Credit Crisis - Is there More to Come?

With the credit crisis still going through the throws of settling down we are yet to see the full impact of the US meltdown. The impact of the credit crisis is only beginning to be felt by the global economy, more so it is the individual consumer who will pay for this in the long run.

At this stage the Australian economy has slowed down in the finance sector, the property sector and we have also seen substantial impact in the share market. What we are yet to see is the impact from an unemployment perspective and also from a home loan default and personal credit default perspective.

Yes we are seeing more and more martgagee auctions but is the smaller ticket items such as credit cards, store cards and personal loan going into default which will impact consumers for years to come.

The amount of people in Australia which have a listing on their credit file will skyrocket over the coming twelve months as people struggle to repay debt which was accrued during a time of low interest rates and lower cost of living in general.

This was ok during this period of lower interest rates and cost of living although now where a home loan costs hundreds of dollars more per month and the average fuel bill is now an average of $100 per month more the amount it costs just to maintain these repayments has seriously sapped the disposable income which was once available.

Where does this lead from here? In many cases it leads to people juggling money between credit cards and potentially making late payments on their bills that are due. If this cycle is not broken quickly by way of cutting down on all unecessary spending or earning more money then these late bills start to pile up and can quite easily turn into a serious debt issue.

Once a bill is more than 90 days in arrears the provider of the service has the right to place a default listing on your credit file and this can take up to five years to come off your credit file even if you pay it in full at a later stage.

I have helped many clients break this cycle by way of a refinance and more specifically the consolidation of debt in their home loan.

I will be writing up more information on the impact of a credit listing in my next blog due out very soon.