Beware of credit repair companies
Is that fix for real?
All too frequently you can turn on your television, read the newspaper or be online and see advertisements from companies claiming to be able to “repair your credit report” or “fix your credit history.” These companies often claim they can remove “black marks” from your credit report, or “clean” your report. This may be very enticing for anyone who has ever found themselves rejected for a credit card, a loan, or a mortgage because of defaults or other negative information on their credit report.
You should be wary of any organisation that promises to do these things. These credit repair companies often charge large fees for a service that most people can do themselves, for free.
They will often overstate their ability to improve a credit report, given that if information on a credit report is correct, it can’t be removed. There’s a good chance that you may end up thousands of dollars out of pocket without any real improvement in your credit report. Often they sign you up to contracts with unfair terms, such as big termination fees which penalise you for terminating the contract.
Some credit repair services may also try to convince you to enter into insolvency arrangements which may not be suitable for your circumstances, or to consolidate your debts with a high-interest loan. Often these loans are either offered by the credit repairers themselves, or by an associated company. This may end up costing you more than if you had negotiated directly with your credit provider.
Steps to fix my credit rating
- Order a copy of your credit reports
- Check for errors and report any you find
- Pay bills on time, every time
- Clear up any debt defaults
- Pay off high interest loans so you can reduce your debt as quickly as possible.
- Reduce other debt
- If you have a credit card be sure to use it responsibly
- Check your free credit report annually to track your credit health
Help with "file fix"
The consumer safeguards in the Privacy Act and Privacy (Credit Reporting) Code require credit providers and credit reporting bodies to promptly investigate and respond to consumers’ correction requests about inaccuracies in credit reports.
You can also ask a financial counsellor or community legal services for advice. Financial counselling is free, independent and confidential.
You should remember, however, that information which is correct cannot be removed, so a credit provider or credit reporting body cannot be forced to remove that information to resolve a dispute with you.