Credit repair in Australia

What is credit repair?

Credit repair is the process of cleaning up and correcting incorrect information on your credit report with the goal of improving your credit score.

You have two choices when it comes to trying to repair your credit - you can do it yourself for free or you can pay a specialist credit repair company to do it for you. Both have their benefits and drawbacks.

The advantage of doing it yourself is that it won't cost you anything, but means you may need to devote some time and energy to what can be a confusing process.

The advantage of using a credit repair company is that they'll handle the work for you, but you'll need to pay for the privilege.

Whichever option you choose, it's important to understand that there's only so much you can do to repair your credit.

Will credit repair help me?

There's only so much that can be done to repair your credit, whether you choose to do it yourself or use a credit repair company.

Every legitimate listing on your credit file (whether it's a positive or negative listing) will stay there for a set amount of time.

This includes things that can hurt your credit score like missed payments, unsuccessful loan applications, bankruptcies and defaults.

Unfortunately, the only way for these listings to be removed from your credit report is to wait for them to be removed automatically after the right amount of time has passed.

The only thing that you or a credit repair company can get removed from your credit report are incorrect listings made by either the credit reporting agency or a credit provider.

How else can I fix my credit score?

The best way to improve a bad credit score in Australia is by demonstrating that you're a responsible borrower over an extended period of time. This includes taking the following actions:

• Pay off your bills and repayments on time. Late payments and defaults can hurt your credit score, so it's important to make the minimum payments on time each statement period. If you're using a credit card, it's ideal to pay your balance as much as you can or in full each month to reduce your interest payments.
• Consolidate your debts. If your credit score is low because you're struggling to pay off multiple card or loan debts because of interest costs, you can consolidate your debts into one account with a 0% balance transfer offer. These cards don't charge any interest on the transferred amount for a promotional period (which can sometimes be as long as 26 months). You can start comparing balance transfer cards and understand how they work on Finder.
• Lower your credit limit. Your credit score is also based on how much available credit you have. If you have a large credit limit that you aren't using, you could consider lowering it. Not only will this curb any temptation to overspend, but it could have a positive impact on your credit score.
• Don't apply for too many loans at once. Applying for multiple credit cards or loans in a short space of time can hurt your credit score, especially if your applications are rejected.

What is a credit repair service?

If you'd like help fixing your credit file, you can use a credit repair company. Credit repair services look for incorrect listings on your report that may be damaging your credit score and organise for them to be removed for a fee.

The specific fees will differ between credit repair agencies, but you are likely to pay between $500 and $1,500 dollars in total to have a listing removed from your file. You normally pay a fee for every listing you want removed.

This is an example of the process when using a credit repair company:

1. Initial consultation. You may be offered an initial consultation to explain the credit repair process. This should be complimentary and it's to ascertain whether the process will meet your needs.
2. Check your credit file. Following this your credit file is checked and the first fee is charged. This stage is to see if there are incorrect listings that can be removed and if there are actionable things that can be done to improve your score.
3. Formally apply for credit repair. If you want to move forward you will need to formally apply for credit repair. You'll need to list the defaults or incorrect listings you want investigated and removed and you will need to pay a fee for each.
4. Contacting creditors. The credit repair company, if it accepts your application, will then contact creditors to determine which defaults can be removed from your file. Some credit repair companies may negotiate a payment plan with your creditors if you still have an amount owing.
5. Listings are removed. If successful, listings are removed from your file. You will pay a fee for each successfully removed listing.

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Credit Repair Companion

Credit Repair Companion helps you to dispute bad credit listings on your credit report, so that you can get your credit score back on track.

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Are credit repair companies safe?

While many credit repair services are legitimate businesses, it's worth doing your research before you approach one. You should only consider using a licensed credit repair company that is listed on ASIC's website.

It's also impossible to wipe or reset your credit score, so beware any service that claims to be able to do so.

How much do credit repair services cost?

You could expect to pay more than $1,000 when using a credit repair service, but this will vary between providers and may depend on the listings that need to be removed.

Generally, you will need to pay an initial consultation fee which can cost up to a few hundred dollars. There will then be a fee charged for each listing the company successful removes. This varies as well but is also a couple of hundred dollars. According to ASIC, some listings can cost as much as $1,000-$1,500 to repair your score.

Make sure you get a full list of the fees and charges before you agree to pay for the initial consultation.

What impacts the cost of credit repair?

If you decide to get assistance from a credit repair company, the following factors will impact how much you'll pay:

• Defaults. The number of defaults you have on your credit file affect how much you have to spend. This is because credit repair companies in Australia charge a fee for each mark they remove. So, the higher the number of defaults, the higher the cost.
• Successful negotiations. After each successful negotiation that the credit repair company carries out to remove a negative listing, you'll be charged a fee to ensure the mark is successfully removed.
• Crossed or linked credit files. In case you're the victim of crossed or linked credit files because of how certain lenders submit credit data, you can expect a credit repair company to address this for a fee.

What are the benefits of working with a credit repair company?

If you have legitimate incorrect listings on your credit file, here are some of the potential benefits of seeking the help of a credit repair company:

• Professional service. Credit repair companies work to repair credit reports for a living, so they know what to look for and who to get in touch with to remove incorrect, negative marks. This could prove more convenient and successful for you compared to if you were to repair it yourself.
• Improved credit. The ultimate goal of using a credit repair agency is to improve your credit history and score. This will help increase your chances of approval when applying for loans or lines of credit in the future.

While the costs will vary between different cardholders, credit repair does come at a cost. However, if you decide to get your credit repaired professionally, the benefits it will have on your finances will outweigh the fees in the long run.

You can watch the video below with Merrilyn Mansfield, financial advocate from Princeville Credit Advocates, to find out more about the credit repair process.

VIDEO: The credit repair process

How to compare credit repair agencies

There are a few credit repair agencies that offer their services to Australian consumers. However, in order to determine whether or not an agency is reputable, there are a few important factors you need to consider:

• Licences. Check if the credit repair service has an ABN, which you should be able to find at the bottom of the company's website.
• Transparency. How upfront is each company about the fees you will have to pay? Look for a company that provides the full terms and conditions before you have to hand over any money.
• Reputation. Is the company a trusted name in the industry or does it have a reputation for being a bit dodgy? Look for a company that is respected and has an impeccable service record.
• Customer reviews. Look at online review sites to get an idea of the experiences other people have had with agencies. This gives you a good idea of how each company treats its customers.
• Overall cost. Look for the best combination of an affordable price and quality service.

The pros and cons of credit repair services

Frequently asked questions

• Can credit repair companies help if I have been a victim of identity theft?

  Yes. These companies know how to work with credit card providers to remove any fraudulent entries from your file.

• Who can see my credit file?

  Credit reporting agencies can disclose information in your file to credit providers, mortgage insurers, trade insurers and agents acting on your behalf.

• Can I get rid of every negative listing on my credit file?

  No. It's only possible to get rid of listings that are incorrect.

Written by

Thomas Stelzer

Publisher

Tom Stelzer is a publisher and writer for Finder, covering investing and cryptocurrency. He previously worked for Finder as a writer in Australia and the UK, covering things like personal finance, loans, investing, insurance as well as small business and business loans. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney. See full bio