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 you could save money by doing your own credit repair.

Find out what credit repair companies can and can't do

Smart tip

It's a good idea to check your credit report every year to make sure it is correct.  A copy of your credit report is free if you can wait 10 working days. See credit reports for more information.

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. 

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 fee structure, and the terms of their contract.

High fees

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 opaque costs.

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

Go to the Ombudsman for free

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.

For more information about credit repair services, see the research report by the Energy & Water Ombudsman NSW, Consumers' use and experience of 'credit fix' agents.

Do it yourself credit repair

A poor credit report could affect getting a loan 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 to do this, but remember that your credit report can only be changed if a listing is inaccurate or out of date.

See the information in 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 Sep 2016