MyCRA Specialist Credit Repair Lawyers

Tag: late payment notations

  • Beware guarantor loans for desperate first home buyers

    Media Release

    guaranteed loanBeware guarantor loans for desperate first home buyers.

    24 April 2014

    First home buyers desperate to get a foothold in the property market are receiving financial help from Mum and Dad or other family members at increasing rates through family guaranteed loans, but a consumer advocate warns there is no financial benefit for the guarantor, and significant credit rating risks.

    Graham Doessel, Non Legal Director of MyCRA Lawyers, a firm focused on credit disputes, says the difficulties people face entering the property market has sparked an increase in guaranteed loans, where the equity of a property owned by parents or other family is used as collateral.

    But Mr Doessel says many people may not be aware of the significant risks involved in this type of loan, which is being offered in some form by most lenders.

    “Most people don’t know that family guaranteed loans can be dangerous for your credit rating, because your credit history is then linked with the credit rating of your child or other family member, despite having no claim to the property, and little control over the outcome of repayments,” he warns.

    Mr Doessel says in most arrangements, if for some reason repayments are not met, both sides are liable for the debt, and both may be defaulted.

    “Unfortunately the guaranteeing party may not be aware the loan is or was in default until such time as they attempt to take out credit for themselves and are refused,” Mr Doessel says.

    He adds that new repayment history information being recorded on consumer credit files means loan repayments must be made on time or possibly face a ‘late payment’ notation against your name.

    “These late payment notations could impact your ability to get credit for two years,” he says.

    Otto Dargan, director of Home Loan Experts recently explained the rise in guaranteed loans to Mortgage Professional Australia (MPA):

    “Guarantor loans are now the only product that allows a first homebuyer with no deposit to buy a home and as a result, their popularity has increased,” he told MPA.(1)

    A survey conducted last year from ING Direct revealed that 32% of first home buyers in Australia receive financial assistance from family to put their housing finances on a firmer footing.(2)

    “The challenge of getting on the housing ladder has inspired a growing trend for first home buyers to obtain financial assistance in order to get the keys to their first property,” ING stated.

    Mr Doessel says a negative entry on a person’s credit report will mean it is difficult to get credit. He says defaults impact the ability to obtain credit for 5 years. In severe cases of delinquency, the guarantor’s own home is called upon.

    “In cases of significant arrears, the bank begins to use the guarantor’s property to recover lost debts,” he says.

    He suggests parents or family guaranteeing a loan should sit down and ask some tough questions before committing.

    “The most important question anyone contemplating guaranteeing a loan should be asking is ‘could we make the repayments should our child or family member be unable to?’ If in doubt, don’t risk it,” Mr Doessel says.

    He says it is vital to make these considerations:

    1. Seek outside independant and or legal advice prior to any agreement being made.

    2. Insist there is adequate protection to cover anything that may go wrong during the term of the loan, such as life or income protection.

    3. Set a specific amount that will be guaranteed.

    4. Ensure there is an ending to the time period of the guarantee.

    5. Request a duplicate copy of all bank statements sent during the course of the guarantee. This way, payment problems can be addressed prior to any defaults, while your good credit rating is still intact.

    “Get in and do your research about alternatives to a guaranteed loan before you agree. As a parent or family member you may find you can help your first home buyer in other ways without risking your good credit rating to do it,” Mr Doessel says.

    /ENDS

    Please contact:

    Graham Doessel – Non-Legal Director Ph 07 3124 7133

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

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

    MyCRA Lawyers 246 Stafford Road, STAFFORD QLD. Office Ph: 07 3124 7133

    About MyCRA Lawyers: MyCRA Lawyers is an Incorporated Legal Practice focused on credit file consultancy and credit disputes. MyCRA Lawyers means business when it comes to helping those disadvantaged by credit rating mistakes.

    (1) http://www.homeloanexperts.com.au/wp-content/uploads/2009/09/Otto-MPA-Guarantor-Article.pdf

    (2) http://blog.ingdirect.com.au/2013/01/02/is-housing-expensive-66-of-australians-say-yes/

    Image: Ambro/ www.FreeDigitalPhotos.net

     

  • Credit reporting and the year ahead

    credit reporting and the year aheadSome significant changes will be appearing this year due to Australia’s credit reporting legislation overhaul in March. These changes could impact all Australians, and especially those involved in the credit industry…Find out the 5 significant changes we’ll be watching in 2014, and decide what action you need to take for your business or for your own finances.

    By Graham Doessel, Non-Legal Director MyCRA Lawyers

    Are you ready for the year ahead in credit reporting?

    Below is my guest post in The Adviser this week ‘Credit reporting and the year ahead‘ .

    In this post, I discuss the 5 big changes we’ll be watching closely in 2014.

     

    Credit reporting and the year ahead (The Adviser)

    13 January 2014 | Graham Doessel

    2014 will bring some heavy changes to Australian credit reporting following the implementation of the Privacy Act 1988 (Cth) Amendments in March.

    What are the 5 big changes that we’ll be watching closely this year which could impact all involved in the credit industry?

    1. Repayment History Information (and specifically ‘late payment’ notations).

    The introduction of repayment history information (RHI) to Australian credit reports means there is going to much more data available to lenders in which to make their serviceability calculations from.

    One of the pieces of credit reporting data which could be a deal breaker for many prospective borrowers – is any late payment notations. Separate from defaults, a consumer’s RHI will show any late payments made on licenced credit – e.g. loans and credit cards and the date the payments were made.

    That information has been collected from December 2012 – but largely consumers are unaware of this important change. From March this year, it will show up on consumer credit reports across the country – and it will be interesting to see how many people have these new notations against their names.

