Credit repair

Don't get in a fix over credit

It might sound like a good idea to pay someone to help fix your credit history, but credit repair agencies may not always be able to do what they claim. Here we explain what you need to be aware of when dealing with these companies, and show you how to save money by doing your own credit repair.

What credit repair companies can and can't do

Be wary of 'credit repair', 'credit fix' or 'debt solution' companies that claim they can improve your credit report. In most cases, default listings and other historical information cannot be removed from your credit report unless they are proven to be wrong. 

If you know the information on your credit report is correct but the company tells you they can remove or change it for you, walk away. Details can only be changed or removed if they are proven to be wrong.

Smart tip

Don't pay a credit repair company to get your credit report - you can get it for free yourself.

Credit fix or credit repair agents act on your behalf to challenge incorrect listings on your credit report. These companies can be useful if you do not have the time to do this yourself, but make sure you understand what services they are offering, their fees, and the terms of their contract.

If they cannot clearly explain what services they are going to provide, this could be a warning sign, and you might be better off trying to repair your credit yourself.

ASIC takes action against a credit repair business

ASIC has taken legal action against Malouf Group Enterprises for making false or misleading representations about their credit repair business. They told people that they could remove negative listings from their credit file when in fact nothing could be done about the listings. See ASIC's media release for more information.

Fees charged by credit repair companies

Credit repair agencies typically charge very high fees, as much as $1,000 to fix one listing. Depending on the size of your debts, signing up for a credit repair service could increase your financial problems rather than fix them.

Large fees can be charged even if the agent is unable to remove the listing. Remember, they will not be able to remove or change an item on your credit report if the details of that listing are correct.

Read ASIC's report on debt companies which reveals a high pressure sales environment and hidden costs.

The Financial Rights Legal Centre explains the pitfalls of debt management firms in their video 'Debt Dating'. View it at their website

Charging you for free services

A credit repair agency may ask an Ombudsman's external dispute resolution (EDR) service for assistance in resolving your case. The agent could then charge you a fee, even though Ombudsman services are free.

You could save yourself a lot of time and money by contacting an Ombudsman directly, rather than going through an agent.

Read more about this in the NSW Energy & Water Ombudsman's report, Consumers' use and experience of 'credit fix' agents.

How to sort out your own credit problems

A poor credit report could affect any loans or credit you apply for in the future, so it is important to make sure the information is correct.

If there is an error on your credit report, you have the right to get this fixed. There is no charge for this, but your credit report can only be changed if a listing is inaccurate or out of date.

See how to check and correct a wrong listing for details on how to fix incorrect information on your credit report, and how to contact an Ombudsman if you need help.

Fixing a wrong credit listing should not increase your money worries. Understand exactly what a credit repair agent can do and what it will cost. It may be better to do it yourself.

Related links

Last updated: 12 Feb 2018