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Recently one of our clients had triplets. They were only planning one baby, but three were conceived naturally and they already had another young child.
Sam, a young dad still in his 20s, urgently needed a new car to accommodate his expanding family, but when he applied for a car loan he discovered two banking and finance defaults on his credit file. The babies were born and were still in humidicribs when Sam contacted me for help. The cost to Sam of a poor credit rating was an inability to access finance to buy a car at the moment he needed it the most.
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The cost to Sam: no car for the triplets.
Tracey had been employed full time for two years with a solid, stable income, and had saved a deposit for a new home. She had been dreaming about this house for years and wondered if she would ever get there. She started looking and found some places she liked. This would be the beginning of a great, new chapter for her. She did some research and found a mortgage broker, and started the process of applying for a home loan. Her mortgage broker wisely asked her if she had any problems on her credit file. She asked Tracey’s permission to order a copy of the credit file to make sure it was clean. It wasn’t. Tracey had an old credit card debt that had got out of control three years ago when she divorced, and she had to find new accommodation quickly. Soon after, she paid the debt in full, but this black mark meant she could only be approved for high interest finance through a second-tier lender. They charged an up-front fee of $10,000 and offered an interest rate two per cent above what she could get if she had a clean credit file. As a result, she had to dip into her deposit to pay the $10,000 application fee which raised her LVR to 90 per cent, requiring her to now buy lenders mortgage insurance (LMI). In addition, she would have to pay $1,000 extra in interest a month until the listing dropped off her credit file in two years.
The cost to Tracey: $44,000 (loan application fee, LMI and two per cent higher interest rate for two years)
Richard and his wife had paid rent for housing for years and were keen to buy their own home. They both had stable employment and had saved a deposit. They had three children aged four, seven, and nine. His broker ran a credit check and told Richard the bad news. There was a court judgment on his credit file that would remain there for another four years. The judgment had arisen as part of a commercial dispute that had now been settled, but Richard could not get a loan that he could afford. His broker could not recommend a second-tier lender because the interest rates were so high that Richard would be put in hardship trying to pay the monthly instalments. The cruel twist was that the property market would continue to rise over the next four years, so by the time Richard’s credit file was clear, he wouldn’t be able to afford to buy a house with the rising cost of housing and bringing up the kids.
The cost to Richard: remaining stuck in a rental cycle they could never break free from.
All these scenarios were resolved by using a reputable credit repair company to erase incorrect information from credit files. There is legislation, codes and rules that credit providers have to follow when placing adverse information on a credit file, and often they don’t follow the rules. This has a huge consequence on consumers like Sam, Tracey and Richard.
After using credit repair, Sam got his car for the triplets. Tracey got the house she dreamed of, and Richard and his family broke free of the rental cycle and moved into a home of their own. They all paid the lowest interest rate possible. They could afford the loans they got. And they all believed that the cost of credit repair was miniscule compared to the costs they were facing with bad listings on their credit file.
Dr Merrilyn Mansfield, lead adjudicator and researcher, Princeville Credit Advocates
Dr Merrilyn Mansfield is a consumer advocate and the lead adjudicator and researcher for Princeville Credit Advocates, a Sydney- and London-based credit repair company. She is fascinated with consumer laws that relate to credit reporting and in advocating for a consumer’s right to a correct credit report. For more information, please visit www.wemend.com.au or email