    It remains to be seen how lenders will treat this information (as all serviceability calculations are so subjective), and precisely how the information will impact credit worthiness.

    We don’t know yet how many days late will be too late, and we won’t know this information until a new Credit Reporting Code of Conduct is registered. It has been proposed a repayment more than 5 days late will see you with one of these notations against your name.

    Another uncertainty is how many will be too many and mean the lender’s computer says ‘no’ or the lender’s computer says ‘yes’ but at a higher interest rate.

    2. New obligations on credit reporting bureaus

    With the registration of a new Credit Reporting Code of Conduct (CR Code), will be a new requirement on credit reporting bureaus such as Veda, Dun & Bradstreet, Tasmanian Collection Services and new entrant Experian, to audit the compliance of credit providers.

    The new CR Code requires CRB’s to monitor credit providers, and to determine those that pose the greatest risk of non-compliance with their core obligations under the Privacy Act. The Code determines these “at risk” credit providers would be subject to audits.

    We will be interested to see precisely how this obligation is metered out to credit reporting bureaus, and whether an independent overseer will be appointed to ensure objectivity. We hope this change will improve the accountability of credit providers. We also hope it will solidify the two entities as being ‘separate.’ We have found in the past during credit disputes, a client-type relationship tends to exist between agency and credit provider, at the exclusion of consumers.

    Further to this, it was proposed in the draft Code of Conduct, that CRB’s should also publish on their website an annual report by 30 June each year outlining information relating to credit report correction. The information would relate to the number of correction requests received, the number of successful correction requests, and the number of complaints received.

    This information has previously never been supplied to the Australian public from our credit reporting agencies (because there has never been a requirement to). If implemented as part of the new CR Code, this information will give Australia a much more accurate picture of the depth of credit reporting issues as they exist.

    3. The ‘open’ credit score

    Currently, Australia’s largest credit reporting agency, Veda is offering consumers the opportunity to purchase their ‘Veda score’ so they can see the number that lenders have been able to see when requesting credit information from Veda.

    With the Privacy changes will bring an obligation on those agencies providing a credit score, to provide information on how it is calculated. Veda has made moves to do this already.

    In addition to Veda, U.S. giant ‘FICO’ has said it would also like to offer open credit scoring to the Australian public.

    FICO currently offers its data analytics services and credit scoring to lenders for internal use in Australia, and has been doing so for many years. It is reportedly used in 90% of consumer lending decisions in the U.S.

    So if it does provide an alternative to Veda’s “VedaScore” it will be interesting to see the differences in the scores, and which one is more accurate reflection of lender serviceability calculations.

    4. “Improved” ability to correct consumer credit reports

    Creditors can and do make mistakes when placing listings on credit files, and the onus is on the consumer (or someone acting on their behalf) to identify and address those inconsistencies.

    But up till now, it has very much been a case of David and Goliath – with some consumers finding they are lumbered with listings that just shouldn’t be there due to not having the extensive skills and knowledge required to address their complaints in the appropriate way.

    The new laws around complaints correction have promised to streamline the correction and complaints process for credit reporting as well as force the credit provider to justify credit listings and actually substantiate the information it reports on credit files.

    These are significant changes which we look forward to putting into practice on behalf of the many clients we act on behalf of in credit dispute cases.

    5. New powers for the Privacy Commissioner

    New Privacy Laws provide that civil penalties can be issued by the Privacy Commissioner for a breach of certain provisions of the Privacy Act, and including the Credit Reporting Code of Conduct. They can also be imposed for serious or repeated breaches. These can be up to $220,000 for an individual or $1.1 million for an organisation.

    Finally there is some real incentive for credit providers to take due care with adding listings to credit files. The Privacy Commissioner has said he will not be taking a soft approach when it comes to breaches of the Privacy Act, and we will be watching with interest to see if this also applies with the same gusto to credit reporting breaches covered under this legislation.

    All in all, this year could bring some really positive changes to Australia’s credit system, but with it will be some teething problems resulting in confusion for some consumers. If nothing else, there’s going to be some really interesting times in credit reporting, and in finance in the months ahead.

    ________________________________________________________________

     GD COLOUR HEAD SHOTGraham Doessel is the Non-Legal Director of MyCRA Lawyers.

    MyCRA Lawyers advocates for individuals in matters of credit file dispute.

    An early pioneer in credit repair, over recent years Graham has become a frequent consumer spokesperson for issues impacting credit reporting, and is the Secretary and Spokesperson of the Credit Repair Industry Association of Australasia (CRIAA).

    Graham also founded and is the Non-Legal Director of Armstrong Doessel Stevenson Lawyers.

     

  • Credit survey shows mobile bill a priority at expense of mortgage

    late paymentA NewsPoll survey sponsored by credit reporting agency, Dun & Bradstreet has found that financially strapped consumers would forego paying their mortgage before they skipped paying their mobile phone bill. We look at the details of this survey and the ramifications for their credit file if people choose this path in reality when they are under financial stress.

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

    The Age published a story The Hard Truth on Credit Reports on Sunday, detailing the results of this survey sponsored by Dun & Bradstreet. We look at an excerpt from it:

    Newspoll asked 1200 consumers which bills they would not pay if they did not have enough money to meet their financial obligations. The mortgage is the most-nominated expense for non-payment, followed by pay TV subscriptions. More consumers would forgo payments on the mortgage, pay TV and electricity before they stopped paying their mobile phone bills.

    The survey, sponsored by credit reporting agency Dun & Bradstreet, goes against the accepted wisdom that most people would think it essential to keep paying the mortgage on time. Steve Brown, head of the consumer credit bureau at Dun & Bradstreet, says the results are probably explained by the fact consumers think about the consequences of not making their financial obligations.

