MyCRA Specialist Credit Repair Lawyers

Tag: The Adviser

  • What you should know about credit repair

    credit repair in AustraliaIs your credit rating letting you down, and want to know the best way to fix bad credit in Australia? Or want to know some tips and tricks to credit repair in Australia that many in the industry won’t tell you? I regularly write guest posts for popular broker publication ‘The Adviser.’  The post The Adviser published last week was called “What your clients should know about credit repair” and it explains the ins and outs of credit repair in Australia, and how clients experiencing bad credit can best safely and effectively navigate the credit repair industry. I have provided this post in its entirety, and recommend anyone considering credit repair to give it a read.

    By Graham Doessel, MyCRA Lawyers www.mycralawyers.com.au.

    As seen in The Adviser…

     

    What your clients should know about credit repair 

    06 June 2014 | Graham Doessel

    As a former broker, I know the hills you often need to climb to get deals over the line. One of those obstacles can be bad credit. When everything else stacks up – bad credit can be a deal breaker.

    So naturally at some stage as you struggle with clients who would qualify apart from their bad credit, you may find yourself considering credit repair and its benefits to your clients.

    So what is credit repair? For those that don’t know, credit repair is working on behalf of a client to assist in disputing an inconsistent credit listing or listings. Credit providers will only make corrections in accordance with the Privacy Act 1988 (Cth).

    The information on the client’s credit report must be inaccurate, out-of-date, incomplete, irrelevant, or misleading to be removed. A credit repairer’s job is to find and argue inaccuracies in credit reporting.

    I would love to say that every firm educates clients and brokers in this way. But in reality there are a whole ton of broken promises, misleading statements and at times out-and-out lies permeating the industry.

    This can make it harder for clients to find those firms which have genuine skill and experience in the industry and who will act with ethics and integrity. Some brokers have a direct referral system with a reputable credit dispute firm for that reason. But if you don’t, how do you make sure your clients aren’t going out there blindly and making costly mistakes?

    Here’s what your clients should know about credit repair:

    1. Cheaper does not mean better

    The cheaper the price, the less work that is probably being done on the credit file. We allocate about 28 working hours to each case because that is the average time frame involved if the job is done correctly.

    2. Nothing is guaranteed

    There are no guarantees with this type of work, but a firm should not take on someone they don’t believe they have a good chance of helping. This comes down to having trust in the firm you are recommending as well as the firm having a rigorous assessment stage. Clients should also be looking for published success rates and testimonials as evidence of a firm’s success.

    3. Get it right the first time

    Your clients may only have one chance to get it right. When clients have already used another company or have done some of the work themselves, it can place limitations on their case.

    4. The ombudsman should be the last resort

    Any credit repairer worth their salt should have access to more avenues of investigation and dispute than what an industry ombudsman can provide. They should be pursuing these before seeking an ombudsman’s assistance.

    5. Beware of imprints

    Be careful of firms which leave imprints on the credit file, as this could instantly undo all the work done in removing the credit listing.

    6. Lawyers can help

    A law firm will have the added protection of a state law society. A lawyer can act in court processes including the removal of judgment and writ services, which is something a non-lawyer can’t do. A lawyer can also identify and advise on legal issues; prepare binding agreements, conduct formal negotiations and then follow through with enforcement where necessary; make formal recommendations to credit providers making reference to the law, and make representations on their client’s behalf.

    While credit reporting mistakes continue to come up on client credit files, there will always be a place for skilled credit reporting advocates in the finance industry. As brokers, more education about credit reporting can give you the power to contribute to a solution for the credit repair industry, and assist in minimising the current problem.

     

    If you want to know more about credit repair and credit repair lawyers in Australia, or just want to talk to us about how we can fix your bad credit rating then you can contact us on 1300 667 218 or visit the link below.

     

    FIX MY BAD CREDIT 

    Image: iosphere/ 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

  • 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.