Nationwide, consumers are extremely excited about the new credit amnesty laws that came out on 1 April 2014. The buzz is all about how our names are going to be cleared, debts written off, and how we will be free to access more credit based on our clean profiles.
Although some of this is true – it is not as simple as that.
The amnesty rules are as follows:
- All default listings, on every consumers’ profile were automatically removed on 1 April 2014. This goes for all default listings which are /settled or unsettled. This is a ONCE OFF removal and credit providers are entitled to list consumers with default information in the future.
- Although default listings have been removed, payment profiles have remained the same. This will give future credit providers the opportunity to ascertain the consumer’s previous credit behavior. It will show credit providers if debts are in arrears or if they are being paid every month.
- Only PAID UP judgments will be removed from the bureaus. The bureaus however do not know which judgments are settled and which are not. Therefore, it is the consumer’s responsibility to advise the credit bureaus of the paid up status.
- Judgment rescissions are no longer necessary to clear a paid up judgment. A settlement letter from the creditor will be sufficient for the credit bureaus to remove the judgment listings.
The credit amnesty is a huge help to consumers whose debts have been settled, but there is the possibility that credit providers will now increase their lending rates or make their lending requirements more stringent to negate the lack of information that they now have on consumers. They no longer know the full extent of the consumers risk and will possibly try make up for this by assuming that the average consumers are all risky.
So what do you have to do to get your name cleared? Nothing, most of the work has already been done behind the scenes. If you have settled a judgement you may need to advise your credit bureau that you are paid up.[tip title=”Top Tip”]Get your credit report from Moneysmart and make sure that all your paid up accounts are reflected on your credit report. And then, of course, stay debt-free! Avoid getting into debt, especially now as lending rates are expected to increase.[/tip]
The credit amnesty will give consumers a breath of fresh air to try realise their financial goals by “cleaning” their financial status and affording them the opportunity to once again access credit. Make the best of it.