MyCRA Specialist Credit Repair Lawyers

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  • Be careful where you live because it can affect your credit score

    Media Release

    where live affect credit scoreBe careful where you live because it can affect your credit score

    15 April 2014

    Australia’s new credit laws have some consumers on edge and checking their credit score to ensure they’re not blacklisted – but a consumer advocate for accurate credit reporting says beware, your credit score can be lowered by where you live as well as what you do with credit.

    Graham Doessel, Non-Legal Director of MyCRA Lawyers, a firm focused on credit disputes says many things can reduce your credit score, including your address.

    “Basically all the details asked for on your home loan application form can be used to calculate a credit score, including where you live,” Mr Doessel says.

    The former broker says some suburbs put you in the credit danger zone.

    “It’s not common knowledge, but when it comes to your address some suburbs are listed as high for commercial credit risk and if you happen to live in that suburb your score may be lower than what it would be if you lived somewhere else,” he says.

    Credit reporting bureaus such as Veda Advantage and Dun and Bradstreet hold information on millions of consumers, and use this data to make predictions about credit risk. They also publish de-identified information on their collected data from time to time, such as with Dun and Bradstreet’s 2009 publication ‘Consumers still in the danger zone – A geographic look at consumer credit risk across the country’ (1)

    “The Geographic Risk Indicator (GRI) assesses the likelihood of future default on a credit obligation based on demographic data. Those areas categorised as a high risk are 3.4 times more likely than average to be inhabited by individuals who have experienced previous negative credit events,” the publication states.

    “It may not be fair, but the truth is, if you live in a ‘bad’ suburb your score will be reduced even if you are personally a good credit risk,” Mr Doessel says.

    So what else can contribute to lowering your credit score?

    Mr Doessel says how long you’ve lived at your address can also contribute to a low score.

    “Lenders like to see stability, so moving just before you put in an application for finance is probably not ideal, depending on how much you’re borrowing,” he says.

    Some of the many factors Veda Advantage might take in to consideration when calculating their VedaScore can include: (2)

    · Types of credit provider you have made credit enquiries with (Credit providers are rated as high to low risk lenders) · Type and size of credit requested in your application

    · Number of credit enquiries and shopping patterns

    · Directorship and Proprietorship information

    · Length of employment

    · Age of credit report

    · Default information including court writs and default judgments

    Mr Doessel says default information can play a big part in how your score is calculated.

    “Of course any adverse listings such as defaults or Court Writs and Judgements and Bankruptcies can really lower your credit score even if you live in a great suburb. We’ve helped millionaires with disputing credit listings impacting their ability to get finance,” he says.

    He says repayment history is a grey area as to how it could impact your credit score. This is relevant to you if your credit provider decides to opt in to the new comprehensive credit reporting system and lists payments on your credit card or loan accounts which are more than 14 days behind.

    “It’s important to pay your credit accounts on time every time as we just don’t know what impact even one late payment notation could have on your credit score,” he says.

    /ENDS.

    For interviews and more information please contact:

    Graham Doessel – Non-Legal Director MyCRA Lawyers Ph 3124 7133

    Lisa Brewster – Media Liaison MyCRA Lawyers media@mycralawyers.com.au

    www.mycralawyers.com.au www.mycralawyers.com.au/blog

    MyCRA Lawyers 246 Stafford Rd, STAFFORD Qld 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.

    Links:

    (1) http://dnb.com.au/library/scripts/objectifyMedia.aspx?file=pdf/32/14.pdf&siteID=1&str_title=Consumers+still+in+the+danger+zone+-+GRI+Report.pdf

    (2) http://www.veda.com.au/yourcreditandidentity/check/vedascore/how-my-vedascore-calculated

    Image: Danilo Rizzuti/ www.FreeDigitalPhotos.net

  • Could carry-over credit card debt be the undoing of many a home loan?

    carry-over credit card debtIn my recent guest post for broker publication The Adviser, I discuss repayment history and credit card accounts, looking at how Australia’s new credit laws could change the playing field for borrowers and brokers, and how repayment history could impact credit ratings and the approval of home loans. 

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

    You can read my guest post from The Adviser in full below:

    Could carry-over credit card debt be the undoing of many a home loan?

    Australia’s new credit laws will place late-paying clients of licenced credit accounts such as credit cards and loans on the ‘naughty list’ if they are more than five days late with repayments.

     So who’s going to be most at risk of getting a late payment notation?

     In our experience, those with carry-over credit card debt, as well as those people with multiple credit cards could be most at risk.

     Certainly, when assessing clients who present with bad credit, we find a significant number of clients with defaults who have carry over credit card debt and/or are juggling multiple credit cards and other debts in arrears.

     These people are more likely to default because they have undertaken too much credit, often leaving no wriggle room for when life throws them a curve ball. Death, divorce, unemployment, sickness and relocation can all create that upheaval which leads to chaos with finances. If someone in the throes of a chaotic event is unable to pay an account and it falls more than 60 days in arrears, they can have a default placed on their credit file.

     In the case of repayment history, it’s going to take much less of a curve ball to make a dent in the credit file. Australia’s credit reporting system proposes to tackle the over-commitment issue with the inclusion of repayment history information to an individual’s credit file. If a client gets more than five days behind in their credit card or loan repayments, their repayment history may show up on their credit file.

     Those people robbing Peter to pay Paul – running from one repayment to the next, but never quite getting far enough in the red to cop a default on their credit file – are just the type of credit users big brother is hoping to catch out with repayment history information. It will mean people with bad habits when it comes to credit are going to be stopped in their tracks, and, eventually, won’t be able to take out major credit such as a home loan.

     Too many late payments will be used to assess increased risk of default even when a default is not present on the credit file.

     So how many people have carry-over credit card debt?

     A recent survey conducted by Roy Morgan for ASIC shows that around 2 million Australians do not pay off their personal credit card debt in full each month, rising from 24 per cent of personal credit card holders in 2009 to 27 per cent of personal credit card holders in 2013.

     Another recent survey showed the volume of Australians worried about their finances. Mortgage Choice revealed in its Money Survey last month that 53.4 per cent of people surveyed were “very worried” or “concerned” about their financial situation. The survey also found that 55.5 per cent of the respondents had credit card debt, with 45.7 per cent of them owing at least $4,000.

     The fall-out goes to the uneducated

     No one is immune to incurring late payments on their credit file, and the fear is that clients who don’t fall into the category of the overcommitted could also be tarred with the same brush. Those who are more than five days late because their bill goes missing, or who stay a little too long on holiday, or just get busy and forget to pay are going to be tarnished as a late payer.

