What will now be reported is the type of credit that you’ve got, the name of the credit provider, the dates on which the credit account was opened or closed, the current limit of the account...
(PRWEB) April 17, 2014
Australia’s credit reporting system has been overhauled, with the introduction of the new Credit Act. On his Creative Real Estate ‘Street Smart Secrets to Real Estate Wealth’ podcast, real estate strategist Rick Otton explains exactly how property investors could be negatively affected by the change.
He said credit reporting agencies traditionally recorded the number of credit applications rather than whether they had actually received the loan or not. This meant it was possible for someone to have massive amounts of debt.
“But for the first time it’s all going to be exposed. We’re all going to be walking financially bare for the first time,” Mr. Otton explained on the podcast.
“What happens is the lenders are going to have new information that they can find out about all of us out there because there are going to be five new extra data fields on the credit reports.”
“What will now be reported is the type of credit that you have, the name of the credit provider, the dates on which the credit account was opened or closed, the current limit of the account – which will expose all the debt you have – and a 24-month repayment history.”
Mr. Otton, a real estate millionaire and educator who has mentored thousands of students over the past 20 years, said under the new Credit Act, it was possible for one’s overall credit rating to be lower, based on new information now available to credit providers – a phenomena he had witnessed in countries like the US.
“I’m going to suggest to you that when the Act comes out, lending is going to have a sharp contraction while the financial institutions get their head around the new scoring system and how much debt people are actually in,” he said.
Mr. Otton predicted that international property investment trends had showed that as people increasingly struggled to access finance through traditional sources, the concept of vendor, or owner, finance would explode.
“This is when owners finance buyers on a property deal – when they carry some of the burden and allow the buyers to make repayments to them,” he said.
“Since 2000, there’s been a slow increase in owner financing in Australia. What’s common, for example, is for buyers who are short on deposits to give a part to the property owner and make payments on the balance. It makes it easier to buy houses and makes it easier for people to sell houses.”
Mr. Otton is an advocate of creative real estate strategies where people can build property portfolios without relying on banking finance or personal capital.
His podcasts can be accessed, at no charge, at CreativeRealEstate.com.au. Other resources include a free downloadable Power Property Profits Pack available on http://www.creativerealestate.com.au/freepack/.
About Rick Otton
Australian property investment specialist, Rick Otton, has been developing, sharing and teaching his innovative real estate strategies for over 20 years. As the founder and CEO of We Buy Houses, which operates in the US, UK, Australia and New Zealand he is known for introducing cutting-edge techniques that have enabled previously disenfranchised people to get out of the rental cycle and into their own homes.
His innovative low-risk, high-reward approach to Australian real estate investing has been featured in a variety of television programs and magazines, including Today Tonight, A Current Affair and Australian Property Investor. His real estate book, published in 2012, ‘’How To Buy A House For A Dollar’, was voted by Money Magazine and Dymocks Book stores as one of the Top 10 Most Popular Finance Titles for 2013.
As well as conducting free seminars, workshops and conferences in the UK and Australia, Rick Otton regularly loads free podcasts to his iTunes channel, Creative Real Estate. In these he shares examples of real transactions, and often has his students as ‘guests’ who discuss the different ways they apply his teachings to their own clients.
These podcasts can be accessed, at no charge, at CreativeRealEstate.com.au.