Your credit report is a record of your credit history. It includes information to identify you as well as information about your credit history, including loans you’ve both applied for and taken out. Previously, your Credit Report mainly shows your ‘bad’ credit behaviour such as defaults and other credit infringements and bankruptcies. Now, your Comprehensive Credit Reporting (CCR) or 'positive reporting' refers to additional information being provided to, and held by, Credit Reporting Bodies (CRBs) in Australia, like your repayment history. Lenders use this information to decide (ie. to make more informed lending decisions) whether to give you credit or lend you money. Knowing this may help you understand why a lender rejected you. Your credit score (credit worthiness) is based on personal and financial information about you that's kept in your credit report, this includes: when you apply for a loan, or credit, debts, credit limits and etc. Therefore, credit reporting system means it is more important than ever to make your repayments on time, as late or missed payments will show up in your credit report. You have the right to access your credit score and credit report for free once every 12 months from each of the credit reporting bodies in Australia: (as at 5th Nov 2020) Check Your Credit (Illion) Experian Australia Credit Services Equifax Tasmanian Collection Service Note: *You can also request a free credit report, if your application for credit was declined in the past 90 days. *CCR is mandatory for the big four banks back in July 2018, and voluntary for other lenders, and more lenders are participating in CCR over time.
If you want to fix something in your credit report which is incorrect - credit repair. If you have a poor credit score or an error in your credit report, it may affect loans or credit you apply for. You have a right to get errors fixed for free, and you can arrange this yourself. Beware of paying credit repair companies that claim they can 'clean' your credit report by having information removed. This may not be true. Information that is correct, even if you don't like it, can't be removed.
7 steps to rein in living costs
8 weeks Challenge 😉 OR build a lifetime habit
Feeling strapped for cash? Try these simple strategies to manage bills, it’s possible rein in spending and increase your savings. But ARE YOU up to it?
1. For a start, Review your spending WEEKLY: * Know where your money goes EXACTLY, you will be amazed by how a few dollars add up quickly. * Check your everyday transaction account statements for the real picture on what your spending looks like. * Check your credit card transaction = Chances are you’re forking out more than you realise on non-essentials, and small but regular treats like take-outs are often a key culprit. 2. Plan your grocery shopping & STICK to your shopping list: * Do one major shop each week, ties in with the grocers weekly special. * Multiple trips increase temptation for impulse buys. AFTER going through steps 1 & 2 for a few weeks, proceed to step 3 (if you haven’t gave in or up yet.) 3. BUDGET WEEKLY – USE CASH ONLY - this is a real challenge : * Set a realistic WEEKLY budget for grocery and allowance for each member in the household * Withdraw the amount of CASH budgeted, and distribute out as per budget plan * Each one is responsible for their own Cash, once spent, THAT is IT. Till next budget week. * DON’T be tempted and break the discipline to use Credit Card or Debit Card or more Cash. * Discipline is in the small steps each week, and a good habit will serve you well later. 4. Check your utilities bills: * Are you getting the best deal? - It may be possible to cut hundreds off your annual power bill just by switching to a cheaper provider1. Check out websites like Energy Made Easy or Energy Watch to see if you could save. * Are you wasting too much energy? - Heater, Air-con running a bit too long, may be? 5. Rethink your mileage: * Check out your local independent service station if possible, price difference could be up to 10c/litre. * Save even more by rethinking the need for a second car? 6. Monitor your digital spend & phone bill: Re-check and re-think what is necessary. * Is your phone and internet bundle plan right for your family’s needs? * From on-demand TV to excess data charges, staying connected could be draining your bank account. Set clear spending limits - monitoring your spending. 7. Do you REALLY need to ‘keep up with the Jones’: * Who care? Does that make you happier or just instant gratification that is short lived? * Social media can be the thing that encourages unplanned purchases. Give priority to growing savings rather than “likes”. “likes” – Does NOT increase your bank saving, paying attention to what you are earning and spending helps to build a healthier bank account for a bigger goal in life.
Buying property with other people: Mine, yours or ours?
When people buy property together, particularly if it’s with a partner or spouse, they often register the title in both people’s names – especially if they’re going to live in the property.
But other arrangements are possible, several friends might opt to own individual shares in a property, for example, or a couple might choose to have only one of their names on an investment property title. The following information provides you with a good starting point to help you on your way. Also tax legislation and other Australian laws governing property ownership and investment are complex, so seek proper legal and financial advice before entering into any arrangement.
Joint-ownership titles The two main types of joint-ownership titles in Australia are joint tenancy and tenancy in common. Joint tenants own the whole property together. If one of them dies, ownership passes to the surviving tenant or tenants, you can’t sell or transfer your ‘share’ in a joint tenancy. This is the most common arrangement when a couple owns a family home.
Tenants in common own individual shares in a property, and those shares do not have to be equal. Shares in a common tenancy can be transferred to someone else. When one tenant dies, their shares pass to their heirs if they have a will.
Legal liabilities Tenancy in common is a useful arrangement when a group of people want to buy property together. Each tenant can own a share proportionate to how much money they’ve contributed, and can sell or otherwise dispose of their share as they wish (unless the tenants have entered into a prior agreement that prohibits this).
Tenants in common can take out individual loans to finance the purchase of their share of a property, with each tenant repaying their own loan. However, tenants in common are “jointly and severally” responsible for all the loans – if one tenant falls behind in their payments, the other tenants are responsible for those payments. You should also be aware that a lender could force the sale of the property to recover money owed by one tenant.
One person’s name on the title When you’re buying an investment property with a spouse or partner, there could be tax and other advantages to putting the title in only one person’s name. Capital gains tax is payable when you sell a property that is not your family home, such as an investment property. Tax on capital gains is calculated as part of your annual income in the year the gain is realised. If the property is in the name of the partner who has low or no income, less tax could be payable than if the income from the capital gain was shared with the partner with a higher income.
Future borrowing If you already have an investment property, a lender will take into account both the income from the property and the loan you’ve taken out to buy it when assessing how much they can lend you.
If you own a share in a property as tenant in common, a lender will count the whole debt on the property as your liability – not just your share of it. This could in turn decrease the amount of money they’re willing to lend you.
Offset accounts and redraw facilities work in similar ways; they both allow you to reduce the balance of your home loan, and therefore the interest charged, by applying extra money to your debt.
Redraw facilities allow you to deposit spare income into your home loan account, allowing you to redraw a sum equal to the extra repayment amounts in future. In the meantime, the extra money paid will lower the amount of interest charged while still giving you access to your money. However, there may be restrictions on how much money can be withdrawn and when. For redraw, it depends on whether the facility applies to a fixed-rate or variable loan. Most institutions only allow redraw from a variable-rate loan, or fixed-rate loan but with limited access. It is important to find out how a loan’s redraw facility works before taking it on, as the fees and restriction attached might outweigh the benefits of interest savings.
Offset accounts are like savings accounts that function alongside your home loan. You earn interest on the money in the offset account and you often have a debit card attached for simple withdrawals. With 100 per cent offset accounts, you earn interest equal to the interest you are paying on your loan. Rather than earning savings account rates, you are earning home loan account interest rates on the money held within the offset account. Offset accounts, like many savings accounts, often come with account fees, but the fee may be worth the interest savings and the added flexibility compared to redraw facilities.
Deciding between an offset account and a redraw facility on your home loan largely depends on how accessible you need your extra money to be.
Finding a loan that matches your needs is a lot easier with an expert on your side. Speak to NICOLE goh, an MFAA Accredited Finance Broker to find a loan that matches your current needs and future plans.
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