Business

How your lust for the latest iPhone could cost you the chance of buying a home.

An entire generation of Australians everywhere have grown up in a mindset where owning the latest iPhone is a must, at any cost! 

Whether the cost is entering into expensive phone contracts or using the latest buy now pay later service, the financial impact can last for years and mean people are rejected for a mortgage according to a leading Australian consumer and financial law firm.

Consumer and finance law firm MyCRA Lawyers CEO Graham Doessel said new comprehensive credit reporting laws means banks now know so much more about everybody and their financial matters including when they buy a new phone and how they buy it which could be enough ruin their credit rating and see them rejected from borrowing to buy a home.

“You’d be amazed how often something simple as buying a new phone can snowball into a full-blown credit crisis for some people,” Mr Doessel said.

“Often when you apply for a new phone the telco will do a credit check which shows up on your file, & if you buy the handset upfront using a buy-now-pay-later service, some of those will do a credit check as well.”

“Once you have a few of these in a short period on your credit file you run the risk of being rejected outright for a home loan,” Mr Doessel said.

“Some lenders treat buy now pay later services the same as payday lenders, which means an automatic rejection,” Mr Doessel said.

“But the issues don’t stop there.  If you sign up to an expensive contract with the cost of the handset rolled into your monthly bill and you start missing payments, chances are your telco will default you.

“Telcos are one of the most common causes of defaults on a credit file, while a default won’t necessarily rule you out of getting a home loan it will certainly be enough for your bank to see you as a risk and therefore apply a higher interest rate, which may price you out of the market,” Mr Doessel said.

“Shopping around for credit whether it be a buy now pay later lender, credit card deal, or other personal loans that require a credit check, can see you ruining your credit score in a matter of days and lock you out of a housing market for 2 years or more.

“If you’re worried you might have blotted your credit file you can get a free copy of it once a year at www.FreeCreditRating.com.au.

“Depending on what you find on there, many can be removed so you can improve your score and boost your chance of getting a loan approved, or negotiating a lower interest rate,” Mr Doessel said.

“Credit providers have to follow very strict rules when it comes to marking a person’s credit file and if they don’t follow them we can have the black marks removed.

“I’m yet to see a credit file that doesn’t have a default on it that has followed the regulations in every respect, and it’s those breaches of the regulations we are experts in finding,” Mr Doessel said.

“It is absolutely worth looking into because it can be the difference between getting a loan and not getting one, or saving thousands of dollars in interest every year.

“The easiest way to see what defaults exist on your file is to go to www.FreeCreditRating.com.au and apply for a free copy of your credit file,” Mr Doessel said.