     And it seems that most people don’t know they run the risk of this. Recent statistics from Veda Advantage revealed that the majority of Australians do not know they can be penalised for making a credit card or loan repayment late. Statistics show that seven out of 10 Australians don’t know about Australia’s new credit laws.

    How many late payments will lead to the declining of finance approval is up to individual lenders to decide. What we fear is that even one or two late payments over 24 months could change the interest rate offered.

     How will the new laws change the credit landscape?

     Not every licensed credit provider will be taking comprehensive credit reporting on board, and some will take a while to apply the changes. But what we do know is the shift to the new system is being encouraged by those within credit reporting, with a probable take-up by most licenced credit providers within the next 24 months.

     Brokers may find there’s a teething period in the future, as lenders change the way they assess credit worthiness based on the new available information. What was once accepted by the top-tier lenders could now be declined.

    My advice to brokers? Having knowledge of a client’s repayment history as well as any other adverse listings prior to making an application can help match the right product to your client. It may be a good idea to encourage clients to get a copy of their CRA, and even showing them how easy and quick it can be to obtain their credit report could be beneficial to everyone in the qualifying process.

     Clients can obtain a free copy of all their credit reports from www.freecreditrating.com.au.

    * N.B. Since last Thursday, the grace period for repayment history has been officially extended to 14 days. See today’s post ‘Late payment grace period extended to 14 days’ for more details.

     If you would like to know more about your credit report, or need to dispute a credit listing on your credit report you can contact MyCRA Lawyers on 1300 667 218.

    Image: Gualberto107/ www.FreeDigitalPhotos.net

  • Late payment grace period extended to 14 days

    grace period 14 daysAn application by the Australian Retail Credit Association (ARCA) to extend the 5 day ‘grace period’ to 14 days for late payment information  on credit reports was approved by the Information Commissioner late last week. The amendment to the Credit Reporting Privacy (CR) Code will mean consumers will have more time to pay their credit card or loan account before they cop the new type of bad credit a ‘late payment’ notation. We look at the details of this important change and what this means for you and your credit rating.

    By Graham Doessel Non-Legal Director of MyCRA Lawyers

    Since 12 March 2014, Australian credit reports can include a range of new information available to lenders, including repayment history information. Up until last week, repayment history information could be recorded on licenced credit account which was more than 5 days late.

    But following widespread concern across the community that a 5 day grace period was not long enough to ensure simple forgetfulness or mistakes didn’t see consumers hit with a black mark on their credit report, Attorney-General, George Brandis requested a change. ARCA submitted an amendment to Office of the Information Commissioner (OAIC) to extend the grace period to 14 days, which was approved last week. Consumer advocates (including myself) had argued that the original 5 days late was not long enough to indicate significant credit risk.

    “Given the concerns raised by the community and reflected by the Attorney General on this matter, we agree that a 14 day grace period is an appropriate compromise before a late payment is recorded as Repayment History Information,” ARCA CEO Damian Paull stated in a media release after making the submission to the OAIC.

    He says Repayment History Information helps improve the accuracy of predicting the credit risk of consumers, and consumers need to understand the difference between late payments and defaults.

    “One late payment on your credit report is less serious than a default. Any of us can be on holidays or forgetful, and a late payment can be offset by an overall positive history of paying most accounts on time. Defaults on the other hand are always more serious,” he said.

    I am encouraged that the grace period has been extended to 14 days, and I understand that one late payment on a consumer’s credit report should be much less serious than a default. But at the same time, I fail to see how exactly consumers are meant to understand the differences between a late payment and a default.

    We know the process of assessing credit worthiness is a matter for each lender to determine and given this, consumers have been given no information or examples from lenders in which to garner any understanding on the differences between how a default and a late payment will be treated.

    As someone experienced with seeing the effects of bad credit, I can only make assumptions based on how most mainstream lenders have treated other ‘black marks’ on credit reports. In the past, a client with a default has most often been refused credit with mainstream lenders, too many credit enquiries on the client’s credit report within a certain time frame has also in the past meant credit refusal. Consumers with these black marks who have not been out and out refused credit have alternatively been offered a higher interest rate than someone with a clean credit file.

    I predict that late payment notations will probably be treated the same way. A certain number within a certain time frame could mean credit refusal, a certain number could also mean a higher interest rate for the prospective borrower. So what’s the magic number? I guess we’ll have to wait and see.

    Image: David Castillo Dominici/ www.FreeDigitalPhotos.net

  • New credit laws: journo tells it like it really is

    black mark credit reporting rulesAs consumer advocates interested in accurate credit reporting, rarely would we consider the press to have a great grasp of credit reporting and the issues consumers face, and even less so with the wider coverage of comprehensive credit reporting that has occurred to date. It’s not their fault really – but their views and ideas about fairness, and which are frequently conveyed to the general public are often shaped by players who have had a vested interest in this legislation. Sometimes what we read is not the whole picture of what’s really going on. That’s why it was refreshing to recently read columnist Jenna Price’s piece for the Canberra Times, titled Big black mark for new credit reporting rules. I have included it in this post in its entirety.

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

    Big black mark for new credit reporting rules.

    By Jenna Price. Canberra Times.

    Hey. Your last credit card bill. Do you remember when you paid it? Did you check the date it was due? Or did you just pay it when you had the spare cash?

    And the one before that, say, the one that was due in December when you were busy spending and not paying bills?

    Okay, final question. What about the credit card bill you received in January last year. You know you were busy trying to reshuffle your finances after the mayhem of Christmas and New Year – but did you pay that bill on time?

    I only ask because from next month any time you are five days late on a bill from a licensed credit provider, that late payment will go as a little mark into your credit history file. A little black mark.

    Every. Single. Time.

    This new legislation sits in the Privacy Act (loosely named, really, since we don’t have any). From March there will be extensive changes to the credit reporting rules in that act and there will also be an accompanying code of practice, drawn up by the Australian Retail Credit Association.

    The association drafted the code but it will not be responsible for it. That’s the job of the regulator, the Office of the Australian Information Commissioner. Of course, both bodies called for submissions and consultations. And, of course, they ignored the majority of the input of consumer advocates with decades of experience.

    Credit card payments. Mortgage payments. Car loans. Personal loans. If you have a loan from a bank or mutual bank – or any other providers licensed to give you money – and you are just five days late, it will go straight to your repayment history. That history will be available for any lender to check out if you ever need money again.

