Since ASIC released their report last year on the questionable practices of payday lenders, there’s been a lot of talk about enhanced lending regulations to stop Aussies from getting ripped off. But the real question is: Why are more than two million Australians unable to obtain loans from main stream lenders? The answer is because their names are on a credit black list. The national research of personal insolvency activity covering 2011- 2014 by the Australian Financial Service Association shows the Sunshine Coast is listed as one of the higher credit delinquency areas in the country and is outdoing the national average.
A black mark or credit file can force you down the path of payday loans, pawn brokers and lenders as a last resort. But thanks to a new Australian phone application, there is a better option.
The app has been created by a team of ex-debt collectors as a DIY approach, taking consumers through a series of questions to identify where the faults are in their file; it then runs a search through the Credit Reporting Code to find where the credit provider has made errors in marking the consumers the credit file. Documents are then electronically prepared and sent off to credit providers highlighting the errors and requesting that they remove the credit default.
Sunshine Coast Senior Credit Repair Consultant, Mr Steve Foote, said the app allows our subscribers to navigate the murky waters of credit reporting code and come out with a clean file.
“We find many of our subscribers have poor credit scores because of debts acquired shortly after they acquire their first credit card or mobile phone contract,” said Mr Foote, “People are often unaware their file contains a black mark and that stays on the file for more than 5 years.”
“Once they discover their credit default though an embarrassing phone call from a main stream lender telling them their finance application has been declined, their knee jerk reaction is to pay out the debt and assume their file will be cleaned and increase Credit Score ,” he said
“Paying the debt does not clean their file. When they attempt to resolve the problem they are confronted with a maze of regulations, decide it’s all too hard, and end up turning to payday loans and renting for another 5 years.”
Some recent surveys I checked out showed younger adults are more affected by credit problems and only discover the full force of the issue once they attempt to buy their first home. A credit default which originated from an unpaid $150 mobile phone account can stop potential first home buyers in from obtaining finance from any main stream lender, exposing them to alternative lenders with expensive application fees and higher interest rates.
Private credit repair agencies can charge thousands to repair one default. ASIC recently slammed them in a January 2016 report for their unregulated charging practices.
“Consumers can seek help from Church and Government funded financial counselors, which is a free service, but these people do important work helping people through very difficult financial hardship; someone showing up with Telco default of a few hundred dollars is consuming limited resources and can take time,” he said.
Through the Credit Repair App our subscribers are using the same tools as the professional counselors but this is DIY application which makes more accessible for consumers in terms of cost, time and resources.
Credit Reboot fills an important gap in consumer services, between private agency financial counseling and charity based financial hardship services.
Peter and Julie, a professional couple in their late 20’s applied for a first home buyers’ loan. They were knocked back because Peter had a $250 Telco default from three years ago when he was backpacking around Europe.
“I had turned on mobile network roaming before I flew out, didn’t realise how expensive that was, costing a small fortune. I disputed the bill and paid most off but I was running out of cash after a few months,” said Peter.
“My parents told me I got a few payment demand letters, but it all got too hard to manage from the other side of the world” he said.
“It was embarrassing when our finance application was declined for a 3-year-old phone bill; Julie was not happy.”
“She found Credit Reboot in a Google search, it helped me clean my file, and then after it was cleaned gave me some tips on how to negotiate a discounted settlement on the debt.”
“Knowing I have a clean credit file and a good job makes me feel way better about negotiating better terms with lenders I approach.”