5 credit accidents you want to avoid this Christmas
5 credit accidents you want to avoid this Christmas.
17 December 2013
Australians must put credit issues on their radar to ensure a bad credit rating is not the surprise they get this Christmas season, warns a consumer advocate for accurate credit reporting.
Credit repair pioneer Graham Doessel, who is now Non-Legal Director of MyCRA Lawyers - a firm focusing on credit disputes, says too many Australians are kept in the dark about their credit file, but anyone who intends to borrow money in the next five years should make it their business to prevent simple accidents from hurting their credit rating.
"I fear many people are unknowingly making mistakes with credit right now, which will see them locked out next year," Mr Doessel says.
Back in September, Credit reporting agency Veda Advantage published results of a survey showing that 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 statistics are severely worrying and show too many consumers are unaware of 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.
"I would like to say it is always cut and dried - don't pay, get bad credit but in reality it's not that simple."
There are number of ways you can make mistakes and end up paying dearly for it. Over the Christmas period the risks can be higher.
Mr Doessel covers the 5 major credit accidents at Christmas time:
1. Accidental late payment.
Right now, if you make a payment late
on licenced credit (being loans, credit cards and other
finance) - the information is being recorded. You may not
intend to actually default on your loan - but Christmas can
be a busy time where payments can get overlooked by a few
days. Don't let this happen to you. After March next year,
late payment information will be available to lenders on
your credit report and will stay there for 2 years. So don't
put off paying your credit card after Christmas pay on time
every time to make sure your credit rating isn't
2. Accidental default.
you happen to unknowingly let any bill (including your phone
bill or Energy account) slip into default - (more than 60
days overdue) a default listing will be recorded against
your name. You may have the funds to pay, you may have
simply overlooked the account - but your credit file will
carry that default listing for 5 years - and most times you
will be refused mainstream credit because of it. So if you
plan to go away for Christmas, make a plan to ensure all of
your bills are organised prior to leaving.
3. Being careless with your personal information.
Scammers are out in full force at
Christmas, but often people are too busy to take care with
their personal information. Credit cards are used more
frequently and at a variety of locations; we're being
encouraged to sign up for free giveaways; we're giving out
more details online - but you must consider the risks to
your credit rating. If fraudsters are able to access your
personal details they have the key to your good credit
rating. They can run up credit all over town. Often it's not
until victims apply for credit in their own right and are
refused because of defaults that they realise their credit
file has been misused.
4. Not forwarding new information to old Creditors during moving and transfers.
Christmas and New Year is a very
common time for transfers and other work changes to occur
that could see people moving interstate. A change of address
is a very common reason bills go unnoticed - along with
warning notices and the result is a bad credit rating that
may not be detected until you actually apply for a home
loan. Before you go, tie up all loose ends at your current
address, ensuring all changes of address and accounts are
settled and confirmed in writing to avoid being blacklisted
5. Overlooking errors and omissions from Creditors.
Even creditors are affected by
the silly season -with staff busy and preoccupied. The
volume of transactions may increase while staff decrease,
putting stress on the Creditors' systems. For this reason it
is crucial for you to keep watch on your own finances. Check
your bank statements and bills at this time. Keep abreast of
which bills are due and when. If you don't receive a bill,
chase it up. Busy people make mistakes - don't let them make
it with your credit rating.
You can check what is currently reported about you at www.freecreditrating.com.au.
Mr Doessel says education is the key to ensuring less people are making mistakes with credit. More information on credit reporting in Australia can be found at the Office of the Information Commissioner's website www.oaic.gov.au. MyCRA also provides up to date information on trends and issues in credit reporting impacting consumerswww.mycra.com.au/blog.