    These dramatic changes are taking place and no one is telling us about them. There are no advertising campaigns. There is no education process. Just a daggy little website called Credit Smart run by ARCA, the peak body for those same lenders that will be running surveillance on your records. The animations. The script. Cringeworthy.

    When did ARCA launch the website? The press release says late January.

    What’s worse is that the scheme is retrospective. So it’s not as if you can decide to be meticulous from this very moment. Nope. From December 2012, if you were late it can be uploaded to your file.

    Nor do the banks or mutuals have to make a song and dance about it. Nope. They can just send you one of those bland terms and conditions emails or letters and you will not even recognise that you are about to be watched with an auditor’s eye.

    The way it’s been promoted by some is that this will mean those of us who pay on time will be able to get discounts.

    But Kat Lane, the experienced consumer credit advocate at the Consumer Credit Legal Centre NSW, said that overseas experience reveals punctual payers may not get benefits. Instead, the information will be used to target those who pay late. You can imagine, can’t you? There are lenders who will go after vulnerable consumers and charge them accordingly.

    Lane said consumers would certainly be able to use external dispute resolution if they want to challenge what is held on their files – but that may take months. The Financial Services Ombudsman is already a very busy agency.

    The fact is, this is all about the convenience and protection of lenders and not about the safety and security of consumers.

    Last year, the Australian Retail Credit Association conducted a survey on what Australians thought about credit reporting. Not much – in fact 60 per cent of us had no idea what that term meant. And those of us who did know something, thought of credit reporting as negative.

    Damian Paull is CEO of ARCA, which is charged with educating people on these changes. I asked him if he’d ever paid a bill late.

    He said: “I’m far more conscious now of tracking when my bills are due … my behaviour has changed and my consciousness has changed since I’ve become more aware.”

    Which is lucky for him, with plenty of notice and a wealth of understanding from years in the industry.

    The rest of us aren’t so lucky. And it won’t be long before utilities bills join home loans and credit card payments. I fear it will be telco bills. Telcos argued hard for repayment history.

    And I predict our – so far – safe and successful lending system will be riddled with the damage done to people persecuted by lenders with no hearts and no discernment, just their little black credit records.

    Bravo Ms Price, finally someone has seen these changes for what they really are…the certainty of MORE NEGATIVE for consumers, with a very vague promise of positives. And like Ms Price I agree that there has not been enough done to educate consumers about these changes before they were implemented. I too imagine a day when telcos and energy companies are able to report repayment history information and cringe at the ramifications this could bring to consumers.

    While the new Privacy amendments as a whole have some merits for consumers, I would consider it is not the fool-proof system that consumers are being led to believe – particularly in their application.

    Being involved in many credit dispute cases on behalf of consumers in the past has meant we have seen first-hand what consumers should be worried about within the framework of credit reporting.

    Credit providers make mistakes, and in other cases they try to ‘get away’ with not doing what they should be doing to protect consumer rights. This can affect thousands of consumers.

    And as mentioned by Kat Lane in the above article, it can take months to challenge a listing via an EDR scheme like an Ombudsman Service. In some cases in the past we have also found that Ombudsmen haven’t investigated cases fully for the consumer – due to points of law being out of their scope of investigation. We have found this can be detrimental to successful dispute resolution.

    In the area of correction, consumers are being told if they have a problem with a credit listing, they can fix it themselves. This is across the board on many websites – including the Office of the Australian Information Commissioner and ARCA. Consumers have been urged to “watch out for” credit repair companies, and told if there are errors on their credit file, they don’t have to pay anyone to fix them.

    In my opinion it is dangerous to tell consumers with little to no knowledge of Privacy legislation that the only way to dispute their credit listing is through the internal systems. Certainly, we would not deter anyone from fixing their own credit listing if they chose to do so – indeed, it would be preferable for them to try it themselves rather than engage with a ‘dodgy’ company performing credit repair.

    On the other hand, consumers should not be entirely discouraged from seeking advice on their own behalf in a dispute matter which results in them engaging with a reputable credit repairer or a good lawyer well-versed in credit law. We liken it in some ways to doing your tax returns. You can do your own – certainly yes. But you can also pay your accountant to complete it for you. Both are valid options. The difference is – the ATO is not telling consumers they can’t use an accountant to complete their tax return.

    Image: stockimages/www.FreeDigitalPhotos.net

     

  • Why you really don’t want to be late with your credit card

    repayment history informationDo you have a credit card that you regularly let loose on? If you have trouble paying it back, you need to know that big brother may be watching YOU! Australia’s credit laws have just had a major overhaul. One of the biggest changes affecting you will be that your repayment history on accounts such as your credit card may show up on your credit file. This could impact you and your ability to obtain credit. We look at what you need to know about your repayment habits, and give you some tips so that you may be less likely to be caught out with bad credit.

    By Graham Doessel, Non-Legal Director of MyCRA Lawyers.

    The lowdown on the new laws…

    From March 12 2014, your repayment history on licensed credit accounts (this includes your loans and also your credit cards) may show up on your credit file and remain there for 2 years.

    An account of this type more than 5 days late could be recorded late by your credit provider, if they decide to take up the new credit system.

    Here is some information on repayment history information, set out on the Office of the Information Commissioner’s website:

    What is repayment history information (RHI)?

    RHI is information about whether you have met your consumer credit payment obligations. Consumer credit is credit that is intended to be used primarily for personal, family or household purposes.

    RHI includes information about whether you have made a payment on time or whether you have missed a payment. If you only pay part of the amount owing, you are taken to have missed a payment.

    RHI includes the day on which a payment is due, and if you made a payment after that day, the date on which you paid. Therefore, RHI can include both positive and negative information about your credit history.

    It does not include the amount of any missed payment — only the fact that you have made or missed a payment.

    What types of payments could be included in my RHI?

    RHI can include information about any consumer credit payments that you make, or fail to make, to a credit provider that holds an Australian Credit Licence.

    This means that RHI will usually reflect made or missed payments on a loan or credit card.

    When can credit providers begin collecting RHI?

    RHI can only relate to payments that you have made or missed from December 2012. Then from March 2014 licenced credit providers can pass your RHI on to credit reporting bodies.

    How will my RHI affect my ability to obtain credit?

    From March 2014, credit reporting bodies can disclose your RHI, along with other credit-related personal information, to licenced credit providers. Those credit providers may use this information to help determine your eligibility to be provided with credit.

