Lawyers, we find clients are often unaware of just what is involved with repairing their credit rating. Most times they don’t even know what’s on their credit rating until they apply for a loan and are refused – let alone know what to do to fix it. And even those savvy clients who have done a bit of homework and attempted to correct a wrong credit listing by themselves can get brick-walled by their Creditor, told that the listing can only be marked as paid but will not be removed. So often their broker will suggest professional a credit repair law firm to them, or they may have found us on an internet search.

    Here are some of the main questions we get asked by our new credit repair clients – we hope they help you too if you want to know more about what credit repair is all about.

    What is professional credit repair?

    Professional credit repair involves a credit repair law firm working on your behalf to remove inconsistencies or errors which are found on your credit file, in order to give you the best chance of obtaining credit with the lender of your choice.

    How have professional credit repairers come about?

    The Credit Repair Industry in Australia has grown significantly over a short period of a couple of years. There are many reasons for this.

    • One is due to the tightening of bank lending criteria following the Global Financial Crisis (GFC) and then the Banking Royal Commission.
    • The decline in sub-prime lenders has meant that many non-conforming loans that were previously available to many people have since folded.

    Put simply, credit repair has grown from the need for potentially millions of credit file holders with black marks on their credit report to find some way to buy a home, a car, get a credit card and even a mobile phone plan.

    Because of tight lending criteria, the need for greater accuracy in credit reporting has arisen.

    When deciding whether to lend someone money, banks are looking at any reason people may default on a potential loan – which includes any suspect credit history.

    The mistakes creditors make every day in reporting negative listings may have previously gone unnoticed, but since the GFC, the royal commission and now Covid, they can be the very reason many people are refused credit.

    So with many instances of credit reporting ‘inconsistencies’, coupled with very little consumer knowledge on credit reporting law and a great need for a third-party negotiator when dealing with creditors, the credit repair industry has been driven forward.

    What are credit rating errors?

    Credit rating errors are quite common, and the onus of ensuring the accuracy of your credit file rests with you.

    But how do you know if a listing has been placed accurately on your credit file, or if it should be there in the first place?

    A credit repair lawyer with their knowledge of credit reporting legislation will find and address those instances where a credit listing may have been placed unlawfully on your credit file.

    Credit rating errors could be anything from

    • the listing placed on the wrong credit file; to
    • the basis of the credit listing being unfounded; to
    • incorrect notices being provided to the client; right through to
    • system errors and incorrect spelling, to name a few examples.

    Is credit repair legal?

    Yes. Credit repair lawyers work to ensure accurate and legal credit reporting.

    Creditors are bound by a large volume of legislation and codes of conduct to do with placing information on consumer credit files.

    These laws are in place to protect consumers from unfair and damaging credit reporting.

    What a credit repair lawyer does is investigate the procedures taken by the creditor when placing the listing on the credit file, and if necessary, alert creditors and other relevant authorities to the instances where they believe the listing was placed on the credit file unlawfully and for this reason request the listing’s removal from the client’s credit file.

    “If the listing has been placed unlawfully on the credit file, then it should not be there and should be removed.”

    What’s the process to fix my bad credit?

    Credit repair law is not an exact science, because every case is different but there are some common threads which run through credit reporting law which we follow.

    1. Firstly, we order a copy of your credit files on your behalf from one or more of Australia’s credit reporting bodies which tells us exactly who and what we are dealing with in relation to your bad credit.
    2. Then we investigate any avenues for disputing your credit listing or listings with your creditor.
      1. This involves requesting documentation from your creditor about your account, and
      2. cross referencing the procedures taken prior to and during the listing of the default, writ or Judgment with our knowledge of credit reporting legislation.
      3. This can be a lengthy process of review, and likewise, the creditor can at times take a while to provide the information they should.
    3. After we have all of the information, and reviewed it all against the legislation, we have the basis for a case for default, writ or Judgment removal.
    4. Then we formally communicate with your creditor to request the removal of what we would then deem to be a listing placed on your credit file unlawfully.

    This process can be a bit ‘back –and- forth’, as there are procedures that we, and they have to follow in accordance with industry and the law as well as negotiations which take place behind the scenes with creditors.

    The complaint may also need to be escalated to a higher authority such as an industry Ombudsman if there is no satisfaction with the creditor.

    If the creditor agrees to remove the listing, you will need to contact the credit reporting body to confirm it has been removed.

    The reason for this is that you do not create a credit ‘enquiry’ on your credit file by requesting information about your own credit report.

    If you want the best chance of obtaining credit, then you want to reduce the number of credit enquiries as much as possible.

    How long will it take to fix my bad credit?

    The length of time it will take to remove bad credit from your credit file is very much an unknown factor.

    It could depend on the particular facts relating to your application, including the evidence required to support each party’s claims; on the amount of cooperation we receive from your creditor/s including how quickly they respond to our requests; on the number of issues raised in your application; the volume and relevance of information and supporting documents provided by you and the complexity of the legislation relating to your particular defaults.

    We have had a previous success rate of up to 91.6% of removal on every case we take on, and this is on average taking 45 – 60 days (but as little as a couple of weeks) to achieve once we have deemed you suitable for credit repair.

    If my credit file shows an outstanding amount, should I pay it off?

    It depends on the nature of your credit listing dispute. We have in the past negotiated for the removal of many credit listings which still hold an outstanding amount. Your credit repair lawyer can give you further advice based on your individual case. This is why at MyCRA, the costs involved are not based on the amount owing but are on a per-listing basis. For more information on MyCRA Lawyers costs, visit our main website.

