This affects everybody… yep everybody!!!
If you decide to delete and not read, then more the fool you are…
I only occasionally say that this Blog is a must read, and this is my must of must reads!
New legislation has been approved in relation to EVERYBODY’S credit file… and it comes in to effect March 2014.
Now the specifics are still to be fully negotiated but in general terms, anytime you apply for finance in the future, the lender will have access to a whole lot more info than they have in the past.
For those who have never seen their CRAA or their credit file, it consists of basic information that shows mainly bad things to those who have been bad. It shows all credit that has been applied for over the last 7 years, and defaults against your name where bills haven’t been paid in time, any directorships of companies you may be, bankruptcy… and some other general, not so pleasing to some, info…
So when lenders assess a loan application, as long as they do not have bad credit, bankrupt or are not directors when they say they are an employee, that’s a tick on their credit checklist.
Now, however, the new proposed credit reporting looks like it will be including repayment history.
Some of you are saying, well sure if you don’t pay your bills then you don’t deserve a loan… but think of it like this:
What if you miss your credit card repayment by one day because you were on holidays? Or you were 2 weeks late paying your rent?
The repayment history can add that directly onto your CRAA and lenders may not necessarily decline an application due to this, but in the days of credit scoring, it will not go in your favor… especially if there are a few. A default on your credit file generally only occurs when you have missed three payments of the same bill.
I for one can raise my hand and say that I have missed a due date on a credit card… I think everyone has at some stage!
Other information it looks to show will be:
Now for us as Brokers it will be more beneficial in getting these reports prior to even starting an application to see if the loan will fly or not… along with old enquiries being dismissed by applicants as being paid off or closed.
It also opens up the Rate for Risk on lending… meaning if you have a few misdemeanors then a lender may charge a higher interest rate if there appetite for risk is warranted.
This isn’t just mortgages… its personal loans, credit cards, car loans, store cards, mobile phone accounts…
Yes this could even stop you buying a new mobile phone on a plan!!!
And to add fuel to the fire they are not sure if data will be backdated to 2012.
Meaning, now’s the time to get organised…
Lets dig a little deeper, for those who are self employed… you better make sure your BAS is paid on time!!!
For everybody, this will be any bill from anyone… including electricity & gas bills, council & water rates, phone bills, Foxtel, all insurances, memberships, BAS, ATO tax bills, mortgages, leases, car & personal loans.
So here’s my tip of the Blog…
We live in an age of technology, so I am setting up as of today automatic transfers to my credit cards for the minimum required monthly repayment amount. And set it for the day before if your bank account and credit card are with the same institution and 3 days early, if they are different.
That way you will never miss a credit card repayment… then you can make the extra payments at your will and your CRAA will not get a missed payment history comment marked against you…
Remember BPay takes two days to be received, so make sure you pay them at least two days before due date.
If you are not money management savvy, then start learning… or pay the price.
Lastly, don’t take this as a joke, the legislation is already approved and coming and will capture so many off guard… so start sharing it on your Facebook accounts. Everybody needs to know this!