QUEENSLAND, Australia – Two out of every three Australian car buyers are rejected because of having poor credit.
Not everyone in Australia has the idea of what their current credit rating is. However, it is one of the essential things to know, especially if one is planning to buy a new car or exchange their old one for something new. It is especially critical to know and understand the current credit rating because, according to what MyCRA Lawyers said, there is an increasing number of Australians who are looking towards getting a car loan. However, most of them ended up being rejected by banks and other lenders because of having a poor credit rating.
Graham Doessel, the Founder and current Chief Executive Officer of MyCRA Lawyers, reported that car sales in Australia in the new year had marked its lowest figures in the last eight years. Mr. Doessel also stated that the less than stellar sales figures is likely due to the new and much stricter regulations when it comes to taking out loans in the country. The borrowing regulations that are imposed after the Royal Commission into Misconduct in Banking, Superannuation and Financial Services Industry, or the Banking Royal Commission, he said, has become more challenging for the Australian people to take out financing.
And while all of those are true, there are still ways that a lot of Australians can take to protect their credit rating and ensure their eligibility for taking a car loan whenever they may have to.
For Aussies who are planning to purchase a car soon, whether it is buying a brand-new wheel or trading a beat-up one for something new, they are recommended to prepare, especially their credit rating. Every borrower must have their credit to help prevent being rejected last minute.
Australians can have access to a free copy of their credit report once a year. It is available from all major credit reporting associations in the country.
However, getting a credit report is not enough. It is recommended to check if everything is in place and up to date. For those who have bad credit scores, there is still time to repair it.
When it comes to credit rating, a credit score between 833 to 1200 is an excellent one, and there is nothing to change about it. A credit score of 726 to 832 is considered very good and good for scores ranging from 622 to 725. Meanwhile, a credit score that is at the end of the spectrum, or in the average, which belongs to the 510 to 621 range, needs a bit of tweaking and getting a pro financial advice might be necessary.
On the other hand, a below-average credit score, which is between 0 to 509, it will not be looking good when getting a car loan. In this case, professional financial advice is necessary. There are also hardship plans that some banks offer to help reduce loan repayments and extend the loan contract.
Meanwhile, recent credit reporting changes are expected to boost around thousands of credit scores this month.
From previous reports, effective February 14, 2020, getting a car loan, home loan, personal loan, and a business loan could become much more convenient for a lot of Australians. It is because of the amendments made to the country’s credit reporting standards. Civil court filings will not be included in the credit scores anymore.
The adjustment to the Credit Reporting code 2014 was already approved by the Office of the Australian Information Commissioner (OAIC). Based on the recently amended code, summons and writs will no longer be regarded as publicly available information. Thus, it will be ditched from every person’s credit report.
Angela Falk, the Australian Information Commissioner and Privacy Commissioner, previously stated that the amendments are expected to help balance the demand for a more efficient and convenient credit reporting as well as every individual’s privacy.
She further stated that the changes in the code also put limitations in place when it comes to the types of information that will be considered parts of a credit report. Ms. Falk said that making sure that irrelevant publicly available information will not impact the creditworthiness of an individual will be to the advantage of the borrowers.
Before the amendments to the credit reporting standards, any individual with claims filed against them has their credit scores affected, regardless of whether the claim made to the court or not. It has been a massive source of frustration that borrowers are easily rejected when they try to take some loans from banks.
It might also be one of the reasons why most car borrowers in the country are being rejected because of poor credit rating.
With the new legislation, however, only credit-related information like judgments will be included in every individual’s credit report.
Mr. Doessel said that the new legislation would stand to benefit every borrower in the country, especially those who have their previous credit rating destroyed because there were treated as guilty until their innocence is proven.
On the other hand, if the poor credit rating that has been a major cause of rejection in care loan applications can be reversed, there ate a lot of car loans available from many Australian banks. Choosing the most appropriate car loan is also necessary, especially for those who have their credit ratings still on recovery.
Some lenders in Australia offer their borrowers personalized interest rates, which will be partly based on their current credit score. The higher the credit score, the lower the interest rate will be. Lenders also offer both secured and unsecured car loans. Between the two, secure car loans are much more common, and they usually have much lower interest rates compared to unsecured car loans.
For those who have still recovering credit scores, it is recommended to consider secured loans to get much lower rates.
Meanwhile, Mr. Doessel previously commented about the new code will be appreciated by mortgage brokers as well, as they often get themselves left behind when discussing home loan deals with their clients who have trivial court judgments affecting their credit rating.