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Beware Credit Repair Companies

Australian Retail Credit Association (ARCA)
15th November, 2015

Myth – I need to pay someone to fix or repair my credit report.

Fact – This is false.  It is available from credit reporting bodies, your credit provider, financial counsellors, ombudsmen, or community legal services.  It is now easier to get errors fixed yourself, for free.

All too frequently you can turn on your television, read the newspaper or be online and will 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 data 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 accurate, it can’t be removed.

They may also have contracts that contain unfair terms, such as termination fees which penalise you for terminating the contract. Some credit repair companies 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 repairer themselves, or by an associated company. This may end up costing you more than if you had negotiated directly with your credit provider.

If there are errors on your credit file, you don’t have to pay anyone to fix them.

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.

This is required to occur within a 30 day period. So long as the credit provider or credit reporting body has any kind of personal credit information about you (it doesn’t need to be that information you’re seeking to have corrected), they are required to assist you with your correction request.

If, after this initial investigation, you are then unhappy with how they addressed your correction request, you have the right to lodge a dispute with the credit provider’s or credit reporting body’s External Dispute Resolution (EDR) scheme.

All consumer credit providers who provide information to credit reporting bodies must be members of an EDR scheme. EDR is independent, and it is free for consumers to use.

You can also ask a financial counsellor or community legal services for advice.

Financial counselling is free, independent and confidential. To find a financial counsellor or community legal centre in your area visit www.CreditSmart.org.au/page/helpful-services.

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.

Australian Retail Credit Association (ARCA)

This article first appeared on the CreditSmart website which is an information website developed by credit experts in conjunction with consumer advocates and government bodies to help you understand the credit reporting system.  Its goal is to help you understand how the credit reporting system affects you, by providing unbiased and fair information.

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