Credit Worthiness

The shock of being refused a loan or credit can be humiliating and embarrassing.

Particularly where the refusal has come from "impaired" default listed on the client's credit file.

Please bear in mind that credit may have also been refused for reasons outside "impaired credit listings" which will be covered in another section of this site (Credit Assessment).

The credit worthiness of prospective borrowers is absolutely essentially in order to obtain the most competitive finance packages offered by various financial institutions.

So how does one ensure that they have good credit and maintain it! What we are attempting to set out in this page, is some basic "house keeping" practices to ensure that a borrower's credit rating is maintained and "credit infringements" (blemishes) are prevented from being recorded on a Credit Reporting Agency (CRA).

In Australia the premier Credit Reference Association originally known as Credit Reference Association of Australia (CRAA) changed it's name to Baycorp Advantage and in March 2007 changed it's name again to Veda Advantage, is the leading CRA in Australia and has 99% of Australia's credit providers as members.

Firstly, in order to protect consumers from unnecessarily having credit infringement entries listed on their personal credit files, the Natonal Credit Code Protection Act (NCCPA) (formerly known in each State as the Uniform Credit Code - UCCC) and Privacy Act sets out protocol which must be followed by Veda (Baycorp) Advantage members prior to them listing a customer with a payment default. It is important to understand what these parameters are, so that the borrower can then manipulate their position to allow a resolution to the credit problem they have with their lender before an infringement is recorded.

Please remember that these rules only apply to people who fall under the Uniform Consumer Credit Code. Where the credit infringement occurs with a corporation or with a person who has borrowed funds for a commercial/business nature, the Natonal Credit Code Protection Act (NCCPA) (formerly known in each State as the Uniform Credit Code - UCCC) DOES NOT cover them or prevent the creditor from listing a default on the borrower's credit file immediately without giving the commercial debtor an opportunity to rectify the irregularity. In most cases the commercial debtor will be given similar opportunities as the Natonal Credit Code Protection Act (NCCPA) (formerly known in each State as the Uniform Credit Code - UCCC) debtor, however be aware, the commercial creditor is NOT obliged too.

In most cases though, where the infringement is a commercial or non-consumer nature, the financier will still adopt the new (1st July 2010) Natonal Credit Code Protection Act (NCCPA) (formerly known in each State as the Uniform Credit Code - UCCC) practice, however, this is not guaranteed.

Under the NCCPA, the financier must provide adequate warning of a breach of the finance contract to a borrower. This is firstly, a letter dispatched to the borrower to their last known address (seven or days after the payment is missed), which is usually the one they will have on file. If you have since moved and have not updated your address details with your lender/s you are leaving yourself open in having mail sent to you returned, which in turn could result in the financier placing a "clear-out" listing on your credit file immediately (in this instance they are not required to wait the obligatory 60 days), an entry which will remain for seven years. Not Good!! If the borrower has not responded within seven days, a second letter will be dispatched highlighting the urgency of the irregularity and urging the borrower to contact them to discuss the non-payment. The upshot is that under the NCCPA, the financier will give you 60 days from the date your payment was missed, to correct the discrepancy. On day 61, if the discrepancy has not been remedied, then a payment default maybe logged on the borrower's credit file, alerting any other lenders who you may approach, that the borrower has an outstanding debt with the "defaulting" creditor which is not being honoured!

Types of Credit Infringements

•  Telephone Accounts
•  Electricity Accounts
•  Gas Accounts
•  30 Day Accounts
•  Personal Loan Accounts
•  Overdraft Accounts
•  Cheque Dishonours
•  Collection Agency Listings
•  Credit Card Companies

The main credit infringements that are usually found on affected Veda Advantage (Baycorp) client files are usually listed by Telecommunication companies, and other utility services along with continuing credit companies such as credit card providers. The next most common credit infringements usually found are from personal loan lenders and collection agency listings. The least recorded infringements are 30 day accounts, cheque dishonours and overdraft accounts.

Interestingly enough it is very rare for a mortgagee lender to list a credit infringement on a borrower for overdue payments, usually because these credit arrangements are secured loans, and the lender in these cases are usually well covered with their security over the loan granted.

The other credit lenders that have provided unsecured loans (even Telephone and Electricity accounts are unsecured loans). Therefore if payments are missed and no attempt is made to rectify the outstanding amount, the only security these companies have is to let other potential credit providers know that their customer has not paid their outstanding account, and to warn them of the possibility that same may occur to them if they provide credit to their customer.

