Tens of thousands of Aussies have an extra reason to love Valentine’s Day this year, with their credit scores set to jump after civil court filings disappear from their credit file.
According to consumer and financial law firm MyCRA Lawyers, the change will allow some people to get credit where previously they were rejected, or simply negotiate lower interest rates.
MyCRA Lawyers CEO Graham Doessel says for years borrowers have had their bank funding cut off or rejected because of trivial and vexatious civil court actions that judged them guilty until proven innocent.
“Now only judgments can be recorded on someone’s credit file and those judgments must relate to ‘credit’ to impact someone’s credit rating,” Mr Doessel says.
The end of weaponised civil court actions
Mr Doessel says the change will hopefully end civil court actions by ex-business partners, disgruntled employees and jilted lovers, who use civil courts as a weapon to cripple someone’s credit.
“We’ve had a client with a business employing 120 staff almost sent to the wall because of a trivial dispute with their pool repairman over $3000 that never even went to court,” explains Mr Doessel.
“Other common weaponised civil disputes are ex-business partners suing simply to dry up funding, or even spurned partners who are out to get their ex-lover’s business.
“It’s a victory for common sense.”
Credit reporters to look for loopholes
There’s just one catch, says Mr Doessel. Credit reporting bodies have traditionally reported this information and will still want to where they can, he adds.
“Credit reporting bodies will be reading this legislation as narrowly as possible. In our discussions with one body they are already interpreting the changes differently to us and believe this change only applies to consumer files, not commercial files,” explains Mr Doessel.
This means those with the most to lose, namely small business proprietors, potentially remain in the same predicament, says Mr Doessel.
“If this is the case – and we won’t know until after February 14 when the changes come into effect – then it renders the new laws almost useless because those most affected are small business people,” Mr Doessel said.
The new requirements come into effect on Valentine’s Day and will be retrospective, so people with a civil court default on their file that isn’t the result of a judgment and isn’t credit-related will have them removed.
If you believe these changes might impact you, then get in touch. We’d love to talk to about your options moving forward.