The Credit Slip-ups That Stop You from Buying a Home

Press Release

The Credit Slip-ups That Stop You from Buying a Home

21 May 2013

Latest housing figures show the property market is on the up and up, but a consumer advocate for accurate credit reporting warns that people can put their chances of buying a home at risk by making some basic mistakes with credit.

CEO of MyCRA Credit Rating Repairs, Graham Doessel, says many buyers get caught out with bad credit at the time of finance application and are refused a home loan unnecessarily.

“Many people are shocked that they can’t buy a home because of their credit report, as they always pay their bills on time, but there are some basic mistakes that people often make with credit that can see them refused finance – and they can be easily avoided,” Mr Doessel says.

He says bad credit or credit impairments are currently shown on the credit file for between 5 and 7 years, and most often impact the credit file holder’s ability to get mainstream credit.

“People can also be forced to pay a much higher interest rate because of bad credit. So it is ideal if people can avoid the mistakes in the first place, or fix them before they make a home loan application,” he says.

The advice comes as the Australian Bureau of Statistics announced last week a recorded increase in loans during March, with investment housing commitments rising 1.4% and owner occupied rising 1.1%. [i]

Mr Doessel says good general credit education in the community is required to take full advantage of the renewed market confidence.

“All buying sectors, including Australia’s flailing first home buyer market, could be enhanced by demonstrating to them just what good decisions with credit are, and how people can prevent credit refusal,” he says.

5 Crucial Credit Mistakes Which Could Cost You a Home Loan

1. Paying bills late – even slightly late!

Previously it would take 60 days before a repayment fell into ‘arrears’ and a Credit Provider would list a default on your credit file. This can still happen, but from December last year licenced Credit Providers are reporting other repayment history. If a payment on a credit card, loan or similar is made more than 5 days late, it will be recorded on your credit file for two years. Too many late payments could impact your ability to get a home loan. [ii]

2. Making multiple credit applications

When choosing credit that’s right for you, by all means do research but only apply for credit or give your personal details when you’re sure you want to proceed. Many people don’t know that all credit enquiries are recorded on your credit file, and too many will be a detriment to your approvability – so only officially apply when you’re sure.

3. Not checking account statements

You should check all bills and statements when they come in, and query anything you’re not sure about. This includes if you have moved or changed accounts, and you don’t a receive statement from your Credit Provider. Any discrepancy should be disputed immediately so the issue is noted with your Credit Provider prior to the account being considered ‘late’ or in ‘default’.

4. Not Checking Your Credit Report

Most people don’t know that every year they are able to request a copy of their credit report at no charge from Australia’s credit reporting agencies, so you can see most of what the banks see about you. The report is provided within 10 working days, and if you need it sooner, you can pay. Many people don’t know they have bad credit, so it is important to check and if you believe you have been unfairly listed, to dispute it.

5. Taking ‘no’ for an answer.

Bad credit means you are locked out of mainstream credit for between 5 and 7 years. So if a Credit Provider says the listing is fair, and you believe it isn’t, you should take the matter further. If you are confident you have a clear case, then you can escalate your complaint yourself to the Credit Provider’s Ombudsman. The case must be pursued based on the Credit Provider’s adherence to credit reporting law. Alternatively, you can employ a credit repairer to make a case and dispute your listing with your Credit Provider on your behalf.

[i] http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0

[ii] http://www.comlaw.gov.au/Details/C2012B00077

ENDS

© Scoop Media