    This means that if you fail to make the full amount of a payment on time from December 2012 it may affect your ability to obtain credit in the future.

    How far back will my RHI go?

    Information about any particular payment cannot be held for more than two years from the date it was due.

    However, RHI will not include information about any payment that was due before December 2012.

    How will I know if a credit provider will pass my RHI on to a credit reporting body?

    When a credit provider collects your RHI it should notify you of certain matters, including the name and contact details of any credit reporting body to whom it is likely to disclose the information.

    So whilst not every licensed credit provider will be taking comprehensive credit reporting on board, and some will take a while to apply the changes, it is really important to start implementing better credit habits NOW to ensure you’re not caught out with bad credit.

    Here’s our top tips to make sure you stay on top of your credit card and avoid a late payment notation and also defaults:

    1. Pay on time, every time.

    It doesn’t have to be a big account to have an impact on you. Accounts for as little as $150 which go unpaid can see you defaulted and banned from mainstream credit for five years. Paying on time, every time is your first line of defence against bad credit, especially following the introduction of late payment history.

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

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

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

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

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

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

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

    5. You have a right to correct mistakes

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

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

    Image: Stuart Miles/ www.FreeDigitalPhotos.net

     

  • 6 Tips For a Clean Credit File

    tips clean credit fileCurrently, we are seeing lots of people running into trouble with their credit rating. If you end up in trouble with a default on your credit file, it sticks for 5 years and can be a real thorn in your side when you go to apply for credit again. With new laws now in place from March 12 – repayments on accounts such as credit cards and loans made more than 5 days late may see you end up with a notation against your name for 2 years. It’s heavy stuff. We look at what you can do to stay savvy with credit now and in the future, and make it work for you!

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

     

    You could be forgiven for thinking that credit is the enemy…

    But we need to develop the ethos that credit is not something that is granted, it is something that is earned. At one point banks were practically throwing money at us. Now it’s tough and you have to prove yourself.

    There is absolutely nothing wrong with using credit provided you make it work for you. In fact, not having a credit rating in this day and age can be just as difficult as having a bad credit rating.

    Where people come unstuck with credit is getting to a stage where they are forever chasing their tail with repayments, falling behind. Or getting blasé about repayments and not realising the consequences.

    Credit can be wonderful provided you maximise it to suit you. If you can’t afford it now you can have the privilege of paying for it later – but understand that you will pay at some point.

    Payments on any bills which are more than 60 days late can be listed as a default on your credit file.

    This default can remain on your credit rating for 5 years and can be very detrimental to your ability to gain further credit. Even if the account was later paid, the credit reporting agency generally does not remove the default but can mark it as paid.

    Even defaults that show up as being paid can be enough for a declined home loan approval in the future. It is extremely important to keep a clear credit file because the repercussions will be felt for 5 years.

    You also need to be organised to ensure you avoid the dreaded late payment notation against your name. Too many of those could be just as detrimental to getting a loan as a default would be.

    There is no time like the present to start making credit work for you.

    Begin by checking your credit file – which you are entitled to do for free every 12 months via the major credit reporting agencies Equifax (Formerly Veda Advantage), Dun & Bradstreet and Tasmanian Collection Service.

    If you find a default, writ or Judgment on your credit file which you believe is there unfairly, unjustly or just shouldn’t be there at all – it may be possible to have it removed.

    Here are some tips:

    1. DO USE CREDIT: Having no credit history means there is nothing to calculate and the risk appears high to lenders. Start by borrowing something small. Repaying mobile phone plans, internet accounts, or store credit on time will appeal to anyone checking your credit score. Smaller purchases paid correctly contribute to approval for larger loans such as homes, vehicles, and businesses in the future because they show a person’s ability to repay. Positive repayment history on loans and credit card accounts may also help to boost your credit score after March 2014.

    2. MAKE REPAYMENTS ON TIME: Repay any bills received by the due date. Repay over the minimum amount required on credit cards. If you are having trouble paying on time, contact the creditor as they may be able to work out a payment plan rather than listing the non- payment as a default or in the case of licenced credit, a late payment notation.

    3. HAVE A STABLE ADDRESS: Lenders like to see stability. Furthermore, defaults are easy to come by when bills are sent to the wrong address. If you do travel frequently, consider a trusted family member’s address for all bills.

    4. CHECK CREDIT FILE REGULARLY: You should check your file before you need to apply for credit. That way if there are any problems you can sort it out while there is no urgency, and save yourself embarrassment and disappointment from having credit declined.

    6. DON’T LEAVE DEFAULTS TOO LATE: If there are defaults, don’t put up with them for 5 years. To find out more about removing/disputing a credit listing you don’t agree with, contact us here at MyCRA Lawyers on 1300 667 218.

    Image: Stuart Miles/ www.FreeDigitalPhotos.net

  • Credit reporting in Australia your questions answered on bad credit

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Images: Stuart Miles/ www.FreeDigitalPhotos.net

  • Credit reporting in Australia – your questions answered

    credit reportThere are some credit reporting changes just arrived which may affect you and your ability to get a home loan, a car loan or any other type of credit. Obtaining credit in Australia may be a little different from now on, as since March 12 Australia has stepped into a comprehensive credit reporting regime. We feel it’s important to educate consumers about credit in Australia, so we look at the credit file basics, and what you should know about taking on credit in Australia.

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

    We answer your basic questions about credit reporting in Australia…

    What is my credit rating?

    Your credit rating is a file on your credit history and is collated by the major credit reporting agencies if you have ever been credit-active. Your credit rating is then checked by any financial institution or credit provider and is used to assess both the amount you are able to borrow and your ability to repay the loan.

    What does ‘credit active’ mean?

    Anyone that has borrowed money, or has established an account for services is credit active and will have a file in their name. This includes mobile phone plans, accounts with utility companies, rates accounts and of course loans of any kind.

    What is defined as a ‘bad’ credit rating?

    In broad terms, any credit defaults, court actions or writs, external administrations and bankruptcy are all recorded on your credit file and would be considered ‘bad’ credit history by most credit providers.

    In this current economic climate, basic defaults and even too many credit enquiries or applications for credit may be considered to be tarnishing your credit rating. Your repayment history may also be considered ‘bad’ credit if you have too many late payment notations against your name.

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

    If you are unsure what is on your credit file, it would be worth taking the time to find out.

    There are three major credit reporting agencies in Australia: Equifax (Formerly Veda Advantage) – which holds the credit file of over 16 million Australians, Dun and Bradstreet and Tasmanian Collection Service.