    ”They are looking at how their lifestyle would be affected,” he says. ”With the mortgage, the reality is nothing is likely to happen for months,” Brown says. That is because there are processes that have to be followed by a lender before the house can be repossessed and the lender is going to negotiate first with the borrower.

    Brown says another factor could be that delaying a mortgage payment ”frees up” more cash than not paying some of the other household bills. Many people probably feel they cannot do without the mobile phone, he says. The pay-TV subscription, he says, is probably regarded as a bit of a luxury.

    Whilst these suggestions from Mr Brown are fair assumptions, one of the other reasons consumers could be nominating their mobile phone bills would be paid on time over their mortgage could also be to do with the long history of difficulties associated with dealing with telcos in situations of financial difficulty. Perhaps there is the perception that banks would be fairer in their approach to difficulties, and easier to deal with than telcos in these situations. Consumers have in the past experienced problems with customer service with telcos. The multitude of complaints in this area resulted in a major inquiry by the Australian Communications and Media Authority (ACMA) and the report – Reconnecting the Customer. (The telco industry has since developed a Telecommunications Consumer Protections (TCP) Code which came into effect on 1 September 2012).

    The other thing this report reveals is a lack of awareness across the board of current laws around reporting of late payments on Australian credit reports.

    If you are in real financial difficulty – try to sort it out with all of your Credit Providers prior to being late with any bill payment. But if you were to choose which credit account to miss paying – don’t make it the mortgage or credit card!

    Here are the current rules governing Australian credit reports:

    Repayments to licenced Credit Providers – including payments due for mortgages, credit cards and other licenced credit must be made on time. If you are more than 5 days in arrears with these payments, a late payment notation will be recorded against your name. This has been happening in Australia as of December 2012 and will show on your credit report as of March 2014. Late payments will be erased after two years. If you are more than 60 days in arrears on any account – including licenced credit, mobile phones and utilities, you will have a default recorded against your name. Defaults will be erased after five years.

     Brown says about 85 per cent of people have no reportable problems under the present system. Another 5 per cent have multiple incidents of payment defaults.

    The remaining 10 per cent have had a ”bump in the road”, Brown says. They will have missed payments due to a life event, such as losing their job or because of an ill partner, but will have since returned their finances to good order.

    Brown says the extra information will help the 10 per cent who have had occasional problems to restore their credit worthiness more quickly. However, there are some individuals who are ”teetering” on defaulting but are receiving more credit because lenders are not seeing the fuller picture.

    ”Some of the 85 per cent who do not have any reportable problems under the current reporting system are, in fact, overcommitted,” Brown says. They may find it harder to get credit under the new regime, he says.

    While the intention of the legislation may be to weed out “overcommitted” borrowers, we have long argued since the repayment history legislation was first in the pipeline that the reporting of late payments will mean those who have even one late payment will be subject to higher interest rate charges while the repayment history information sits on their credit file. We will be watching this phenomenon closely as it unfolds as of March 2014. We hope this new information won’t be a tool to charge higher interest rates to borrowers who have had a “bump in the road” or who have even just missed a repayment due to life circumstances such as holidays, or missed bills and is just used as it is intended – to seek out the overcommitted who are constantly teetering on default.

    How to Handle a “Bump In The Road” under the New Laws.

    For those people suffering temporary debt stress, there is now a large incentive to talk to your bank.

    If you are suddenly unemployed, fall ill, separate from your spouse or have a period of intense debt stress – you should know there are laws that may be able to help you through this difficult time. By putting your hand up early– before your accounts go into arrears – you could save your credit file.

    If you are experiencing temporary financial hardship you should contact your bank or building society or other Credit Provider and ask to speak with the Financial Hardship Variation Team.

    Using the specific words ‘financial hardship’ will help make it clear to the bank what you need. Ideally, act before you fall into arrears on your account – to save your credit file when you recover from this difficult time.

    They may make arrangements with you to get you over this temporary bump in the road, which could include reducing repayments, or freezing repayments for a period of time. To find out more, read the Australian Bankers’ Association’s Factsheet on financial hardship.

    To access more information about your credit file, contact MyCRA on 1300 667 218 or visit our website www.mycra.com.au.

    Image: Naypong/www.FreeDigitalPhotos.net

  • Access to credit will fall with introduction of new credit reporting data – and it’s being collected now

    Press Release

    default listingAccess to credit will fall with introduction of new credit reporting data – and it’s being collected now.

    27 June 2013

    Credit numbers are expected to decline when more data is reported about Australian credit habits in March next year, and a consumer advocate for accurate credit reporting warns, some simple mistakes may mean it is your credit worthiness on the line.

    CEO of MyCRA Credit Rating Repair, Graham Doessel says this is an important time to know about Australia’s credit laws, and to be careful with how you use and repay credit.

    “Australian consumers are currently under the microscope with their repayments, and if they are more than five days late with their repayments to licenced Credit Providers, that is going on their credit record now for two years and will show up as of March next year,” Mr Doessel advises.

    “In my opinion, this is going to trip up many Australians. With only a 5 day grace period proposed, it may mean many Australians are unnecessarily banned from credit due to simple billing mistakes, lost paperwork and other payment mishaps,” he says.

    The prediction of reduced credit numbers has been echoed by Dun & Bradstreet CEO, Steve Brown at a recent Australian Banking and Finance Conference.

    Publication Banking Day reported Mr Brown as telling the conference that a contraction in consumer credit will take place following the introduction of comprehensive reporting in March.

    “Lenders will start to learn things about consumers that they did not know before, such as the number of late payments they make,” Brown says.

    And so say Citigroup.

