Fixing credit reports
The law requires credit reporting bodies to make sure that information on a consumer’s credit report is accurate, up to date, relevant, complete, and not misleading. However, errors can occur.
When a consumer obtains a copy of their credit report, they should check the following information:
- Debts or loans:
- Are the credit accounts listed correctly?
- Are there any listed that do not belong to the consumer?
- Is the credit limit listed correct on each one, and are there any duplicates?
- Is the record of whether the consumer has made repayments on time accurate?
- Defaults: the consumer may see defaults listed if any repayments were 60 days or more late. Check that these details are correct and that the consumer received notices about the defaults before they were listed.
- If they have paid an overdue payment in full or the debt has been settled, check that this is reflected in the report.
- If there is a ‘serious credit infringement’ listing, ask whether the consumer was in contact with the credit provider when the listing was made – a ‘serious credit infringement’ indicates that the debtor was ignoring attempts to contact them or that the credit provider was unable to contact them despite repeated efforts to do so.
- Recommend that they check that the information used to identify them is correct, such as:
- name and date of birth.
- current and two previous addresses.
You can explain to consumers that if they are concerned about information being entered on their credit report, and wanting to check its accuracy when it is entered, some credit reporting bodies also offer to alert consumers to changes on their credit report. However, they will charge for this service.
You should stress the importance of checking a credit report carefully because incorrect listings may affect a consumer’s ability to get credit in the future.
Incorrect listings or activity on their credit profile may also alert a consumer to potential identity theft which occurs when someone uses a consumer’s details to apply for credit. If a consumer believes they are the victim of identity theft, they should alert the credit reporting bodies or credit provider so they can help to resolve the issue and ensure their credit profile is not adversely affected.
What happens if a consumer has a complaint about the information reflected on their credit report.
The law has very clear procedures for dealing with incorrect information, and you will be able to explain to a consumer how to go about raising a correction request or complaint.
The Privacy Act has safeguards to make it easier for consumers to have potential errors investigated and resolved. A credit provider or credit reporting body who the consumer has dealt with is required by law to investigate any correction requests when asked to do so by the consumer.
This applies even if the information the consumer is seeking to have corrected was not reported by the credit provider, the consumer gave their correction request to. On receiving a correction request by a consumer that information showing on their credit report is incorrect, the credit provider or credit reporting body the consumer made the request to is required to action this request. They are not permitted to refer the consumer to a different organisation – they must engage with the relevant credit provider /s or credit reporting body on behalf of the consumer.
The correction request must be investigated and concluded within 30 days – unless the consumer agrees to extend the timeframe. Once the matter has been investigated, the consumer must be provided with a response indicating whether or not a correction will be made (and if not, why not).
If the consumer feels that the credit provider or credit reporting body did not properly attend to their correction request or if it was not concluded within the 30-day timeframe or if they were not satisfied with the outcome, this can be escalated to that organisation’s nominated external dispute resolution (EDR) scheme, or to the Office of the Australian Information Commissioner.
When considering the correction request, the credit provider or credit reporting body must decide whether the information is “inaccurate, out-of-date, irrelevant or misleading”. If the credit provider or credit reporting body decides that it is, they must take steps to correct the information.
It must be stressed that a credit provider or credit reporting body can’t remove a default listing simply because the debt has been subsequently paid. If the debt is subsequently paid, the credit provider must update the listing to note that is has been ‘paid’, however the listing will remain. After 5 years from the date of listing, the default will “expire” and will then be removed from the consumer’s credit report.
The default listing must only be removed if it is “inaccurate, out-of-date, irrelevant or misleading”. This could happen, for example, if the payment had been made before the default was listed but the credit provider’s system didn’t record the payment, if the consumer didn’t actually owe the debt, or if the credit provider didn’t issue the correct notices to the consumer before listing the default.
Consumers should be wary of ‘credit repair’ companies that will offer – for a fee – to remove a default listing from a credit report. If the listing is correct, it can’t be removed.