    You can write to or email one of these agencies and request a copy of your file. If you are not in a hurry there is no charge to you but it will take 10 working days from application to receive this information.

    What is not realised by many people is how easy it is to have a default slapped on your credit file. If a bill of $150 is more than 60 days late (including rates, power, and mobile phone bills) then a credit provider has the right to notify you of their intention to record this default on your credit file. Even if the account is paid and noted on your file, this default usually remains on your record for 5 years.

    In addition to this, if you are more than 5 days late repaying your credit card or loan account – you may also have a late payment notation recorded against your name.

    To find out more about credit reporting, you can visit our main site www.MyCRA Lawyers.com.au

    If you want to know more about bad credit, look out for our next post where we answer common questions about bad credit, and what you can do if you wish to dispute an adverse credit listing.

    Image: Pong/ www.FreeDigitalPhotos.net

     

     

     

  • Unemployed? 8 ways to keep your credit rating safe.

    unemployedWhat happens to your credit rating when you lose your job? There are some things you can do when you face unemployment to reduce the likelihood that your credit rating will suffer. Unemployment is often just a temporary setback. But if during the time you’re unemployed you lose your good credit rating, you could see a temporary setback become the thorn in your side that remains for between 2 and 5 years. We look at the 8 most important things to do when you lose your job to help save your clean credit file.

    By Graham Doessel, Founder and Non-Legal Director of MyCRALawyers www.mycralawyers.com.au.

    8 ways to keep your credit rating safe after you lose your job.

    1. Act. Most people feel like digging a hole and burying themselves in it for a while when they lose their job, but taking action immediately will save your credit file. Even if you think the situation is only temporary, you don’t have a crystal ball. You need to take steps straight away to protect yourself and your family from debt and bad credit.

    2. Check your insurance. If you have taken out income protection insurance, or mortgage protection, now’s the time to make that phone call to see where you stand. It can take a while for the claim to be processed.

    3. Apply with Centrelink for assistance. Don’t be too proud to ask for help. Talk to the Department of Human Services to find out what government assistance you may be entitled to and when. As with insurance, some benefits have waiting periods, so contact the department as soon as you can to know where you stand.

    4. Tally up what you owe (and what’s owed to you). Work out how much disposable income you have now, and tally up all of your bills that you consider will appear in the future. You can find a great budget planner on ASIC’s MoneySmart website which could help.

    5. Assess the credit you owe and where you may have trouble with repayments in the future. Work out how long your current funds are going to last. What you want to do is avoid getting into 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.

    6. Make licenced credit a priority to pay on time. Licenced credit includes your credit card and loan accounts. It needs to be repaid by the due date as a priority, due to the possibility that repayment history on those accounts is being collected. If your Credit Provider is collecting repayment history, then accounts which are more than 5 days late will appear as a ‘late payment’ notation on your credit file. This notation stays on your credit file for 2 years and too many will probably impact your ability to obtain credit, or at least affect the interest rate you are offered.

    7. Notify your Credit Providers. Don’t wait until you’re in arrears, or until you’re in debt up to your eyeballs, to let your Credit Providers know you have lost your job. New laws have been introduced around financial hardship – and in your situation you are who these laws were made for! Financial hardship variations are encouraged in many industries if consumers notify their credit provider they are undergoing temporary financial hardship. Financial hardship variations can involve reduced or frozen payments and can prevent a default appearing on your credit file. Undergoing step 5 is almost essential to any successful hardship negotiation. Knowing what you can afford to pay and when, prior to talking to your Credit Providers will go a long way and ensure the newly negotiated amount is affordable for you while you are unemployed. 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 smart to ask.

    8. If it’s too late: all may not be lost. If you are currently experiencing bad credit due to a temporary financial hardship such as a job loss, it may be worth assessing your credit history and the circumstances around any defaults placed against your name. Any listings which are deemed unlawfully placed for whatever reason could be required to be removed by your Credit Provider. For more information on this, and disputing a default, contact us on 1300 667 218 or visit our main website www.mycralawyers.com.au for more information.

    If you know your finances are under control, then you can concentrate on finding the right job for you.

    For further and specific money help, consult a financial counsellor in your State.

    The above information is for general purposes only and should not constitute financial advice nor replace seeking help from a professional financial adviser.

    Image: pat138241/ www.FreeDigitalPhotos.net

     

  • Know about your credit score before you buy a home.

    Media Release

    buy a homeKnow about your credit score before you buy a home.

    27 March 2014

    A massive overhaul of Australian credit reporting law now means big brother is watching you like never before, and a consumer advocate for accurate credit reporting says there are some actions you should take now to minimise your risk of being locked out of a home loan.

    On March 12, Australia moved to ‘comprehensive credit reporting’ when amendments to the Privacy Act had final implementation.

    Mr Doessel, Non-Legal Director of MyCRA Lawyers, a firm focused on credit disputes, says new information about your credit habits is now open to prospective lenders who check your credit score.

    “More credit information unfortunately means there’s more reason for lenders to say no to your home loan application or to increase the interest rate offered,” Mr Doessel says.

    Recent statistics from credit reporting bureau Veda Advantage reveal 80% of Australians have never checked their credit history and 53 per cent were not aware that they could ask for a copy of their credit file.

    Mr Doessel says “with over 16.5 million consumer credit files held by Veda Advantage alone, we’re talking millions of Australians who may be at a disadvantage under the new laws through simple lack of education.”

    To help promote understanding of our new laws Mr Doessel identifies seven key points which you should be aware of, especially if you intend to buy a home over the next few years.

     7 credit score health tips

     1. Repay all accounts by the due date -especially your credit card and loan accounts. Any time you are more than 5 days late paying your credit card and loan accounts, a notation can be made in your ‘repayment history’ and remains there for two years. If payment on any credit account over $150 (including telco and energy bills) is more than 60 days overdue, you can have a default applied against your name which has a five year ‘shelf-life’.

     2. Repay more than the minimum amount on credit cards. You don’t want to unknowingly end up in arrears and with a late payment notation against your name because you didn’t pay enough.

    3. Be careful with the amount and type of credit you apply for and use. Too many credit accounts and cards could reduce your score, even if you’re not using them. Also restrict the type of credit you apply for. Too many ‘alternative’ or high interest accounts could see you with a lower score. Reducing your number of credit enquiries is also a good idea.