    “Citigroup Australia’s country risk director for consumer, CLN Murthy, agreed that there would be a tendency to reduce credit limits after comprehensive credit reporting came in,” Banking Day reports.

    Repayment information will be part of five new data sets to show up on your credit report as part of wide-sweeping amendments to Australia’s Privacy Act, which includes a new Credit Reporting Code of Conduct.

    “Prospective lenders will be privy to your repayment habits – and the word is out that more and more information may be on the table going forward,” Mr Doessel warns.

    Banking Day recently reported that Mr Brown and others in the consumer finance industry will be pushing for even more data to be included in the future.

    “Brown said Dun & Bradstreet would like to see the inclusion of account balance data in credit files,” Banking Day reports.

    The long term plans with respect to repayment history information is to be able to offset good repayment history against a default listing. The conference predicted that products and pricing structures could be developed for these borrowers.

    In the meantime, Mr Doessel says there are some simple things credit-active Australians can do to make sure their credit-worthiness remains in-tact:

    1. Pay on time, every time. Pay within five days of your bill’s due date to avoid a late payment notation. It doesn’t have to be a big amount to impact you. Too many late payment notations will probably mean you’re refused credit, or offered only a high interest rate.  

    2. If you can’t pay, actively seek help. There are new laws to help prevent you from being defaulted if you are under financial hardship, provided you get in early with your Credit Provider. So there is a new incentive to get in and work it out prior to letting your accounts go into arrears and copping a default listing.

    3. Seek cautions credit limits. If you’re not using it, don’t have it is the general adage. If you take out a credit card or other line of credit, it’s probably not wise to opt for a lofty limit, but ask for an amount closer to what you intend to use.

    4. Consider identity theft risks. Understand how lucrative your personal information is and take steps to keep abreast of how it can be at risk. New laws will allow you to place a ban period on your credit information if you believe you may be at risk of identity theft. Acting quickly may prevent credit file misuse.

    5. Check your credit file regularly. With the new information available, it will be more important than ever to check your credit file. Many people don’t know you can do this for free annually through the Australia’s credit reporting agencies and a copy is sent within 10 working days.

    6. Correct credit information which you believe is inaccurate, inconsistent or unfair. To offset the new information, new laws will make it fairer for those disadvantaged individuals to access and correct their credit report.

    But Mr Doessel says there will still be a requirement to work within and have knowledge of credit reporting law when disputing an inaccurate or unfair credit listing.

    “It is important to note, that Credit Providers and Ombudsman must act impartially and cannot advocate for you,” he warns.

    He says you can start by contacting your Credit Provider yourself to alter incorrect information, or you can put your case for dispute in the hands of an advocate.

    “You should take steps to rectify mistakes before the information has any bearing on a credit application you may make in the future,” Mr Doessel says.

    “You should take steps to rectify mistakes before the information has any bearing on a credit application you may make in the future,” Mr Doessel says.

    /ENDS.

    Please contact:

    Graham Doessel – CEO Ph 3124 7133

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

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

    MyCRA Credit Repair 246 Stafford Rd, STAFFORD Qld

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

    Image: Victor Habbick/ www.FreeDigtalPhotos.net

     

     

  • A ‘fair go’ in the credit system for those under financial strain still a way off.

    Media Release

    [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”]

    Financial Hardship
    Financial Hardship

    A ‘fair go’ in the credit system for those under financial strain still a way off.

    14 February 2013

    From March 1, national credit reform will see steps made towards a fairer credit system for disadvantaged Australians, but whilst a consumer advocate for accurate credit reporting welcomes the changes, he says those consumers suffering credit impairment may still come across difficulties getting fair treatment in the credit reporting landscape.

    CEO of MyCRA Credit Rating Repair, Graham Doessel says for those Australians experiencing financial hardship, better protections will be afforded through significant reforms to the National Consumer Credit Protection Act which is due for implementation on March 1 2013.[/fusion_builder_column][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][i]

    “For those people doing it tough – one of the most important things they need is to be able to open a dialogue with their bank and make moves to guard their asset and their credit file during periods of financial difficulty, and this will be formalised under the new financial hardship laws,” Mr Doessel says.

    But he says for credit impaired individuals, we are yet to see the full extent of any ‘fairness’ until the implementation of amendments to the Privacy Act 1988 occur in 2014.

    “Whilst there are many aspects to this credit reform which will be helpful to those disadvantaged Australians, such as hardship provisions and capping pay-day loans, the most significant change for people forced ‘on the fringe’ will be within the area of correcting credit reporting mistakes, which won’t be implemented until March 2014,” he says.

    The Privacy Amendment (Enhancing Privacy Protection) Bill 2012 will change the Privacy Act 1988 in the area of correction of credit reporting inconsistencies, including enabling consumers to force their Creditor to justify a disputed listing; and give consequences for credit reporting breaches.

    Next month’s implementation of the National Consumer Credit Protection Amendment (Enhancements) Act 2012 will also bring reforms to a range of credit areas, with the sole regulator being Australian Securities and Investment Commission (ASIC).

    A range of credit reforms will include;

    * Changes to procedures for hardship applications under the National Credit Code.

    * A ban on short-term credit contracts (that is not a continuing credit contract; where the credit provider is not an authorised deposit-taking institution (ADI); the credit limit of the contract is $2,000 or less; and the credit contract is for a maximum term of 15 days or less).

    * New obligations for small amount credit contracts (that is not a continuing credit contract; where the credit provider is not an ADI; the credit limit of the contract is $2,000 or less; and the credit contract is for a maximum term of 1 year) including:

    * introducing presumptions of unsuitability where a consumer is in default of an existing small amount credit contract; or in the preceding 90 days, a consumer has been a debtor under two or more other small amount credit contracts

    * Specific protections for reverse mortgages – such as the requirement to provide consumers with projections of the debtor’s equity in the property under a reverse mortgage and a reverse mortgage information statement.

