Credit rating self-checks essential for prospective home buyers.
19 February 2013
A credit rating self-check should be top priority for prospective home buyers before finance application to ensure ‘surprise’ bad credit doesn’t mean they lose their dream home, according to a consumer advocate for accurate credit reporting.
CEO of MyCRA Credit Rating Repair, Graham Doessel, says a credit file check will reveal any adverse listings which will lead to credit refusal.
“Home buyers should ignore their credit file when applying for finance at their own peril. In many instances it can be more important to have a clear credit rating than a huge deposit,” Mr Doessel says.
He says many people assume if they pay their bills on time they should have a clear credit history, but surprise bad credit and credit reporting errors can and do occur.
“So many of my clients are unaware they have defaults until they apply for major credit such as a home loan, and are flatly refused because of defaults. The clients can lose the house and have their dreams shattered, all because of a credit file which contains defaults that may not even be lawful,” he says.
A credit file exists for anyone who has ever been ‘credit active’ and is used by lenders to assess the risk and borrowing capacity of potential borrowers.
Defaults are put there by creditors when accounts have remained unpaid for more than 60 days.
Defaults remain on a person’s credit file for 5 years from the date of listing, and have the potential to severely impact a person’s ability to obtain credit.
“Currently, any default can be enough for an automatic decline with most of the major banks. Many lenders are even rejecting loans for excess enquiries such as two in thirty days or six within the year.”
“It also affects the type of loan people may be eligible for, the interest rate they are offered and price of establishing the loan. The lending options become more expensive and limited,” Mr Doessel says.
He says many clients had what they thought were impeccable repayment histories, but found out the hard way that they were the victim of credit reporting errors.
“At this time in Australia, creditors basically have the go ahead to list defaults and other negative listings on consumer credit files with very little by way of checking in terms of accuracy of that listing,” Mr Doessel says.
The onus is on the consumer to ensure their credit file reads accurately.
“That’s why it’s so important for everyone to know what is said about them on their credit file, and to know how to dispute any errors that come up,” he says.
House hunters can request a copy of their credit report from one of the major credit reporting agencies such as Veda Advantage, Dun and Bradstreet or TASCOL (if in Tasmania). These agencies will provide people with a free copy of their report within 10 working days from receipt of the request.
“If you request this report well before you are ready to buy a house, you can potentially save yourself the embarrassment and heartache of being knocked back for finance due to credit file defaults, and that’s also one less lender-generated credit enquiry on your credit file,” he says.
Demand for ‘credit rating repairers’ has grown due to what Mr Doessel says is a credit system fraught with difficulties.
He says many of his clients have attempted to dispute an unfair listing themselves and have come up against problems.
“Most times the Creditor says defaults are never removed, but can be marked as paid if the account has been settled. Effectively they are bullied into paying the overdue account and are still copping the default on their credit file.”
But Mr Doessel says if a listing contains errors or inconsistencies, it should be removed.
“It takes someone who is aware of how to work within the legislation, demonstrate effectively where the Creditor has made errors and show cause as to why a listing is unlawful and should be removed. Unfortunately this is something many consumers have neither the time and or skills to do effectively,” he says.
Graham Doessel – CEO MyCRA Ph: 07 3124 7133
Lisa Brewster – Media Liaison firstname.lastname@example.org
246 Stafford Road, STAFFORD QLD. http://www.mycra.com.au
MyCRA Credit Repair is Australia’s number one in credit rating repair. We permanently remove defaults from credit files.
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