Don't pay to fix your credit history - do
If debt is getting you down or you have a bad credit history
there is free help available. If you pay a debt solution company
just remember that they may not always be able to do what they
claim and can charge high fees for things you can do yourself.
Here we explain what credit repair companies can and can't do
for you, how to save money by fixing your own credit and how a free
financial counsellor can help you if you are struggling.
How credit repair companies
'Credit fix', 'credit wash' or 'credit repair' companies act on
your behalf to challenge incorrect listings on your credit report.
They may tell you they can fix your credit history and solve your
debt problems but, in many cases, they may not be able to do what
they say they can. You could end up paying a lot of money without
being any better off.
Fix your credit history
Credit repair companies may claim they can improve your credit
rating by having negative information removed from your credit
report, but default listings and other correct historical
information cannot be removed. Plus, you can arrange for any wrong
information to be removed yourself for free. See how
to fix your own credit problems below.
Case study: Toni paid for debt help
When Toni moved house, she told the phone company about her
change of address, but the following month they sent her bill to
her old address. Because she didn't receive the bill, it wasn't
paid, and the phone company listed it as a default of $170 on her
When Toni found out about the listing, she signed up with a
credit repair firm that said they could help her remove it. Toni
paid $1,000 for this service. In the meantime, Toni also lodged a
complaint with the Telecommunications Industry Ombudsman (TIO) and
the listing was removed due to her action.
Toni contacted the credit repair firm and asked them for her
money back but, as she had signed a contract with them, they
refused to refund her $1,000.
If Toni has any issues with her credit report again in future,
she plans to use an Ombudsman to sort out her credit issues rather
than going to a credit solutions company.
Debt fixes and solutions
Credit repair companies may also offer 'debt fix', 'debt
management' or 'debt solution' services to get out of debt and help
you take back control of your finances. Many of these solutions can
have serious long-term consequences for you and your credit
Do not sign up for any of the following debt management services
until you understand what they mean for you in the long term:
- Debt agreements - an agreement
to pay an amount you can afford, over a period of time.
- Bankruptcy - when you are legally
declared unable to meet your debts.
consolidation - rolling all your loans into one
Before agreeing to any of these solutions, seek free help to
manage your finances from a financial counsellor.
You can also watch the Australian Financial Security Authority's
(AFSA) video on how to avoid untrustworthy
Things to consider before
using a credit repair company
Before you sign up with a credit repair company, 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 report yourself.
ASIC takes action against a credit repair business
ASIC has taken legal action against Clear Credit Solutions for
making false or misleading statements 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
Fees charged by credit repair
Credit repair companies typically charge very high fees, as much
as $1,000 to fix one listing in your credit report. Depending on
the size of your debts, signing up for a credit repair service
could make your financial problems worse rather than fix them.
Even if they are not able to fix any entries on your credit
report, the credit wash company could still charge you high fees.
Credit repair companies cannot remove or change items on your
credit report if the details are correct.
If they make you pay an upfront fee, that could be a red flag
that they want to make sure they get paid even if they can't help
Charging you for free services
A credit repair company may contact an Ombudsman's
external dispute resolution (EDR) service to resolve your case.
The company could then charge you a fee, even though Ombudsman
services are free and are designed to be easy for people to
You could save yourself a lot of time and money by contacting an
Ombudsman directly, rather than going through a credit repair
How to fix your own credit
A poor credit report or credit score could affect any loans or
credit you apply for in the future, so it's important to make sure
the information is correct.
If there are errors on your credit report, you have the right to
get them fixed. There is no charge for this, but your credit report
can only be changed if a listing is inaccurate.
Find out how to check and correct a wrong listing
on our credit report webpage.
We also have guidance on how to get a good credit rating on our
credit scores webpage.
Free debt help from financial
If you're struggling with debt, a financial counsellor can help
you come up with a solution or understand the options available to
you. Financial counselling is a free
and confidential service.
Use our map to find a financial counsellor
in your area, or call the National Debt Helpline on 1800 007
Fixing a wrong credit listing should not
increase your money worries. Understand exactly what a credit
repair company can do and the costs involved. It may be better to
do fix the issue yourself.
Last updated: 23 Jul 2018