    * Remedies for unfair or dishonest conduct by credit service providers.[ii]

    Mr Doessel says whilst the new obligations for Creditors will have significant advantages, they are only part of the credit reform ‘puzzle’. He says credit reporting mistakes still occur frequently, and individuals can be disadvantaged and refused mainstream credit by a system that has failed them.

    “People with defaults on their credit file can be severely disadvantaged – locked out of mainstream credit for 5 years. Not all defaults deserve to be there. People are getting let down by the system and have equal trouble correcting their credit reporting mistakes.”

    “Whilst the powers that be say that there is a legitimate avenue for correcting credit reporting mistakes for the individual, many consumers who have dealt with big companies for even small complaints 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,” he says.

    He is hopeful that a large piece of the puzzle for those suffering hardship unfairly will be completed once the Privacy Act 1988 amendments come into effect in March 2014.

    “It remains to be seen next year how changes in credit reporting law will allow credit impaired individuals to be able to address inconsistencies on their credit report which can see them disadvantaged and funnelled into expensive credit such as payday loans,” Mr Doessel says.

    He hopes Privacy Act amendments will see fewer of those consumers locked out of mainstream credit unnecessarily – but he says it is a matter of seeing how the laws pan out.

    “My concern is, how ‘late payment notations’ (which are being recorded now as part of the Privacy Act changes) will impact credit suitability and I would hope repayment history information will not undo credit approval if the debtor has managed to avoid a default and negotiate a variation of repayment terms because of temporary hardship under these new laws,” he says.

    “So there is still going to be a time of uncertainty for many involved in credit, including for consumers. I know the intention is that eventually, we will see a better and fairer credit system for all – but I think the road to it could be a rocky one,” he says.

    /ENDS.

    Please contact:

    Graham Doessel – CEO Ph 3124 7133

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

    http://www.mycra.com.au/ 246 Stafford Road, STAFFORD QLD. Ph: 07 3124 7133

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

     

    ——————————————————————————–

    [i] http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=LEGISLATION;id=legislation%2Fbills%2Fr4682_third-reps%2F0001;query=Id%3A%22legislation%2Fbills%2Fr4682_third-reps%2F0000%22

    [ii] http://www.asic.gov.au/asic/asic.nsf/byheadline/ASIC+Credit+Reform+Update+-+latest+issue?openDocument

    Image: David Castillo Dominici/ www.FreeDigitalPhotos.net[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

  • Credit reform about to take effect March 1 2013

    credit reformWe look at Amendments to important legislation to take effect from 1 March, and how this will impact consumers and all involved in the credit system.

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

    The Australian Securities and Investment Commission (ASIC) has advised subscribers in a recent newsletter to be aware of new credit obligations commencing as part of amendments to NCCP.

    From March 1, the National Consumer Credit Protection Amendment (Enhancements) Act 2012 will bring reforms to a range of credit areas and ASIC will be the single regulator.

    ASIC Commissioner Peter Kell has outlined the main areas of reform, which most impacted individuals and businesses should be familiar with. Here’s the main points:

    * Changes to procedures for hardship applications under the National Credit Code.

    * Restrictions on the use of certain words, including ‘independent’ and ‘financial counsellor’.

    * Remedies for unfair or dishonest conduct by credit service providers.

    * Specific protections for reverse mortgages – such as the requirement to provide consumers with projections of the debtor’s equity in the property under a reverse mortgage and a reverse mortgage information statement.

    * Additional obligations, including new disclosure requirements, on consumer leases to provide greater regulatory consistency between leases and other functionally similar forms of credit.

    * The introduction of disclosure requirements in relation to the use of employer payment authorisations.

    * A ban on short-term credit contracts (that is not a continuing credit contract; where the credit provider is not an authorised deposit-taking institution (ADI); the credit limit of the contract is $2,000 or less; and the credit contract is for a maximum term of 15 days or less).

    * New obligations for small amount credit contracts (that is not a continuing credit contract; where the credit provider is not an ADI; the credit limit of the contract is $2,000 or less; and the credit contract is for a maximum term of 1 year) including:

    * introducing presumptions of unsuitability where a consumer is in default of an existing small amount credit contract; or in the preceding 90 days, a consumer has been a debtor under two or more other small amount credit contracts

    * disclosure requirements for licensees’ premises and websites; and * a ‘Protected Income Amount’ where the borrower is Centrelink-dependent.

    COMPLIANCE AND ENFORCEMENT APPROACH:

    Immediately following the 1 March 2013 commencement date, ASIC will adopt a balanced approach to administering the new requirements when industry makes genuine efforts to comply. ASIC will generally be tolerant of those genuinely trying to achieve compliance and will work with industry participants to address and rectify any problems.

    However, ASIC will certainly take a tougher approach where it encounters deliberate breaches, serious misconduct or significant risk of consumer detriment.

    ASIC will review its approach and compliance expectations after the first few months after which industry should have fully adapted to the new obligations.

    CONSUMERS who consider that a lender or broker has not complied with the new obligations can make a complaint to the lender or broker directly. If the problem cannot be resolved – the consumer can proceed to an external dispute resolution scheme (EDRS). Consumers can also make a complaint to ASIC to consider whether there has been a breach of the legislation.

    Further information for consumers will be available from 1 March 2013 on ASIC’s website www.moneysmart.gov.au.

    The streamlining of laws around financial hardship is a significant step in credit reform. The encouragement of an open dialogue with Creditors at times of debt stress, and the option for people to negotiate alternative arrangements with their lender other than being hit with a default on their credit file is so vitally important.

