Did you know, that every time you move house, you run the risk of damaging your credit rating? It happens if loose ends are not tied up on your credit accounts before you leave your old address. We look at some ways you can make sure you don’t risk your good credit rating, and ability to get a loan in the future when moving house.
By Graham Doessel Founder and Non-Legal Director of MyCRA Lawyers www.mycralawyers.com.au.
Moving is a time of stress and chaos. All of your important stuff is boxed up and in transit. You’re flat out cleaning the old place on time, let alone tending to those financial loose ends. But to maintain the integrity of your credit rating, it is really important that you have a plan for making a clean break at each residence.
Time and again we have the situation where clients apply for a home loan and are refused because they have ‘surprise bad credit’, which when we track it back for them is due to the fallout of accounts sent to their previous address. This may not always be your fault.
We have had plenty of clients who’ve needed help disputing their credit listing, because their Energy Provider could not work out that cancellation of their old account and installation at the new address meant that they had actually moved. Their final account was sent to their old address because they had not specifically provided a forwarding address.
Not notifying your Credit Provider of your new address when you move can lead to a Serious Credit Infringement or ‘clear-out’ listing being placed on your credit file. This listing is, as the name suggests, much more serious than a default.
What is a Serious Credit Infringement (SCI)?
A serious credit infringement is an overdue debt in which the Credit Provider has been unable to contact the individual for 6 months following the overdue debt, despite reasonable attempts by the Credit Provider to do so. A SCI is listed on your credit file for 7 years. If contact is made within that time, and the overdue debt is paid, the listing is then downgraded to a default, which carries only a 5 year term.
To avoid this, here are 5 tips for keeping your credit rating in check when moving house:
1. Let all your Credit Providers know you will be moving and give them a forwarding address.
You are obliged to update your Credit Providers with your forwarding address when you move. When you make that call to your Credit Provider, be sure to make a note of the day, time and person you spoke to about the request.
Often we have people say they have told their telco or their energy company they are moving, and provided a forwarding address, but mail has still gone amiss and the client has ended up paying for it. If you have specific details of your call – the Creditor may be able to bring up the recording and verify your request.
2. If ending an account with a Provider, request a final account.
If you need to cancel your account, such as an Energy or home phone account when you move, make sure you request a final account for services. There may be incidental charges, or pay out fees as well as days accrued in the new bill period. Pay that notice as soon as possible.
3. Don’t assume your account is finalised until you get it in writing.
Once you have paid your final account, request a statement be sent in writing verifying the account is at an end. If you don’t receive that notice, chase it up.
4. Cancel any direct debits.
Places such as gyms and childcare centres operate payments via a separate direct debit company. If you have any direct debits set up, you should notify the company of the cancellation and of your forwarding address.
Don’t assume correspondence with your gym is enough to cancel that account. You will have signed a separate contract with the direct debit company, and you are just as obligated to them if you have missed payments, for whatever reason.
5. Redirect mail.
Despite providing a forwarding address, and despite your attempts to finalise your accounts, there can be instances where a Credit Provider continues to send mail to your old address.
Creditors can and do make mistakes, and one common mistake is simple computer or human error with billing systems. To prevent their oversight from costing you your good name through bad credit, consider redirecting mail through Australia Post to your new address.
If you have just found out you have bad credit, there are many circumstances where you may be able to successfully dispute the credit listing. For help to dispute your default or Clear-Out listing, contact MyCRA Lawyers on 1300 667 218.