Suffering from poor credit history does not have to be the end of the road because fixing errors in your credit file can get you back on track again
A number of Australians suffer from poor credit history owing to different reasons, and in numerous situations, there are steps people can take to repair credit. If you, like many others, wish to get on the credit repair bandwagon, know that you should start by understanding what the process entails. Knowing what goes into your credit file and monitoring it regularly is important. Bear in mind that while credit repair is possible, it’s not something that’s going to happen overnight, and the entire process definitely requires perseverance from your end.
Understanding credit repair
With Merrilyn Mansfield: Financial Advocate, PRINCEVILLE Credit Advocates.
What appears on my credit file?
Your credit file carries just about every important piece of credit related information about you. You can, as a result, expect a relevant entry on your credit file each time you apply for credit, and every time you enter a contract for a service like an internet or a mobile phone connection. If you default on any payments, the same finds a mention on your credit file.
Court writs and summons stay on your credit file for four years; while payment defaults, credit enquiries, court judgements, and bankruptcy stay on the file for five years; mentions of clearouts and part 9 debt agreements stay in place for seven years; and instances of previous directorships and external administration will remain on your credit file for 10 years. Upon the closure of a credit account, its payment history cannot stay on your file for more than two years.
As per the Privacy Act of 1988, every individual has the right to obtain a copy of his or her credit file, and you can contact a credit reporting agency to get a copy for free. If you need it urgently, you would have to pay a nominal fee.
Why should I check my credit file regularly?
Checking your credit file from time to time is important because of two main reasons:
Incorrect marks on your credit file
There are instances when banks and other providers of credit process loans and other credit accounts incorrectly, which can lead to incorrect marks on your credit file. Instances of people paying their loans off only to see that their loan providers have accidentally reported defaults are not uncommon. If you don’t go through your file, there is no way of knowing if it contains any incorrect marks.
Protect yourself against identity theft
Since your credit file carries details of all credit accounts in your name, going through it can tell you if someone is using your personal information to apply for credit. If you feel you’re a victim of identity theft, you’ll have to take measures like cancelling the accounts in question and filing a police report.
Order a copy of your credit file
Receive email alerts whenever specific changes occur on your credit file for 12 months. You also receive a copy of your credit file despatched within one working day.
Receive your credit file with information on:
- Details of consumer credit enquiries
- Details of overdue consumer credit accounts
- Commercial credit enquiries
- Details of overdue commercial credit accounts
- Bankruptcy & Court Judgements
- Writs & Summons
- Information on your current relationship with a credit provider
- $79.95 p.a. annual fee
What is credit repair?
If you think you can pay money to erase bad marks from your credit file, think again. Credit repair, you should know, involves going through your credit file carefully, followed by refuting any incorrect marks you may find. If you’re perseverant, you can look forward to removal of the incorrect marks, which can lead to increased possibility of success in your future applications for credit.
Bad marks that you can work on removing from your credit file include listings that credit providers place without following suitable rules and regulations. Credit repair companies like Credit Repair Australia go through credit files scouting for such listings on an everyday basis, and can help you spot such mistakes easily.
Repair credit on your own or seek professional assistance?
A good credit repair company brings with it experience in this field, but you’ll have to pay a price to take advantage of such services. If you’re not sure whether using the services of such a company is worth the money you spend, consider the following to arrive at a conclusion:
- Get a copy of your credit file from Veda, Experian, or Dun & Bradstreet
- Make a note of all defaults and negative listings along with their dates and the time that remains for them to stay on your file
- Determine how long it’ll take and how much effort you’ll have to spend to address every such listing
- Determine if paying a credit repair company is worth improving your possibility of getting credit in the future
Know that there are several credit repair companies that can help go through your credit file, and they’ll have the expert knowledge to identify fixes easier than you. Once you choose to work with any such company, it would work in refuting inaccurate claims and getting them erased from your credit file.
If you decide to go at it on your own, start by getting a free copy of your credit file, and once you place your request, you can expect to receive a hard copy via regular mail. Once you receive a copy of your credit file, prepare to go through it with a fine-tooth comb.
What is involved in the credit repair process?