In other words these unsecured loan providers are relying upon the integrity of their customer, and once that trust has been betrayed, results in a credit infringement being listed on the customers credit file which stays on there for five years, even if it paid. This then can cause all sorts difficulties when applying for loan facilities in the future, as these defaults then places a question mark over the proposed borrowers honesty and integrity with those lender/s.

So how do you ensure that your credit rating remains intact?

1. Always ensure that your regular utility bills are paid by the due date!
2. Always ensure that your personal loan payments are made by the required date.
3. Always ensure you pay your minimum credit card balances every month by the due date.
4. Always ensure that your 30 day accounts are paid in full by the due date.
5. Always ensure that when you change your address or move house, that you have notified your credit providers of your new address and contact details, and confirm with them that they have recorded the change. If you miss a payment how will the creditor contact you to remind you if you don't!
6. Always ensure that you have sufficient funds in your cheque account when you draw a cheque to pay a bill.
7. Never incur a debt that you feel you may have trouble in repaying. In other words do your budgets to make sure that you can afford the payments. Put it off until later when you know you can meet the proposed commitment without hardship.
8. Be aware of Identity Theft, where someone uses your name to obtain credit and leaves you holding the bag.

All these comments are common sense, however, too many people ignore the signs and allow emotions to overcome good sense, in an attempt to "keep up with the Jones".

How do I deal with a credit default?

If you find that you are unable to make a scheduled payment DO NOT IGNORE IT! That is the worst thing to do. As part of your integrity with your credit provider, contact them immediately and discuss with them your predicament. Make an arrangement to make the scheduled payment at a later date, however ensure that you keep that arrangement. Remember that the credit provider has a very good CRM (Client Relationship Manager) program where any arrangements are recorded and the system will automatically check that you have complied with the revised arrangements.

If you are unable to keep the arrangement, again DO NOT ignore, rather contact the creditor and make a new arrangement, and again ensure that you keep the revised arrangement. The fact that you have kept in contact with the creditor and they have not had to chase you, puts you in a better standing, and in a position where you need their assistance, they are more likely to accede to your request because you have always kept your word previously. This is called credibility. Strategically, it is always better to go on the "attack" and take the initiative rather than be placed on the defensive having to deal with the financier's collection department.

Here's the thing, when a creditor makes a new arrangement with you, what they have done is vary the credit terms with you, so as a result the time limits imposed under the NCCPA will be amended accordingly. This means that the time limits which would normally apply for a credit infringement to be listed on your credit file will change accordingly. Therefore it is vitally important to communicate with your creditor if you are experiencing difficulty. In addition to this, the Privacy Act states that whilst you are negotiating with a creditor to resolve your overdue credit account, they ARE NOT permitted to list a Credit Infringement on your file, unless you do NOT honour that new arrangement.

How do I deal with several credit defaults?

This can occur if you are to lose your source of income, therefore causing an inability to make your contractual payments to a number of accounts. The concern here is to ascertain as to how long it will be to replace your income stream. If it is a short time frame, it should be possible to obtain an extension of time from your various creditors to allow your income stream to recommence. However, it is preferable that you make at least some attempt to make part payments. This will have the effect of amending your credit contract thus giving you more time to rectify your position before a credit infringement listing is made on your credit file. If NO payment is made at all, then a credit infringement listing can be made on the customers credit file after the prescribed 60 days.

However, it is apparent that your source of income is not going to be readily replaced, then it maybe necessary to seek professional assistance to resolve the matter with your creditors until your income position is resolved. Should you require some assistance in this area, Finance Here maybe able to assist you with this. Please click here and send us your enquiry.

How do I find out what my Credit Rating is?

The Privacy Act provides that a customer may obtain a copy of their credit report from the various CRA's free of charge. The main CRA in Australia, particularly for Consumer Credit customers is Veda Advantage Limited, located in North Sydney. By writing or faxing to them, and providing the relevant identification details will generate a copy of your credit file and mailed to you somewhere between 14 to 21 days after your request is received (although Veda {Baycorp} will tell you it only takes 10 days). However, if you require a copy of your report more urgently, you may request this, by paying a nominal fee to the CRA to expedite this. With Veda (Baycorp) Advantage, this can be accessed through their web site at mycreditfile.com.au where the fee can be paid either through a credit card or via a telephone account where you have the preferred system activated. We have provided on a another page on this site a more detailed information section on your credit file explanations.

