The New Laws Affecting Your Credit Score (And Three Things You Can Do to Improve It)

Dominique Grubisa
Dominique Grubisa

Published 9:30 pm 17 Nov 2019

Facebook Twitter Whatsapp Linkedin

DG Institute founder, Dominique Grubisa explains why the new credit reporting laws could potentially prevent you from boosting your credit score. Plus what you can do to clear mistakes from your credit history.

Australia has one of the world’s highest debt-to-income ratios. In fact, we rank second in the world, behind Switzerland, when it comes to this issue.

In other words, millions of Australians find themselves indebted. And it’s not just those who are on low incomes. There are many people who earn middle or high incomes who have enormous amounts of debt.

Of course, all of this debt affects your credit score rating. And that can make it more difficult for you to get a home, personal, or auto loan.

That means your goal is to create a good credit score. This is especially important if you’re aiming to enter property investment, for which you’ll need to secure loans.

In this article, we examine how to increase your credit score. But first, it’s crucial that you understand the factors that affect credit scores and why they matter in the first place.

Record Low Interest Rates – And Why They Matter?

Over the past few years, we’ve seen the national interest rates drop consistently. In fact, the rate fell to 0.75% in October 2019, which means it’s edging ever closer to 0%.

The Reserve Bank of Australia (RBA) controls the national interest rates. And according to RBA’s Governor, Philip Lowe, we shouldn’t expect increases any time soon. In an article published in The Guardian, he’s quoted as saying:

“<it’s> reasonable to expect that an extended period of low interest rates will be required”

Lowe’s pointing to the fact that various economic conditions have resulted in this continued decline in the rates. And with the climate of uncertainty, your credit history may become a bigger factor in the future. That’s why it’s so important to think about how to improve your score

We’re seeing the effects of this situation in the way that the government’s reacting. In recent months, we’ve seen lower GDP growth forecasts and a pessimistic outlook for wage growth. There are even fears that a recession is on its way in Australia.

Again, these are all reasons why you need to start thinking about your credit file and what you can do to erase bad credit.

Let’s dig into that a little bit more…

Your Credit Score – Why It Matters?

Whenever you apply for a loan, no matter what type, the lender will look at your credit score. They want to see that you pay your bills on time and that there are no issues with any credit account that you hold.

Let’s assume the lender doesn’t like what they see. In the worst-case scenario, they’ll refuse to offer you a loan at all. If you do get an offer, you’ll usually find that you have to pay a higher interest rate. Plus, you’ll find your access to beneficial loan features limited.

This means that the rates the lenders advertise are not always accessible. If you have a negative debt payment history, you’re unlikely to get a good rate.

Compounding this issue is the fact that many people don’t realise how many things can affect their credit score. We all know that failing to take care of our credit card balances has an effect. But you may not know that making multiple loan applications in a short period of time also hurts your score.

When you’re caught up in credit issues, you may find yourself feeling hopeless.

However, you do have options. There’s more to debt than solvent and insolvent, which means there are ways to fix bad credit. And with recent changes to credit reporting laws, you have even more options.

Here are a few things to keep in mind when you’re trying to improve your credit score.

Ways to improve your credit score through non compliance

Tip #1 – Check for Non-Compliance

For years, credit providers have held consumers to a certain level of compliance. However, it’s only fair that said providers should meet those levels of compliance themselves.

That’s not always been the case and there are many cases of debt collectors breaking laws to get their hands on consumers’ money.

So, how do you check for non-compliance?

Firstly, you need to have access to all of the documents attached to any loans that you may have. These outline what your lender can and can’t do. Plus, you can leverage new credit laws to ensure the lender hasn’t offered you a loan that they know you can’t service.

The issue is that many borrowers don’t have access to these documents. If that’s the case, you can request them directly from the lender. And what’s more, you can refuse to pay another cent of the debt until you have all of that documentation. 

At DG Institute, we check these documents against almost 100 points of data to find examples of non-compliance. And if we find an issue, you can use that to renegotiate your debt so that you pay cents on the dollar. Of course, this has a beneficial effect on your credit score.

Tip #2 – Check for Marks Made Without Permission

You have the right to access a free credit report once per year from a credit reporting agency. It’s crucial that you do that so you can see what marks your creditors have made against you.

The reason for this is that your credit provider has to ask for permission before they can mark your file. Any that didn’t receive your permission can be taken off the report. 

In a recent DG Institute podcast, we spoke to Lawrence Barlow. He’s a former debt collector who’s developed a software package that helps consumers leverage the credit reporting code.

He discussed a client who had a credit score sitting at the 400 mark:

“When we checked the file, we found out he had a whole lot of unusual credit inquiries. And for example, there was PayPal from Singapore, which he’d never been to.”