     4. Ask for help if you need it. If you have circumstances which mean you temporarily can’t make repayments on time, contact your Credit Provider as soon as possible – preferably before your accounts are overdue. You can ask for a financial hardship variation to help ease the burden while you get back on your feet.

     5. If you disagree with an account or bill – act quickly. The earlier you can get to the bottom of an unfair bill the less likely it could impact your credit file. If the Credit Provider ends up listing the account on your credit file as either a late payment or a default, you can ask the credit reporting bureaus to list the bill as disputed on your credit file while you sort it out.

     6. Check your credit score. This is available once a year at no charge from Australia’s credit reporting bureaus – Veda Advantage, Dun & Bradstreet and TASCOL (if in Tasmania). You can also pay to have them sent the same day. Try sites like www.freecreditrating.com.au. You’ll see whether you’ve got any black marks and also whether you’ve been the victim of fraud or identity theft. Veda Advantage also allows you for a fee to see your Vedascore.

     7. Dispute errors as soon as possible. Creditors can and do make mistakes. If you find something on your credit file you don’t agree with – get it sorted out. You can ask the credit reporting bureau which holds the listing to identify it as disputed, and then go about fixing the problem.

    There are avenues you can source to dispute your own listing. You can also seek out external help from a third party such as a lawyer focused on credit law, or a credit ‘repairer’.

    Mr Doessel recommends those who use a credit repairer to do their homework to avoid getting ripped off.

    /ENDS.

    For interviews and more information please contact:

    Graham Doessel – Non-Legal Director MyCRA Lawyers Ph 3124 7133

    Lisa Brewster – Media Liaison MyCRA Lawyers media@mycralawyers.com.au Ph 3124 7133

    www.mycralawyers.com.au www.mycralawyers.com.au/blog

    MyCRA Lawyers 246 Stafford Rd, STAFFORD Qld 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.

     Link: http://www.veda.com.au/sites/default/files/images/ycai_launch_infographic_final_190913.pdf

    Image: Stuart Miles/ www.FreeDigitalPhotos.net

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  • How your credit rating can be damaged when you move.

    moving houseDid you know, that every time you move house, you run the risk of damaging your credit rating? It happens if loose ends are not tied up on your credit accounts before you leave your old address. We look at some ways you can make sure you don’t risk your good credit rating, and ability to get a loan in the future when moving house.

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

    Moving is a time of stress and chaos. All of your important stuff is boxed up and in transit. You’re flat out cleaning the old place on time, let alone tending to those financial loose ends. But to maintain the integrity of your credit rating, it is really important that you have a plan for making a clean break at each residence.

    Time and again we have the situation where clients apply for a home loan and are refused because they have ‘surprise bad credit’, which when we track it back for them is due to the fallout of accounts sent to their previous address. This may not always be your fault.

    We have had plenty of clients who’ve needed help disputing their credit listing, because their Energy Provider could not work out that cancellation of their old account and installation at the new address meant that they had actually moved. Their final account was sent to their old address because they had not specifically provided a forwarding address.

    Not notifying your Credit Provider of your new address when you move can lead to a Serious Credit Infringement or ‘clear-out’ listing being placed on your credit file. This listing is, as the name suggests, much more serious than a default.

    What is a Serious Credit Infringement (SCI)?

    A serious credit infringement is an overdue debt in which the Credit Provider has been unable to contact the individual for 6 months following the overdue debt, despite reasonable attempts by the Credit Provider to do so. A SCI is listed on your credit file for 7 years. If contact is made within that time, and the overdue debt is paid, the listing is then downgraded to a default, which carries only a 5 year term.

    To avoid this, here are 5 tips for keeping your credit rating in check when moving house:

    1. Let all your Credit Providers know you will be moving and give them a forwarding address.

    You are obliged to update your Credit Providers with your forwarding address when you move. When you make that call to your Credit Provider, be sure to make a note of the day, time and person you spoke to about the request.

    Often we have people say they have told their telco or their energy company they are moving, and provided a forwarding address, but mail has still gone amiss and the client has ended up paying for it. If you have specific details of your call – the Creditor may be able to bring up the recording and verify your request.

    2. If ending an account with a Provider, request a final account.

    If you need to cancel your account, such as an Energy or home phone account when you move, make sure you request a final account for services. There may be incidental charges, or pay out fees as well as days accrued in the new bill period. Pay that notice as soon as possible.

    3. Don’t assume your account is finalised until you get it in writing.

    Once you have paid your final account, request a statement be sent in writing verifying the account is at an end. If you don’t receive that notice, chase it up.

    4. Cancel any direct debits.

    Places such as gyms and childcare centres operate payments via a separate direct debit company. If you have any direct debits set up, you should notify the company of the cancellation and of your forwarding address.

    Don’t assume correspondence with your gym is enough to cancel that account. You will have signed a separate contract with the direct debit company, and you are just as obligated to them if you have missed payments, for whatever reason.

    5. Redirect mail.

    Despite providing a forwarding address, and despite your attempts to finalise your accounts, there can be instances where a Credit Provider continues to send mail to your old address.

    Creditors can and do make mistakes, and one common mistake is simple computer or human error with billing systems. To prevent their oversight from costing you your good name through bad credit, consider redirecting mail through Australia Post to your new address.

    If you have just found out you have bad credit, there are many circumstances where you may be able to successfully dispute the credit listing. For help to dispute your default or Clear-Out listing, contact MyCRA Lawyers on 1300 667 218.

    Image: Ambro/www.FreeDigitalPhotos.net

     

  • How to get a copy of your credit report in Australia

    ddpavumba

     Are you in strife with credit or think you might have bad credit? Or do you just want to check what’s being said about your credit habits? With Australia’s new credit reporting regime now in place, it’s really important to regularly check your credit file to make sure it is accurate and up to date. We explain the important things you need to know about getting your credit report and the different ways you can access your credit file information in Australia.

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

    You can access your credit report for free.

    Most people are unaware you don’t have to pay to see what is on your credit file. Under Australia’s credit reporting laws, you can access your credit report for free from all of Australia’s credit reporting agencies annually. This allows you to keep an eye on your credit information and make sure it is accurate. You can and should make a request with each agency for your credit report – as there might be different information listed with different agencies. This copy is sent within 10 working days.

    Equifax (Formerly Veda Advantage) is the primary credit reporting bureau in Australia (holding approximately 16.5 million credit files), as well as Dun & Bradstreet, Tasmanian Collection Services (if in Tasmania) and new entrant Experian.

