The amended Privacy Regulation Act commenced on 12 March 2014 and includes details of how financial institutions can collect, use and disclose your financial information to credit-reporting bodies.
This means that your financial institution is legally allowed to share your credit liability information and your repayment history by providing details of whether your payments have been made on time or not. If you fail to make a repayment on time, it may affect your ability to obtain credit in the future.
Who do credit laws affect and what do they mean for you?
Credit laws affect everyone in Australia and no one is exempt from this. You will have a credit report if you have applied for any form of credit. This can include:
- Phone contracts
- Credit cards
- Residential or personal loans
- Hire purchase/car loans
If you have never missed a payment or even paid off your loans early, this is good news for you as you will probably have a good credit report. However, if you have failed to meet your requirements as agreed with your service provider then we have some work to do.
What is bad credit?
Bad credit is if you have ever:
- Missed a payment (even unintentionally)
- Overextended your credit card (even just a little)
- Had overdue accounts or payment defaults
How will bad credit affect me when applying for a loan?
The Lender that you racked up the bad credit report with will most likely disapprove your loan based on your previous history with them and if one lender rejects you, then the next one will more than likely deny you too, even if they don’t know the other lender’s reasoning.
You need a mortgage broker now more than ever… gone are the days when you can go to a bank to negotiate your own mortgage.
Why do I need a mortgage broker?
If you don’t know how to present your financial position in the absolute best light to the lender and the lender declines you – it’s on your record.
When you use our mortgage broking services, we use our experience and knowledge of the industry to speak to the right lenders for your financial situation leading to a greater chance of having your loan approved. We can’t make any promises, but you are going to have a greater chance with a broker than you will trying to do this yourself.
What can I do to maintain a good credit report?
- Keep an eye on your repayments – DO NOT be late or miss a payment.
- Don’t go over your credit card limit.
- Don’t apply for too much credit.
- Use direct debit to pay your bills on time – most institutions allow you to set up a direct debit of the minimum payment every month. This will ensure your payment is made on time.
- If you are going away for an extended period of time and you know a bill will be due, schedule the payment for the due date via internet banking or ask someone else to organise the payment while you’re away (if you can trust them to pay it on time).
- Remember, if you miss a payment, you cannot simply do a double payment the following month to cover it. It has to be made against the actual date to ensure a good credit report.
If you or someone you know is having trouble with their credit report, speak to one of our experienced mortgage brokers today and we will assist in finding the right lender for your loan and offer advice on how you can improve your credit report.