Alternatively, you can request Finance Here, as your agent, to obtain a copy of your credit report for a similar fee. Where you request this of us, we will explain the contents of your credit file report and also give you an analysis of your report and how various lenders view it in their credit assessment process. This analysis will be provided free of charge to you. Please click here for this assistance. The difference in having Finance Here obtain a copy of your report, is that the credit report we obtain has a different layout to the one you will receive direct from Veda (Baycorp) Advantage. This layout provides a summary of the entries on your credit file, which is set out differently on the report generated by Veda Advantage (Baycorp) direct.

Click here for additional information which will take you direct to the Veda (Baycorp) Advantage Web site to assist you with managing your credit file.

I have credit infringements! Can I get them removed?

This will depend upon a number of factors. Firstly, are they entries that are incorrectly recorded, due to a stolen identity, mistaken identity? If this is the case, the answer is most definitely yes.

If they are infringement listings which are in fact due to late or missed payments, then ability to have them removed will be entirely up to the creditor who listed the default with Veda (Baycorp) Advantage. Veda (Baycorp) Advantage will not remove any credit infringement listing direct, unless it is obviously due to fraud or mistaken identity. Otherwise Veda (Baycorp's) standard reply is that they are simply a "recording and public record keeper" acting under instructions from their member/s. You will be re-directed back to the creditor concerned for negotiation. Creditors such as some finance companies (whom will remain nameless here) will not remove their infringement listing unless it is plainly obvious that they have made an error, even if the account in question has been paid out. If you are to have any chance of having an infringement removed, it certainly has to have been paid, and on top of this a VERY good explanation as to why the infringement occurred. That explanation also needs to be parallel with the notes that are held on their CRM system. Further to this, the credit management or debt recovery department (or the department manager) will not have the discretion to remove the infringement listing as they will be constrained by the lenders "Procedure Manual" for such events. To this end as long as the reason for infringement is plausible, provable and the management of the creditor can see it was due to exceptional circumstances outside your control, they may exercise their discretion and instruct Veda Advantage to expunge the Infringement listing from your file.

However if your were habitually late with payments etc, then it is unlikely they would comply with your request.

Finance Here, has in fact had considerable success with various Telecommunication companies and other credit providers in having infringements removed. Again in these cases we were able to provide sufficient evidence that the reason for the indiscretion was purely an oversight and completely unintentional. What was taken into account was the good conduct of other accounts held by the client and became obvious that that creditor's account somehow slipped through the cracks during the move etc. In all these cases, our client's had to put their "case" to the General Manager/CEO of the respective company with a personally addressed letter. They (the CEO's) have looked at the position and then instructed their down-line to remove the infringement, which of course the manager of the Debt Recovery department did not have this discretion, and in most cases would not bother putting the case to their manager due to company policy and the time required to prepare a submission. Some of the points made in correspondence included to name a few;

•  Debt has been satisfied in full.
•  No further commercial advantage in having the listing still shown.
•  Corporate responsibility in relation to the ongoing effect the listing is having on the customer's credit worthiness and the impact on that customers business or livelihood.
•  Corporate compassion not being the Corporate Bully.
• Restrictive Trade Practices under the Trade Practices Act.

Finance Here has experience in assisting customer/clients in assessing their position with such matters and the likelihood of being able to negotiate with a former creditor to remove the listing. Please click here to see if we are able to assist or click here to contact us. Our initial consultation is FREE.

We are aware of some instances where individual's have taken the matter with former lenders to court and have the court direct the lender and Veda (Baycorp) Advantage to remove the adverse listing. This is of course an expensive route, however, maybe worth considering if important enough.

Other forms of Credit Infringements which have been listed, such Court Judgments, particularly, are relatively easy to remove from the Credit Reporting Agency's system. There is a set procedure that needs to be followed and will require the engagement of your lawyer. We at Finance Here are able to assist you with this process, and guide you.

In summary

Guard your credit rating zealously. The stress and strain that it can impose on personal and business relationships can be very damaging.

Finance Here can assist you in making sure you are keeping your Credit Rating clean. Please click here to enquire further about our FREE services in this area or click here to contact us.