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We are about to enter what we will come to know as the BIGGEST change in privacy reforms in history.
The current credit rating system is set to be overhauled with the introduction of new Privacy Regulations (made under the Privacy Act). The new amended Act is set to commence on 12 March 2014 and includes changes to how financial institutions can collect, use and disclose your information to credit-reporting bodies.
What does this mean?
Under the current scheme, a lender can only access information on credit enquiries and major ‘negative’ credit events such as default and bankruptcy. When the new scheme is introduced your financial institution will now be allowed to share your credit liability information ; when accounts are opened and closed, credit limits and your repayment history by providing details of whether your payments have been made on time OR NOT. If you fail to make loan or credit card payments on time, it may affect your ability to obtain credit in the future. All of this information will be included in your credit report.
What is a credit report?
If you have ever applied for credit or a loan it will be listed on a report about you with a credit reporting agency. This can include:
- Phone contracts
- Credit cards
- Residential or personal loans
- Hire purchase/car loans
- Credit providers use this report to assess whether they approve or decline any request for new or increased loans or even credit cards.
Who does this affect?
What does this mean for you?
If you’ve been good (and I mean really good) – then not much.
If you’ve been bad, then we have some work to do.
What is bad?
If you have ever:
- Missed a payment (even unintentionally).
- Overextended your credit card (even just a little).
- Gone on a holiday, racked up your card and then delayed payment for as long as you can until the bank is knocking on your door, then this is considered bad.
- Had overdue accounts or payment defaults.
What does this mean when you are applying for a loan?
This information will affect your ability to borrow in the future. Further, if one bank rejects you, then the next one will more than likely too, even if they don’t know the other lender’s reason.
What can you do about maintaining a good credit rating?
- Keep an eye on your repayments – DO NOT be late or miss them. Scheduling reminders can help to remember.
- Don’t overuse your credit card.
- Don’t apply for too much credit and avoid making multiple applications over a short period of time. It is possible each application will show up on your file. Lenders may question the need for so many applications and may decline you on that basis.
- Use direct debit to pay your bills on time – most institutions allow you to direct debit the minimum balance EVERY month. Even if you like to pay the balance in full this will ensure your payment is made on time. You can then pay the additional (balance) each month as you please.
- If you are going away for an extended period and you know a bill will be due then schedule the payment for the due date via internet banking – or ask someone else to pay it while you’re away (if you can trust them to pay it on time). But can you really afford to put this responsibility in the hands of other people? You simply cannot do a double payment in March to cover a payment for April. It has to be scheduled against the actual date.
- It’s a good idea to check your credit report every year to make sure there are no mistakes that could affect your credit record and your ability to get credit. You can get a copy of your credit report for free if you can wait 10 working days. You may have to pay if you need it quicker.
- If you experience financial hardship and are unable to make a repayment, always contact your credit provider before the repayment is due to discuss the situation with them.
Who should you tell?
- Everyone! Especially teenagers and young adults who may be looking to get their first home loan soon.
- Anyone you know who is struggling financially at the moment who you know isn’t paying their bills on time.
- Everyone you care about who will need finance in the future.
So, what’s the good news?
- These changes were made to provide you with increased protection over how your information is held and shared.
- Lenders will now have a better understanding of your credit needs and your ability to repay any debts.
- If you have an excellent payment history, this WILL HELP YOU to obtain finance in the future. You have additional rights for accessing your credit information.
- You can complain if you think the information held or shared about you has been mishandled.
How can we help you?
If you have any questions regarding the new Privacy Act please do not hesitate to contact us at Indigo Finance.
When applying for credit it is becoming increasingly more important to present your financial position in the absolute best light for the lender to ensure approval. If you do not know how to do so and then the lender declines you – it’s on your record.
When you use our services at Indigo Finance, we will know who the best lenders for your situation will be and there will be a greater chance of having your loan approved. Now we can’t promise this by the way. But you are going to have a greater chance with an experienced broker than you will by trying to do this yourself.
Your credit information will be available to all financial institutions. Also, if your mortgage insurer declines your insurance, then guess what? – the next one probably will too. Without any reason except that someone else has, so it is important to get it right the first time.
How can I access my credit report?
To apply for a free copy of your credit report, you can contact these national credit reporting agencies or our offices. You don’t have to pay a fee to get a copy of your credit report, you may just have to wait a little longer to get it.
Phone: 1300 762 207
Phone: 1300 734 806
Experian: Experian Credit Services
Phone: 1300 783 684
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It’s too early to be jumping for joy, but the latest housing loan figures support hopes for better times in the home building industry.
The two per cent bounce in February was not enough to restore the number of home loan approvals to the 2012 average. It fell fractionally short of the mark.
But things aren’t quite as dreary as that suggests.For the wider economy; it’s not just the number of home loans that matters.The value of home loan approvals is important. And then there are investors, not generally mentioned when the “home loan” figures from the Australian Bureau of Statistics are reported every month.
But counting investors along with home buyers, the total value of housing finance approvals to both investors and home buyers in February was $21.83 billion, compared with the 2012 average of $20.61 billion.
In other words, the value of housing loans being pumped into the Australian economyis running at more than 2 billion a month above the average for last year.
Last month the Reserve Bank of Australia was cautiously optimistic about the prospects for the home building sector. “Overall, recent housing market developments pointed to a further moderate increase in dwelling construction in the period ahead,” the central bank said in the minutes of its board’s monetary policy meeting earlier in March.
The housing market is dominated by established homes, but sustained strength in demand for established homes can usually be counted on to boost demand for new housing, which then generates a cascade of activity through the rest of the economy.
The value of lending for new housing, including those investor loans identified by the ABS as going into construction, was $2.70 billion in February, 24 million or five per cent above last year’s average.
There is a long way to go before the housing sector is running quickly enough to beable to grab the baton as the resource investment boom tops out. But it does seem at least to be heading in the right direction.
Source: Garry Shilson-Josling, AAP Economist courtesy of Shaw Stockbroking