Debt Repair Kit For Dummies (Australia/New Zealand Edition)
Avoiding debt and establishing a good credit standing play an important role in the lives of Australians. Today, the rewards for being a consumer of good credit standing have never been greater, but, unfortunately, the penalties for being constantly in debt have also never been greater. Learning how to set financial goals, use credit advantageously, avoid identity theft and implement a budget are important skills for Australian consumers.
Common Credit Report Queries for Australians
Credit reports for people in Australia who have a credit history are available from Veda Advantage (PO Box 964, North Sydney NSW 2059). You can get a free copy of your credit report annually; this way, you know in advance what’s in your report and you can also identify any errors it may contain.
Questions most often asked about credit reports include:
What’s in my credit report? The law confines Veda Advantage to only recording your bad points financially. So if you’ve defaulted under a credit contract or, worse, been sued for an unpaid debt, the details will all be in your credit report.
What’s not in my credit report? By law, your report can’t contain any of your personal information, such as your religious beliefs, medical history, ethnic origins, sexual preferences, lifestyle or reputation.
Who has access to my credit report? The report’s purpose is to inform any business that’s considering whether to make credit available to you, about your past credit history. Your credit information is available only to people who are dealing with some aspect of the provision of credit, and is not available to potential employers or insurers.
What can I do about inaccurate information? You can request Veda Advantage or your credit provider to correct mistakes in your credit report. If their response is unsatisfactory, you can complain to the Privacy Commissioner.
Are overdue accounts reported? A record can only be made on your credit report if you’ve been sent a written notice. Ignore this notice at your peril; if you don’t act by contacting the credit provider immediately or by paying the account, you put your credit standing at risk.
What’s a serious credit infringement? This is more than a default; it’s where you have obtained credit by fraud, or when your payments have stopped completely and the credit provider finds it impossible to contact you. The credit provider must attempt to notify you (for example, by sending a letter to your last known address) before reporting the matter to the credit reporting agency.
Avoiding Identity Theft
Identity theft occurs whenever someone uses your personal details to gain some financial advantage, such as taking out a loan in your name. Identity theft is a growing crime in Australia, as well as in other parts of the world. Follow these tips to keep your personal details secure.
Lock your letterbox. A fraudster can use items sent to you in the mail to find out details about you and your accounts. For example, credit-card companies sometimes send credit cards in the mail and follow up with the PIN a couple of days later. The first mailing alerts the fraudster.
Check the flashing light near the card slot at the ATM. A crook can record, or skim, the details of your credit card by attaching a sensor device to or near the slot that receives your card. However, the skimming device often blocks the flashing light that’s a permanent feature of most ATM slots. Check that the flashing light is working before using the ATM.
Keep your computer data secure. If you work with other people, don’t leave passwords sitting on your desk. Ensure the passwords that give access to sensitive information, especially your financial details, are impossible to hack into. Computer hackers have very sophisticated ways of getting into your computer, so regularly upgrade your firewall and spyware protection.
Make your financial transactions online. Handling your finances through the mail can be less safe than over the Web. Get your bills and statements sent to your password-protected computer, rather than have them sent to your mailbox.
Know the risks of having an online presence. Being able to link up with friends and family through the social networking Web site Facebook is a great way to keep in touch. Unfortunately, the crooks quickly learn how to get around Facebook’s security measures, so be careful with what you upload to the site.
Be careful when giving out personal information over the Internet or the phone. Unless you’ve initiated the transaction, don’t give any details. Even if the caller sounds genuine, you can’t be sure of their identity. Ask for their contact details so that you can call back, and even then, don’t simply trust the number you’ve been given.
Don’t reply to unsolicited e-mails that ask for your bank account details. If it’s too good to be true, it usually is! Never give out any personal or financial information; they’re almost certainly scams.
Never click on a link or open an attachment to an email from someone you don’t know and trust. Opening attachments or clicking on links in emails can download malicious software into your computer. Type in the Web address yourself, rather than relying on a link.
Shred the evidence. Get a good home shredder and shred all financial statements that bear account numbers before you put the statements out for recycling. As well as statements for savings accounts, cheque accounts and credit cards, don’t forget all those pre-approved offers for credit that you receive.
Regulating Credit in Australia
National legislation regulating the way in which credit is provided to private individuals in Australia was regulated in 2009. Key points of this legislation are as follows:
The Australian Securities and Investment Commission (ASIC) is responsible for the administration and enforcement of the consumer credit legislation. The state and territory consumer agencies have a supporting role.
All lenders, entities and persons providing assistance for consumer credit dealings (such as mortgage brokers and commercial debt payment assistance firms) must have a licence from ASIC.
All licensees are required to adopt responsible lending practices. They must check that you have the financial ability to meet your obligation to pay a debt such as a mortgage.
Licensees must establish an in-house informal dispute resolution process to handle consumer complaints or queries, and must also belong to an informal external mediation service.
What a Budget Can Do for You
A budget is a plan for spending the income you have, building savings and using credit wisely. In short, a budget allows you to control the direction of your financial future. Here’s a list of things a budget can help you do:
Reach your life’s goals. First figure out what your priorities and goals in life are, then work out a realistic saving and spending plan that helps you achieve those goals.
Calculate how much your regular expenses are. Allocating money for every expense puts you in control of your money, deciding how your money’s used and helping you pay your bills on time. You have the power to make better decisions on how you spend your income.
Know just how much your regular income is. The amount you actually earn after tax may be less than you think. So, unless you change jobs or take a second job, you need to live within your means. By bringing spending in line with income, you ensure you don’t accumulate unmanageable debt and risk your good credit standing.
Prepare for unexpected events. An expected cost, such as a large dental bill, can blow your budget. To lessen the pain, it’s wise to budget for emergencies.
Get and stay out of debt. Because budgeting brings expenses in line with income, your debt level falls. Making regular payments can get you right out of debt.
Build your credit. Pay off the balances on your credit cards, for example, and both your available credit and financial standing go up.
Reduce stress. Gaining control over your finances relieves the constant worry over money, which can cause sleepless nights, reduced productivity at work and, at worst, family breakdown.
Stay healthy. By making provision in your budget for health insurance cover, you can take advantage of health benefits for yourself and your family.
Look forward to retirement. By calculating how much you’ll need when you retire and at what age you’re going to retire, and then putting money into super, retirement need not be something to dread.