    If you need it urgently you can pay for your credit report.

    Most credit reporting agencies also offer a faster service (usually within 24 hours) for a fee.

    You can also check your credit ‘score.’

    [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”][At the time of writing] Only one credit reporting bureau, Veda Advantage (Now Equifax) had provided their credit score to the general public. The VedaScore can be obtained for a fee, and can be handy to obtain, especially if you intend to apply for major credit such as a home loan soon. Veda explains their score:

    Your VedaScore is calculated based on the information held in your credit file at a given point in time. Your VedaScore is dynamic and predicts the likelihood of an adverse event, like a default, being recorded on a credit file within the next 12 months. Your VedaScore shows where you sit in relation to other credit-active Australians in our credit-reporting database. This may be used by lenders as part of the credit assessment process; however, lenders will also use their own criteria and policies when assessing your application not only your VedaScore.

    Once you have your credit report, you need to check your personal details.

    If you obtain a copy of your credit report, the first thing you should do is run over your basic personal information to make sure it is correct and to make sure the information is yours. If it isn’t, you should take steps immediately to rectify this. Possible explanations for conflicting personal information could be:

    • the wrong person is attached to your credit file name or
    • you may be a victim of identity theft.

    Contact the relevant credit reporting bureau who can help you get to the bottom of it.

    You can then look at your Summary Characteristics or summary of information.

    This will tell you at a glance the items of note on your credit report such as any adverse listings.

    Importantly, check for cross-references.

    This is another point where you may have cause to find people other than yourself attached to your credit file. This can happen if someone with a similar or the same name resides in your area or uses the same Credit Provider as you. Any issues with cross-references can be fixed through notifying the Credit Reporting Bureau.

    Your credit history goes into detail about your credit habits.

    Items of note which could be impact your ability to obtain credit could include adverse lisitngs such as defaults, Court Writs and Judgments, bankruptcies and debt agreements, late payments. It could also include excess credit enquiries, and excess credit accounts or amounts, just to name a few.

    How your credit history can impact you.

    All adverse listings could lower any credit score calculated.  In this current economic climate even too many credit applications are often considered to be ‘black marks’ on the individual’s credit file in addition to defaults, clearouts, Court Writs and Judgments.

    The impact of late payment notations on the credit score or on assessment of credit suitability is still unknown since the information is only newly available to lenders. Speculation has centred around just how many late payment notations will be too many to mean (a) credit is refused or (b) a higher interest rate is offered. Most times the loan options available to you are at significantly higher interest rates in order to cover the risks associated with taking on someone with bad credit.

    What if my credit report is wrong?

    If there’s anything on your credit report you disagree with, you can contact the credit reporting bureau to fix it. If it’s something significant like an adverse which you believe is inconsistent, unfair, or incorrect it should be disputed. Credit rating errors could be anything from the credit listing placed by the Credit Provider on the wrong credit file; to the basis of the credit listing being unfounded; to incorrect notices being provided to the individual; right through to system errors and incorrect spelling, to name a few examples.

    You can attempt to fix it yourself.

    This involves dealing directly with Credit Providers in your dispute. The process of dispute is not always easy, particularly if you are time poor, or do not have the necessary skills or knowledge of the relevant legislation pertaining to your case. This doesn’t mean you can’t fix your unfair credit listing without knowing it, but it makes a massive difference to the chances of removal to have this knowledge (or to employ someone who does).

    Some people have in the past made a verbal dispute with their Credit Provider about their listing only to be told it can’t be removed, but can be marked as paid if it has been paid. This can deter individuals from pursuing their case of dispute. Put simply, a Credit Provider should remove a credit listing if it has been demonstrated that the listing was placed unlawfully on the credit file. It is in the demonstration that many people fall short.

    If your Credit Provider refuses to remove the credit listing, then you can take your case to the relevant industry Ombudsman. This can be helpful in many cases, but in some cases it may not be in your best interests to pursue this course. It is important to note that the Ombudsman acts impartially and is not advocating for you. This means there may be areas where they can’t or won’t investigate.

    You can get help to dispute your credit listing. 

    You can seek out external help from a third party such as a lawyer focused on credit law. A credit reporting lawyer can act in court processes; identify legal issues; provide legal advice; prepare binding agreements; conduct formal negotiations and follow through with enforcement where necessary. A credit reporting lawyer can also make formal recommendations to Credit Providers making reference to the law, and make representations on behalf of clients.

    You can also seek help from a credit repair company. A word of warning though, it is important to do your homework to avoid getting ripped off. There are some ‘dodgy’ players out there who may seem cheap, but who in the end could cost you and your dispute case dearly. Consumers can consult the Credit Repair Industry Association of Australasia at www.criaa.org.au for advice on choosing a credit repairer.

    Be careful about cheap and nasty credit repair. If you can’t afford to employ a demonstrated reputable and ethical advocate, consider disputing your own case instead.

    Need help to check your credit report?

    MyCRA Lawyers can help you check and analyse your credit rating and help assess your credit worthiness.

    Get a credit file analysis.

     

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

  • 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.

     

  • New Year, New home? The credit info Australians need to know.

    new years resolution buy homeMany a New Year’s resolution has been declared to take the time to find a home this year, and apply for a loan. If this is you, there are some things you need to know about credit NOW which can help you out massively.

    We look at the three things you need to ask yourself right now, that you may not have considered, but which could stop you from getting your dream home.

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

    Good deposit? Check.

    Good income? Check

    Paid off most of your debts? Check

    Stable job? Check.

    Most people who answer ‘yes’ to all of the above questions would assume they’re ready to go for finance and would be any lender’s favourite customer.

    If this is you, and you are about to talk to your broker or bank branch about getting a mortgage, there are 3 important questions you need to ask yourself before you do…

    1. Have I… disputed a bill with my credit provider/moved/divorced or separated/forgotten a bill/or not received a bill I should have in the last 5 years?

    These are probably the most common reasons people end up with a bad credit rating which sees them refused a home loan. Answering yes to any of these questions may mean you are at risk of having impaired credit show up when a lender does a credit check on you.

    Your credit provider may have issued a default in your name. If you have moved or separated or due to credit provider error, you may or may not have been made aware of your credit listing. These “oversights” whether yours or theirs may not be easy to remove, and many times clients who request their removal are told by their credit provider they are never removed but can be marked as paid if you settle the account. Unfortunately a paid listing is just as detrimental to your home loan as an unpaid one.

