By Kate Perry – Courier Mail

June 11, 2008 12:00am

• Lenders are not as free and easy with credit as they were
• The number of people checking their credit has doubled this year
• Unpaid bills will sit on your credit report for up to 5 years

THE days of easy credit are over, with lenders make it tougher to borrow money, and consumers struggling with mounting debts, credit agency Dun & Bradstreet says.

D&B said as it becomes tougher to borrow money more people are taking an interest in their credit status.

Since December last year the number of the number of Australians checking their credit file has more than doubled. D&B said this could be because more people are being denied credit or just want to check their credit is in good order before applying for money.

Your credit records are checked whenever you apply for mainstream credit - whether it’s a credit card, bank loan or in-store finance.

Data out yesterday from the Australian Bureau of Statistics showed that Australians’ appetite for credit has not dimmed. Total personal loans rose 5.8 per cent in April to $6.9 billion, up from $6.5 billion in March.

Lenders toughening up

D&B’s chief executive Christine Christian says the days of easy access to credit have come to an end and lenders are becoming choosier about who they’ll deal with.

“In the current environment banks are only willing to lend to those that don’t have adverse information on their record- they won’t take a risk on anyone with outstanding debts, missed payments or court actions against their name,” she said.

Unpaid bills linger

Not paying a utility or phone bill can leave a stain on your credit report that will take up to five years to clear. Paying the bill late will not be enough to clear your record. If there’s a blight on your credit report you’ll find it all but impossible to get access to mainstream credit like bank loans or credit cards.

You can get a copy of your credit report by contacting credit agencies like Dun & Bradstreet or Veda Advantage.

Protect yourself

It’s important to protect yourself from other people’s debt. If you live in a shared house, but it’s your name on the utility or phone bill, it’s you the debt collectors will come chasing.

If you’re in a relationship, make sure you read the fine print before agreeing to go guarantor on a loan, or putting your name to a bill. If the romance turns sour you could be lumped with the repayments, or ‘sexually transmitted debt’  .

If you are behind in your bills and have debt collectors knocking on your door, make sure you know your rights. Never ignore late payment demands or phone calls from debt collectors, instead try to negotiate a payment plan.

Step 1 – Know your credit rating

Before most organizations will lend you money they will look at your credit rating to assess whether you have a good conduct in paying debts.

An impaired credit rating can increase the cost of lending and or hinder you in gaining further credit. The sort of things that are noted could be having your power cut off; your car repossessed or perhaps have missed payments on credit cards or mortgage. Can also include clear outs. (This is where a lender has tried to make contact by phone & writing without success. As a result they have listed you as a missing borrower)

Obtaining a copy of your credit file can be free if you are prepared to wait 10 days, however for a fee you can have it a whole lot quicker.

Step 2 – Clear up any disputed credit records

If you believe that a company has unfairly listed an overdue notice on your credit file, you should contact them as soon as possible to seek clarification for any incorrect information. This should be amended immediately.

If this is not rectified appropriately you can contact Banking & Financial Services Ombudsman (http://www.bfso.org.au) or the Telecommunications Industry Ombudsman (www.tio.com.au)

Step 3 – Improve your credit rating

Ensure that you are meeting all credit payments on time, so you can demonstrate that you able to make good on your commitments to another prospective lender.

This may be done with the assistance of your bank. They will be able to establish automatic payments to your respective loans.

Step 4 – Get help from Family and friends & locate budgeting tools

See if you can get a partner/friend to check that you are paying your bills on time. There is several good budgeting software options that are available to assist with managing your cash. Financial counselors may also be a reference point (www.afccra.org) for you.

However if you are unable to make it work there are several options which may be available to you through debt mediation or debt agreements. Debt agreements in effect is a form of insolvency. Care needs to be taken when dealing in these areas as fees are payable for the process. It is a good idea to get a few quotes for comparison.

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