    The consequences of having a negative credit listing, whether that be a default, a Judgment, a writ or a clear-out being generally a ‘lock-down’ of mainstream credit services for the term of the listing (5-7 years).

    This means some consumers unable to secure a hardship variation, can fall into a ‘debt trap.’ Once that lower-interest option is no longer available, then alternative lenders may be sought – especially in times of emergency.

    Within this legislation, is also the cap on payday lenders which the Government hopes will stop loan sharks from exploiting vulnerable Australians:

    “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,” Minister for Financial Services Bill Shorten said in a statement to the media last year following the bills passing.

    The Enhancements introduce 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.

    Caps on payday loans may deter loan sharks – but there is a bigger picture for those forced out to the fringe. Some people who are in situations where they can’t get mainstream credit 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.

    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.

    The effectiveness of consumers being able to correct credit reporting mistakes will still be a large piece of the puzzle to complete when we talk about ‘fairness’ for disadvantaged Australians in the credit system. Promised reforms to the correction of credit reporting mistakes as part of the Privacy Act 1988 amendments won’t take effect till later this year.

    Hopefully those amendments will genuinely ease the correction of credit reporting mistakes. But they must also be looked at in conjunction with the other amendments to the Privacy Act. It is not known how ‘late payment notations’ (collected now) will impact credit suitability and how unfair late payment notations will be viewed or whether they will be part of the new correction laws at all.

    So there is still going to be a time of uncertainty for many involved in credit, including for consumers. My hope is that eventually, we will see a better and fairer credit system for all – but the road to that goal could be a rocky one.

    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 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: Stuart Miles/ www.FreeDigitalPhotos.net

  • Are Australian house prices set to crash?

    Is it good news or bad for the housing market? We look at what’s happening in the property market in Australia and expert opinion as to where we’re heading in the future.

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

    It has been reported by major newspapers that house prices are on the way up. RP Data’s monthly report reveals that property prices have risen for the fourth consecutive month. Capital city dwelling values rose 1.4 per cent in September, according to a Sydney Morning Herald story last week. RP Data’s research director, Tim Lawless attributed the improvement to low interest rates.

    But barely before the housing market has even gotten off the ground, there have been warnings about the over inflation of house prices and over commitment. Credit Rating Agency Moody’s Investors has warned the Reserve Bank and regulators that low interest rates could fuel a housing bubble in Australia which they say will inevitably burst – leaving the market more vulnerable to a crash. Moody’s say despite low credit growth – banks need to maintain high credit standards in order avoid a U.S. style lending surge.

    As reported by Mike King (Motley Fool) in Ninemsn:

    “Lower interest rates could encourage borrowers to load up on more debt, at a time when household debts are still fairly high.  A housing crash could see many homeowners over-leveraged and owing more than their house is worth – similar to what happened in the U.S. However, unlike the US, where banks in many states don’t have recourse to people’s other assets, Australian banks can pursue borrowers to recover any shortfalls between a home loan and the sale value of the house,” King says in the story Are we heading for a house price crash?.

    This may be good advice for many borrowers to heed in the back of their minds. It may be better to borrow conservatively, in order to cover the potential loss of a market turning backwards, and to avoid redrawing on the original amount during the early years of the loan.

    Will we really experience a housing bubble?

    If banks heed warnings from the likes of Moody’s, lending criteria will still remain pretty tight through the foreseen house price increases – at least in the short term. Also, the new information which will be available on credit reports may cause lenders to refuse credit to more people in the coming months as well.

    We are yet to see what the addition of ‘late payment’ notations on Australian credit reports (information about when accounts are paid late) will do for lending figures. Under new credit laws, the Privacy Amendment (Enhancing Privacy Protection) Bill 2012,  payments can be as little as one day late and be noted on consumer credit files.

    It is uncertain the impact these notations will have on someone’s ability to obtain credit.

    I would imagine many lenders, in the interest of ‘responsible lending’ would not want to have on record that they have loaned major credit to a serial late payer. Could lending to someone who had a few late payments on their record be classed as ‘irresponsible lending” should they default? What will be determined as too many late payments on a credit file is not yet defined and is quite a subjective aspect of these new laws which will be up to each lender/insurer to decide.

    I predict that this aspect will lead to fewer approvals as banks err on the side of caution, at least in the short term.

    For more information on repairing your credit file and removing inconsistent credit listings for good, to give you the best chance at being approved for credit at the best interest rates contact a Credit Repair Advisor on 1300 667 218 or visit our website www.mycra.com.au.

    Image: Sujin Jetkasettakorn/ www.FreeDigitalPhotos.net

  • Australian Privacy Foundation says new credit laws will work against consumers

    The Australian Privacy Foundation (APF) has come out swinging at the Federal Government’s proposed amendments to privacy legislation, which incorporates amendments to credit reporting law. During the Senate inquiry into the Privacy Amendments (Enhancing Privacy Protection) Bill 2012, the APF slammed the new laws as a “lost opportunity” to improve privacy, and specifically credit reporting practices. We look at the APF’s comments and what consumers should be concerned about in terms of these new credit laws for the health of their credit file, and ability to obtain credit in the future.

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

    The APF’s comments appeared in a recent IT News article titled ‘Australian Privacy Foundation slams Privacy Amendments’.

    APF board member Nigel Waters told the Senate inquiry that the proposed bill would “significantly weaken” privacy protections for Australians and fail to meet current international best practice standards.

    “While we are impatient for reform, we sadly feel that there are so many flaws in this package that it should not be enacted,” Waters said.

