Something as innocuous as making a late payment for a gas bill can place a black mark on your client’s credit report. Credit Repair Australia CEO Richard Symes outlines the top 10 aspects of credit reporting that all brokers should be aware of.
Something as innocuous as making a late payment for a gas or phone bill can place a black mark on your client’s credit report – hindering their ability to obtain a home loan. Credit Repair Australia CEO Richard Symes outlines the top 10 aspects of credit reporting that brokers should be aware of.
1. Adverse listings
When looking at a credit report, there are three significant adverse listings that will affect your clients’ credit report and their credit rating. They are overdue accounts (defaults), Court Actions (eg default judgments, writs and summons) and bankruptcies. Of these, the most likely to arise are defaults, which includes late or missing payments to household bills. Whilst most people assume that defaults and other negative items cannot be removed, this is not the case. There are several avenues that can lead to having unfair, disputable, contestable or unverifiable adverse listings completely removed. Even information that may appear on face value to be listed correctly may be incorrect and completely removed. Whilst the process can be complex, it can be done successfully.
2. Timeframe for adverse listings
Even if an adverse listing is paid it will remain on your client’s credit report for five to seven years, and may still negatively affect your client’s ability to be approved for finance for several years. Furthermore, while individuals may be able to challenge black marks on their credit reports, it can typically take much longer for an individual to have these removed. Obviously this presents its own challenges when your client has already identified their dream home, and is unlikely to want to risk it still being on the market months later. In these instances, it is often better to refer them to a credit repair company to expedite the process.
03 Enquiries
In certain circumstances, too many credit applications can lead to a ‘busy’ credit report and can be detrimental to a client’s credit rating. Mortgage brokers should keep this in mind when applying for loans on behalf of their clients. If the client has applied for a loan recently and been declined then this should require further investigation by the mortgage broker: was the application declined due to their inability to meet repayments, or was it due to the financial institution perceiving the applicant as risky given their credit history?
4. Age of credit report
A credit report that is deemed to be ‘young’ can negatively impact an individual’s ability to obtain finance. ‘New to bureau’ credit reports may cause suspicion in credit providers because there may be a ‘floating’ credit report or the individual may not have had finance before.
5. Possible matches and cross references
A possible match refers to a credit report which has two or less common identifiers and is believed to belong to the same person but there is no certainty. A cross reference refers to a credit report that has common identifiers which make it almost certain that it belongs to the same person. Most married women will have a cross reference as they have used their maiden name in the past to apply for finance. Most men shouldn’t have a cross reference. Possible matches and/or cross references are common and the identity data stays live for the life of the credit report (credit data stays for five years after the last activity). They also make creditors question why there is more than one credit report and they may suspect possible fraud.
6. Personal information
Mortgage brokers need to be careful when entering clients’ details in the process of applying for a loan. If the information has been entered incorrectly the first time, this may cause an individual’s application to be declined as it will create possible catches and cross references. For example, an individual who has changed state and has a new driver’s licence number could result in a declined application.
7. Address and dates
Having too many addresses in a short period may be viewed as unstable and will hinder an individual’s application for finance.
8. Payday lender enquiries
Payday lender enquiries may be viewed as a sign that a borrower is having trouble meeting their current financial commitments. Some enquiries including payday lender enquiries which may repair a client’s credit rating may be removed. Mortgage brokers should refer their clients to a credit repairer who will be able to determine which enquiries can be removed.
9. Employer information
A client’s ability to obtain finance may be affected if there is a great disparity between the employment start date on the application compared to the credit report. This could be caused by a misspelled employer name or if there has been no application for finance since the beginning of their new employment.
10. Directorships and commercial information
If you have an individual’s credit report and the report comes up with a business current directorship, you should check the company’s credit report. Some declined applications may be due to the information that appears on the company/commercial credit report – and not just the consumer credit report. Also be sure to check the status of the company. If it is under administration or strike off action then further investigation from the broker could be required.
Credit Repair Australia provides a free assessment of individual’s credit reports and ratings. Visit www.creditrepairaustralia.com.