Lawrence then prepared some compliance breach letters to notify the lenders of these issues. Thanks to the credit reporting code, the client had their marks removed and the score rose to over 800.

The point is that a mark on your credit report isn’t set in stone. It’s possible that there’s a compliance issue that can help you with improving your credit score.

Tip #3 – Check the Three Pillars

There are three pillars of compliance that a lender must meet:

1. They must make reasonable efforts to ensure you’re able to service the loan.
2. The lender must establish that you have a legitimate reason for taking out the loan.
3. The lender must act in the consumer’s best interests.

But what often happens is that lenders don’t follow these three pillars. Instead, they allow consumers to borrow and then sell the debt to another company a few years down the line.

There’s usually a compliance breach in this situation. If you can identify that breach, you may be able to reduce or eliminate the debt. This will result in large improvements to your credit score.

If You’re in Debt

Being in debt places you into a precarious financial situation which can quickly snowball into a catastrophe.

One of the clients at DGI Debt Management was a business owner and the primary provider for his family, when the pandemic hit and dramatically reduced his income. In order to continue paying his bills and putting food on the table, he began to take on more debt than he could afford and quickly found himself with $20,642 in debt.

The Debt Management team was able to reduce his debt down to just $3,759, cutting 82% of his total debt off and giving him the breathing room he needed to get back on his feet.

On top of that, he no longer had to worry about the possibility of bankruptcy, or having to deal with creditors anymore.

To find out if the Debt Management team can improve your debt situation, visit DGI Debt Management today.

Good Debt Vs Bad Debt With Dominique Grubisa - DG Institute

Lawyer, Asset Protection Specialist and Property Educator

Dominique Grubisa is a practicing lawyer with over 25 years experience. She is a property investor and developer, an entrepreneur with businesses in Australia and Southeast Asia, a speaker, educator, writer and published author.

This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.

About DG Institute

Founded in 2009, DG Institute strives to empower everyday Australians to grow and protect their wealth. Our goal is to provide direction, motivation and inspiration to our clients and help them perform at their very best. We do that through our professional services, in addition to teaching them how to grow their wealth through property and business education.

This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.

Our Happy Clients

  • Lisa Mitchell

    "My name’s Lisa Mitchell. I live in Chatswood in Sydney. Since joining the Elite Mentoring Program. I’ve done two deals made around $240,000. And probably when I add the extra rental that’s coming, it’s another $70,000. I could not be happier with that result. And I’m amazed by it, to be honest, I’m absolutely amazed. […]"

    Lisa Mitchell, Property Uplift Elite Mentoring Graduate

  • Jennine Kimbal

    "Janine Kimball from Newcastle since joining DG Institute we have two projects currently in progress with a gross realization value of about 10 and a half million dollars expected profit from those is going to be probably around $1.8 million when they complete the reason we joined DG Institute and the Elite Mentoring Program, was […]"

    Jennine Kimbal, Property Uplift Elite Mentoring Graduate

  • Michael Kuligowski

    "Hi, my name’s Michael, and I’m from New South Wales. Since joining the Elite Mentoring, we’ve been able to secure three properties. Well, under market value, both in inner Sydney, New South Wales, also regional new South Wales and one in Victoria by, undertaking, this program, we’ve definitely benefited, and we can see that we’re […]"

    Michael Kuligowski, Elite Mentoring Graduate (Property Uplift & Real Estate Rescue)

  • Sharon Harvey

    "Hi, I’m Sharon Harvey. I’m from South Australia. I joined the Elite Program because I was looking for something more in property and I was looking for more education and somebody who would inspire me and Dominique was that person. I listened to her talk and realize that there was a great synergy between us. […]"

    Sharon Harvey, Property Uplift Elite Mentoring Graduate

You May Also like to Read

Is Australia On The Brink Of A Debt Crisis?

Australia has one of the highest rates of household debt in the world - and it might be about to increase even...

Freeing Australians from the tyranny of unserviceable debts

Over the past decade, the DG Institute has helped thousands of Australians struggling with debt to regain control of their...

How a Debt-Management Plan Could Solve Your Money Troubles

Are you waking up at night worrying about how to repay your out-of-control debt? Well, you don’t need to. With a little...

Debt Recovery

Unfortunately, more and more Australians are getting deeper into debt. Even before the coronavirus hit, Australia had the...


Unfortunately, bankruptcy numbers in Australia are likely to rise due to the economic fallout from the COVID-19 pandemic....

Tame Your Debt Using These Negotiation Tactics

Financial pressure from the COVID-19 crisis is pushing ever-increasing numbers of Australians into debt which they cannot...