    If you fall into the above categories, do yourself a favour and apply to see your credit report before you apply for a home loan (www.freecreditrating.com.au).

     2. Do I have a copy of my credit report?

    Even if you believe you are not at risk of bad credit, and you always pay bills on time, mistakes can and do happen. Don’t let the lender be the one to see them first, order your own credit report and make sure you have the all clear before you apply. If the lender does a credit check they will generate a “credit enquiry” on your file. If you have bad credit, the credit enquiry will only add to the crosses against your name. So it’s best to check your credit file yourself first, which you have the right to do for free annually without generating an enquiry against your name.

    You can order your credit report from Australia’s credit reporting agencies. A free credit report takes around 10 working days to be sent to you by mail. MyCRA Lawyers also offers a credit file analysis service, which includes a credit assessment and same-day copy of your credit file service.

     3. Have I paid my credit card or any loan late in the last 12 months?

    Hopefully you have checked your credit report and it has come back clear…BUT even still, there may be things you are doing right now which are harming your future credit file. If you have been late making repayments to finance providers on accounts such as credit cards or loans you have been monitored (since December 2012). While this information doesn’t show up on your credit file yet, it will from March due to new credit reporting laws which are set to be implemented then. It will stay on your credit file for 2 years.

    If you think you have paid a credit card late, or your personal loan or other finance, then you may be at risk of a late payment notation against your name. If you are a serial late payer, even by a week or so, you are probably at risk of this new type of ‘bad credit’.

    Too many may mean you are refused credit after March. If you think this is you, you may need to apply for that loan before March, and not wait, or potentially risk being refused credit, or being offered a higher interest rate.

    It’s unclear how lenders will look at these notations – how many late payment notations will be too many and mean you’re refused credit, so take heed, and make sure you stop paying your credit accounts late in the future to protect your credit file.

    If you’re not sure where you stand with your credit file, or if there is a ‘black mark’ which will stop you from getting your home loan, talk to us about it. We can assess whether we may be able to help you dispute your credit listing. If successful in proving the credit listing is incorrect or inaccurate, it is required to be removed from your credit file. So you can have the squeaky clean credit file you deserve, and your loan at the interest rates you deserve too. Phone MyCRA Lawyers on 1300 667 218 for more information.

    Image: Danilo Rizzuti/ www.FreeDigitalPhotos.net

     

  • The new credit habit EVERY Australian should adopt in 2014

    Media Release

    credit reportThe new credit habit EVERY Australian should adopt in 2014.

    15 January 2014

    New credit history data about Australians is set to be shared with credit providers in March this year, after a 16-month collection period that many consumers have been unaware of – and a consumer credit advocate is warning Australians about the importance of routinely checking their credit rating to make sure their information is accurate.

    Graham Doessel, Non-Legal Director of MyCRA Lawyers – a firm focusing on credit disputes, says come March, Australia’s credit reporting laws are set for a major overhaul as part of widespread changes to the Privacy Act 1988 (Cth) and a move to more “comprehensive” credit reporting will see much more information available to lenders, including repayment history.

    “Since December 2012 if you have been late making repayments to finance providers on accounts such as credit cards and loans, this information has been collected. From March 2014 this information will be included as part of your credit history and available to potential lenders who perform a credit check,” Mr Doessel explains.

    The other new data sets available to lenders include – the date on which a credit account was opened; the date on which a credit account was closed; the type of credit account opened; and the current limit of each open credit account.

    “It is up to every individual to ensure the information recorded about them is accurate, but unfortunately, the majority of Australians are just not checking their credit rating – I think this is a big worry going forward under these new laws.”

    In September last year, credit reporting agency Veda Advantage published results of a survey showing that a whopping 80 per cent of Australians have never checked their credit history and 53 per cent were not aware that they could ask for a copy of their credit file.(1)

    Mr Doessel says these numbers reflect a nation which is largely unaware of just how important their credit file can be for lenders making financial decisions.

    “There are no class lines, whether rich or poor if your credit file is ‘impaired’ by negative notations, your ability to obtain credit will be affected or the interest rate you are offered will be higher,” he says.

    Up till now, only accounts more than 60 days in arrears were recorded on Australian credit files and listed as ‘defaults’. The new laws add to this, and allow for the 2-year recording of late payments on licenced credit made even one day late, although Mr Doessel says a grace period of 5 days has been proposed to be implemented with a new Credit Reporting Code of Conduct.

    “Five days is still an extremely small window in which to ensure that mistakes or simple oversights on both sides haven’t occurred. It is really essential that Australians keep good paperwork on all credit accounts, and routinely check their credit history,” he says.

    Mr Doessel says it is unknown just what weight lenders will give to this new information they have available to them.

    “It’s up to each lender and their own calculations as to how they treat this new information as well as whether a potential borrower is refused credit or bumped up to a higher interest rate. But I believe late payment notations will impact the individual’s credit score,” he says.

    HOW TO CHECK YOUR CREDIT RATING.

    • It is not well publicised, but under Australian law checking your credit report is free once per year for each individual.

    • It takes about 10 working days from the receipt of your request to send you out your report. This ‘free’ report doesn’t contain any credit score, but does list all of the credit information about you available to any potential lender, as well as all of your personal information.

    • You can apply for a copy of your credit report from credit reporting agencies Veda Advantage, Dun & Bradstreet, Experian and Tasmanian Collection Services (if in Tasmania).

    Or you can apply all in one place at www.freecreditrating.com.au.

    • You can generally pay the credit reporting agencies to be sent an urgent report, or with Veda Advantage, obtain your ‘VedaScore’.

    • If you check your own credit report you do not generate a “credit enquiry” through the agency’s system, whereas if you leave it to a lender, you do. Too many credit enquiries can be detrimental as they are classed as ‘applications’ and potential lenders can assume this notation means you have been refused credit in the past.

    “Thankfully, if there are issues of inaccuracy on credit reports from March – there will be more support for correction within the new legislation, so we are hopeful dispute cases have more chances of success than they’ve had in the past,” Mr Doessel says.

    /ENDS.

    Please contact:

    Graham Doessel – Non-Legal Director MyCRA Lawyers Ph 07 3124 7133

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

    www.mycralawyers.com.au  www.mycralawyers.com.au/blog

    www.mycra.com.au/blog

    MyCRA Lawyers 246 Stafford Rd, STAFFORD Qld Ph 07 3124 7133

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

    Link:

    (1)http://www.veda.com.au/sites/default/files/images/ycai_launch_infographic_final_190913.pdf