    “It should be withdrawn for further work to address the many criticisms that have been made in submissions.”

    IT News says Waters’ argument to the inquiry closely followed those made by the organisation in its written submission to the Senate committee, in which the APF accused the Government of cherry-picking recommendations from a 2008 inquiry into privacy reform.

    Here is more from this story:

    The APF was especially critical of amendments to the credit reporting regime, which the organisation said could be used against consumers, rather than helping to meet responsible lending obligations.

    Richard Glenn, assistant secretary at the Attorney-General Department’s business and information law branch, told the Senate inquiry earlier that morning that the revised regime would give credit providers “a greater richness” of information from which to make judgements about whether a person is eligible for credit.

    But Waters said the provisions would only accrue a “major loss of financial privacy for uncertain benefit”.

    “Although it will help in some ways, the balance, we fear, will be detrimental to consumers,” he said.

    Members of the financial industry called on the Government to delay the introduction of the credit reporting regime until later than the September 2013 deadline currently expected, for fear of being unable to become compliant with included requirements.

    Whilst I am in favour of any new laws which will facilitate an ease of correction of credit reporting mistakes, I have echoed the concern over the “loss of financial privacy” many times. One aspect I have maintained concern about is the additional information which will be made available to lenders in the form of late payment notations.

    It seems ludicrous to give Creditors more powers to effect a credit rating in the form of late payment notations (especially when those notations may not be subject to the same rules as an official credit listing would be) when they are having trouble getting credit reporting right as it stands now.

    Late payment notations will be added to credit files by licenced creditors even if a bill is one day late. The notation will remain on the consumer’s credit file for 2 years. See more in this story: Access Denied… How late payments may ruin your home loan application.

    In this post I urge consumers to be on their guard with this new type of bad credit – late payments – and I predict it will have an impact on those people that otherwise should qualify for a loan.

    Initially lenders will probably err on the side of caution, particularly if the economy isn’t great and adopt a policy of exclusion rather than inclusion to the credit market.

    Many people will take a big gulp when they think about all the bills they have paid late – often more through accident than not having the money – which could now see their loan declined. Who says how many is too many late bill payments? Would three a year be too many, or two in six months?

    And who says when this information will start being collected? I think if you want credit in the future (most of us) you should be on your guard now, be vigilant with making payments ON TIME every time to ensure these late payment notations don’t stop you from getting credit in the future.

    Despite new legislation giving consumers the legal avenue severely lacking in the current laws in some cases to be able to effectively dispute an unfair or incorrect credit file listing, it will continue to be up to the consumer to know the law to be able to apply it to their own case, and this is where credit rating repairers will continue to be needed – to close the gap and help enforce the legislation that Creditors are bound to comply with.

    Credit rating repairers will also continue to be needed – along with consumer groups such as the APF, to ensure that consumers are given a voice following the introduction of these privacy amendments. To put our hands up on behalf of consumers if needed and give accounts of any difficulties that may arise.

    Image 2: healingdream/ www.FreeDigitalPhotos.net

  • Access Denied… How late payments may ruin your home loan application

    You’re a busy young couple, both employed in good paying jobs, you’ve never defaulted on your loans, and you’re in the middle of saving hard for a home loan. Once you’ve got the deposit, you should be a bank’s dream customer right?
    But if you miss paying a few bills, you may not be so lucky. A warning to all future first home buyers about the new laws around late payments that could see you denied that home loan despite all of your good financial deeds.

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

    Comprehensive credit reporting is about to be brought in to Australia. The Government has introduced new legislation into Parliament to amend Australia’s current Privacy Laws under the Privacy Act 1988, which includes the area of credit reporting.

    In total there are 236 pages of amendments to the Privacy Act 1988 within the Privacy Amendment (Enhancing Privacy Protection) Bill 2012, which had its second reading in Parliament in late May.

    These new credit laws are heralded as ‘revolutionising’ credit reporting in Australia, and in theory there are some great changes about to take place which should see more emphasis put on the much-neglected realm of credit reporting accuracy.
    But not all changes will see more people given access to credit.

    The most important change to be aware of is the addition of repayment history information to credit files. In layman’s terms, this means if you pay your bills even a bit late – the company can make a note of it on your credit file.

    Late payment notations will be added to credit files by licenced creditors even if a bill is one day late. The notation will remain on your credit file for 2 years.

    This extra information will be further used to assess credit risk by lenders. The Government says these reforms will lead to decreased levels of over-indebtedness but will also allow people who have a credit file listing the chance to ‘make up’ their negative listing with consistent positive repayment data.

    In discussing New Zealand’s move to comprehensive credit reporting – which occurred in April this year, credit reporting agency and supporter of comprehensive credit reporting, Veda Advantage said it would be the pattern of late payments rather than one or two late payments that will stop someone from obtaining credit.

    “A few hiccups should not hurt anyone’s ability to borrow money for a house, car or holiday in the future,” Veda Advantage New Zealand’s John Roberts told Business Day.

    But lending criteria is quite subjective, too subjective to guarantee those ‘hiccups’ will not penalise potential borrowers. Initially lenders will probably err on the side of caution, particularly if the economy isn’t great and adopt a policy of exclusion rather than inclusion to the credit market.

    Many people will take a big gulp when they think about all the bills they have paid late – often more through accident than not having the money – which could now see their loan declined. Who says how many is too many late bill payments? Would three a year be too many, or two in six months?

    And who says when this information will start being collected? I think if you want credit in the future (most of us) you should be on your guard now, be vigilant with making payments ON TIME every time to ensure these late payment notations don’t stop you from getting credit in the future.