    If you have more questions about credit repair, contact our team on 1300 667 218 or visit the main website www.mycralawyers.com.au.

    Images: Stuart Miles/ www.FreeDigitalPhotos.net

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  • Businesses on verge of default: Cash flow issues leave more businesses unable to pay bills on time

    According to credit reporting agency Dun & Bradstreet, the June quarter came up grim for Australian businesses and particularly small business repayment terms. The number of businesses paying their bills on time fell considerably. It is predicted this will have a flow on effect to the whole economy.  We look at Dun & Bradstreet’s report, the ramifications for those individual businesses when it comes to commercial and personal credit rating defaults, and offer some simple ideas for managing business cash flow and keeping a clear credit file.

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

    According to the latest Dun & Bradstreet Trade Payments Analysis – examining the ability of firms to pay their bills, and pay them on time – the number of payments falling within the standard 30-day term fell 16.5 per cent quarter-on-quarter.

    Further underscoring the deteriorating conditions faced by businesses is the performance of small businesses, which recorded the biggest deterioration in payment terms of 2.2 days. Businesses with between one and five employees are now operating under an average term closer to that of larger firms, at 53.2 days.

    Dun & Bradstreet attributes simple lack of cash flow as the reason for the decline in businesses meeting the standard 30-day term.

    D & B Director, Adam Siddique, says cash flow issues within the small business sector will have a significant knock-on effect to the rest of the economy.

    “It is particularly concerning that SMEs are waiting longer to be paid, and as a result are taking longer to pay their own bills. Trade credit constitutes a significant and critical portion of non-banking finance.  When this is delayed, it withholds millions of dollars from businesses and the wider economy,” Mr Siddique said in a statement to the media .

    “Small business payment terms now more closely resemble those of a large corporation, however small operations are less equipped to manage for cash flow issues, particularly if they are waiting more than two months to be paid for goods and services.”

    In addition, two-thirds (62%) of all trade payments were late during the second quarter.

    The number of severely delinquent payments (90+ days overdue) also rose noticeably during the last 12 months – up 13 per cent since the June quarter last year.

    Mr Siddique predicts economic uncertainty and conservative consumers will continue to impede cash flow for businesses through the rest of 2012.

    He warns businesses to remain focused on the ‘fundamentals’ such as cash flow.

    “A proactive approach to risk and receivables management can often prevent a situation where businesses wait months to be paid,” he says.

    With the threat of delinquency facing many more commercial credit ratings in the small business sector, it is important to realise the connection to personal credit ratings that can often follow the small business default.

    Small business owners who allow overdue accounts to become the norm during the course of business could be unaware of the ramifications for not only the future of their commercial credit rating, but their personal credit rating as well.

    People should not take trade credit lightly, as it can impact both credit files. This applies to both outgoing and incoming accounts. Dropping the ball on either is not the best way to ensure repayments continue to be made within standard terms of trade. If repayments are delinquent, creditors can place defaults on the business credit rating.  But often the owner finds out as Director this is tied in to their personal credit rating as well.

    Long after the business problems are over, the owner can be haunted by this bad credit and denied the basics for their family – mortgages, car loans, credit cards, even mobile phones for 5 years. For someone recovering from a business failure, this can be completely debilitating, particularly if savings have previously been thrown at the business to try to keep it afloat.

    Here’s some ideas for the best ways a business can keep track of its cash flow and stay in the clear with their credit rating:

    1. Pay all accounts on time. Have systems in place whereby credit cards and all bills are paid on schedule if not by the Director then by Administration. If the business is running behind, creditors need to be contacted and payment plans possibly worked out before the due dates to best avoid a default listing.

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

    3. Consider credit checks for all potential account holders. As suggested by Sue Hirst in her article ‘Why You Need Good Terms of Trade’ (My Business Magazine August 2010) business owners should consider implementing a system of credit applications for potential clients who request a major account. This involves the business requiring a credit check on the prospective account holder with one or more of the major credit reporting agencies prior to undertaking a credit account with them.

    4. Regularly obtain a copy of both credit files –it is free for both consumer and commercial credit files once every year from one or more of the Australian credit reporting agencies. This will alert the owner early to any inconsistencies or errors on either business or personal credit files which could see their ability to obtain credit in jeopardy. If there are wrong defaults or mistakes on either the commercial or consumer credit file, it is important to address those inconsistencies immediately – and before it is a matter of urgency.

    5. Keep credit card limits within a set budget as specified by the needs of the company. Don’t be tempted to set a lofty limit to business credit cards as it may encourage needless spending and blow out the business budget.

    6. Be wary of excessive credit enquiries. People should get their credit health checked before applying for new credit, and only apply for credit they have full intention of pursuing.  Some lenders are rejecting loans for as little as two enquiries in 30 days, or six enquiries within the year.

    7. Most importantly, monitor accounts regularly.  Business owners still need hands on knowledge of the business’ expenses.  Check accounts are being paid and check receipts and credit card statements regularly.

    Bad credit attached to your business?

    If you are suffering with a bad credit rating, or have errors or mistakes on your credit file impacting your ability to get business credit, it would be well worth investigating whether you are suitable for credit repair.

    The criteria for credit repair success is generally people who have a credit listing that contains an error or errors, or people who believe their listing is unjust or incorrect.

    By engaging the services of a professional credit repairer, you are giving yourself and your business the best possible chance of being credit active again.

    Image: David Castillo Dominici/ www.FreeDigitalPhotos.net

    Image: sscreations/ www.FreeDigitalPhotos.net