Credit repair does not involve rocket science and could well be simpler than you’ve imagined. If you wish to work on repairing your credit, you can do so by following these simple steps:
- Get and review a copy of your credit file
You can, as mentioned, get a free copy of your credit file by contacting a credit reporting body like Veda or Experian. Once you have access to your credit file, go through it carefully, and make a note of all incorrect and suspicious entries. Consider speaking to the credit reporting body through whom you got your credit file, as it might have the ability to fix certain errors.
- Contact the provider in question
If you spot an error on your credit file or if you come by an entry you’ve not made, you should get in touch with the given credit provider without delay. The credit provider should be able to provide details about the listing, which you can use to initiate a correction or an investigation.
- If the listing isn’t corrected, contact the ombudsman
If the credit provider is unable to fix the listing in question, the next step is to get in touch with the relevant ombudsman. If this fails to yield the desired results, the next step involves contacting the Privacy Commissioner, which can be done within a year of becoming aware of the error.
A professional credit repair company would follow one or more of the above given measures, depending on your situation, and it can also assist you with debt consolidation or a debt agreement, if that’s what suits your lifestyle.Back to top
What is a Debt Agreement?
Low income earners who can’t afford to repay all the money they owe can make use of debt agreements to avoid going bankrupt. Know, though, that debt agreements come with long term implications that can have an adverse affect on your ability to get credit in the future, and they can also have a negative effect on your career.
A debt agreement, or a Part IX agreement, is a legal agreement between a debtor and a creditor, where the creditor agrees to accept an amount of money that the debtor can afford to pay, which is lower than the amount due. The debtor then gets a set period of time to settle the debt. Take into account that a creditor must agree to a proposed debt agreement for it to come into effect, and not all do.
Is a Debt Agreement the same as being bankrupt?
Simply put, entering a debt agreement is not the same as being bankrupt. While a debt agreement qualifies as an act of bankruptcy, know that you cannot be bankrupt until you declare yourself bankrupt, or a court does. An act of bankruptcy, in this case, means that if you don’t comply with the debt agreement’s terms and conditions, or if your creditors don’t accept your proposal, they can file a petition in court to declare to bankrupt.
A typical debt agreement has an administrator looking after unsecured creditors and overseeing that you follow required obligations, and you remain in control of other aspects of your finances. With bankruptcy, a trustee would play a much larger role, and you would be subject to income thresholds.
What else should I consider?
If you suffer from poor creditworthiness or if you wish to repair your credit, make sure you consider the following:
- Repay existing debts
Contact your credit providers and try to negotiate paying off your debts by working on revised repayments terms. If that doesn’t work, consider consolidating your debts under a single debt consolidation loan.
- Credit history does not vanish overnight
The law requires that once you repay a debt the lender should update the same on your credit file as soon as possible. This does not mean that defaults disappear from your file once you repay a loan, because defaults stay on record for five years.
- Is turning to a credit repair company the ideal option?
A credit repair company can simplify the credit repair process for you, but not all are equally good. Make sure you watch out for companies that charge exorbitant fees, companies that exaggerate their abilities to repair credit, and companies that provide contracts with unfair terms like high termination fees.
Repairing your credit might not be as difficult as you imagined it to be, and if you’ve got some time on your hands, you can go through your credit file and take suitable measures to fix any errors you might spot. If you don’t have time on your hands, or if you’re not up to the task because of any other reason, you can always turn to a credit repair company for help. Bear in mind, though, that you have a number of companies from which to choose, so compare your options well.Back to top
Frequently Asked Questions
What details do I have to provide to get a copy of my credit file?
You’ll have to provide your complete name, date of birth, current address, previous address, and driver’s license number.
Can I get a free copy of my credit file at anytime?
You can request for a copy of your credit file if a creditor has rejected your application for credit in the last 90 days, or if your request relates to a credit provider or credit reporting body correcting information in your credit file. You can also ask for a copy once each year, not including the circumstances mentioned above.
Get a copy of your credit file from Veda
How quickly will I receive a copy of my credit file?
You can expect your free credit file copy to get to you within 10 days of placing a request, and you can choose to get it sooner by paying a nominal fee.