    Accuracy Concerns

    The big area of concern around late payment notations from consumer advocates – including myself has to do with accuracy. At the moment credit rating mistakes are pretty common. The other issue is how difficult it is for people to dispute a credit listing themselves, let alone a late payment notation.

    NSW-based Consumer Credit Legal Centre Principal, Katherine Lane told the Sydney Morning Herald last year she was concerned over the fairness of listing a payment that is only slightly overdue or late for a good reason. She says credit reporting continues to operate as an “honour system” relying too heavily on the word of the creditor.

    ”My overriding concern is fairness,” Lane says of the exposure draft, which is now the subject of submissions to the Senate Finance and Public Administration Committee.

    ”Fairness is clearly a problem under the current law and they haven’t fixed the problem.”

    With the new legislation will be laws which will allow you to dispute your credit file listing easier if you believe it has been placed in error. But the thing is it will still be up to you to know the law to be able to apply it to your own case, and this is where credit repairers will continue to be needed – to close the gap and help enforce the legislation that Creditors are bound to comply with.

    To ensure you remain a good candidate for a home loan in the future, pay your bills on time, and prior to loan application order a free copy of your credit file to make sure you’re not going to be disadvantaged by someone else’s mistake. If there’s something you don’t agree with – contact a professional credit repairer to see if you would be a candidate for credit repair to remove credit rating errors.

    Image: basketman / www.FreeDigitalPhotos.net

  • Credit reporting changes introduced into Parliament

    Further to news on changes to Australia’s Privacy Laws, the Attorney-General Nicola Roxon announced that much awaited changes to the Privacy Act 1988 were introduced into Parliament yesterday. These changes will affect your credit file and how your good and bad credit history is shown.

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

    The Attorney-General said The Privacy Amendment (Enhancing Privacy Protection) Bill 2012 represents the most significant developments in privacy reform since Labor introduced the Privacy Act in 1988.

    All of these changes have significant bearing on credit reporting accuracy in Australia, as an individual’s credit file contains so much personal information which is checked to assess risk when an individual applies for credit. It can also be subject to misuse and error.

    The laws are promised to strengthen the power of the consumer over this important Privacy right.

    “These new privacy laws focus on giving power back to consumers over how organisations use their personal information,” the Attorney-General said in a statement to the media yesterday.

    This statement also addressed credit reporting specifically.

    The Government has promised to ‘modernise’ credit reporting arrangements. The Attorney-General was more specific with some of the changes coming in with the introduction of comprehensive credit reporting as part of these Privacy Act 1988 reforms:

    • making a clear obligation on organisations to substantiate, or show their evidence to justify, disputed credit listings
    • making it easier for individuals to access and correct their credit reporting information
    • prohibiting the collection of credit reporting information about children
    • simplifying the complaints process by removing requirement to complain to the organisation first, complaints can be made directly to the Privacy Commissioner, and by introducing alternative dispute resolution to more efficiently deal with complaints.

    The Government says it expects the credit industry will benefit because the reforms provide a more accurate picture of an individual’s credit situation to help them make a robust assessment of credit risk, which is expected to lead to lower credit default rates.

    Namely, this refers to the controversial introduction of late payment notations on consumer credit files. Late payments will be added by licenced creditors even if a bill is one day late. The notation remains on the individual’s credit file for 2 years. It is unclear at this stage the exact process of law governing how late payments may be added to credit files, nor the precise way these late payments will be used when assessing risk and the potential impact on an individual’s ability to obtain credit.

    I can’t help expecting some real confusion over this type of data to occur particularly in the early days whilst data has been collected without individuals knowing the potential impact on their credit file information, and generally arguments and confusion from consumers over what may constitute a bad credit risk after these laws are introduced.

    Australian Broker published an article Credit Agencies rejoice as positive regime gets a kickstart, today in which Dun & Bradstreet’s Director of Consumer Services, Steve Brown said comprehensive credit reporting should open up credit for some groups of people.

    “The use of comprehensive rather than just negative credit information provides greater visibility of under-served consumers who would otherwise find it difficult to access credit,” Mr Brown said.

    This assumption would be due to people being able to now ‘counteract’ a late payment notation or potentially a default listing through their repayment performance history. This could mean that if people have a 5 or even 7 year listing on their credit file, they may be able to show that over a period of 2 years (the length of repayment performance history recorded) they have managed to pay their bills on time. It would then be up to the lender to assess whether they believe a consumer or business with a default who has paid their bills on time for the past 2 years is or isn’t a credit risk.

    Whilst in theory this works, I am concerned this is very subjective and lenders could err on the side of caution especially initially.

    At the moment I believe ‘repayment performance history’ only adds to the volume of negative data which will be visible on consumer credit files. I will be interested to see if in the coming years and months the advantage to this system does in fact materialise in the form of consumers with defaults being given a fairer go due to better repayment history before I am truly convinced.

    Some significant submissions put forward to the Senate Finance and Public Administration Legislation Committee which were accepted by the Government and which should benefit consumers include:

    • Streamlining the correction and complaints process for credit reporting
    • During a correction complaint, the Creditor must give justification for credit listings and actually substantiate the information is reports on credit files.
    • Consumers may complain directly to the appropriate Ombudsman rather than having to go through the organisation’s complaints process first.
    • The provision for remedies such as compensation for consumers who are negatively impacted by a Creditor who has failed to comply with credit reporting law.

    MyCRA will be very intent on seeing how the laws pan out for the actual application of these significant changes for consumers and their credit file information.

    If people have bad credit history which they believe shouldn’t be there, or the data on their credit file is inconsistent – they can contact a professional credit rating repairer to get advice about formulating a credit listing complaint. Call MyCRA Credit Rating Repairs on 1300 667 218 or visit our website www.mycra.com.au.