Changes to credit reporting may affect potential home buyers
ARE you applying for finance for a home loan? If so, there are certain major changes to Australia's Privacy Laws that you need to know before applying, according to recent findings from MyCRA Credit Repairs.
A consumer advocate for accurate credit reporting warns potential home buyers they need to get up to speed with some of the main changes to credit reporting which could see more people refused a home loan in the months and years ahead.
MyCRA CEO Graham Doessel said some simple mistakes made with repayments could see people blacklisted from credit even before the Privacy Amendments (Enhancing Privacy Protection) Bill 2012's March 2014 deadline for implementation.
"Potential home buyers need to know that from this point on, they need to make every credit repayment on time to avoid having late payment information show up on their credit history and potentially ruin their chances of getting the home they want," Mr Doessel said.
Mr Doessel said from this month, in regards to repayment history information, whether or not a credit account was paid on time would be part of a person's credit history and would be used when a lender was assessing a person's suitability for a home loan.
The notation would remain in the credit history for two years.
"Many people pay bills late for a variety of reasons and this doesn't necessarily mean they intend for the account to go into default," Mr Doessel said.
"But these late payers could find they end up refused credit, or charged thousands more in interest due to these notations."
The new laws will now allow information on the type of credit accounts you have, and when they were opened and closed to be shown on your credit history.
This will give lenders more ability to determine the relevance of each listed credit account for your specific situation.
The credit limit on each credit account will be also be used to assess the potential volume of credit the potential borrower could have access to.
"It may be worth reducing unnecessary credit limits on your accounts before you make your application," Mr Doessel says.
Mr Doessel said some lenders would decline a finance application due to too many credit enquiries.
"By all means ask questions, and do your research on the best home loan for you, but when it comes to giving over your details, and making applications, leave that until you have decided which lender suits you best, to avoid being disadvantaged," he said.