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Credit repair: How long does it take and does it actually work?

Looking to improve your credit score? Find out how to repair it.

Credit repair: How long does it take and does it actually work? Improve your credit score

Check your credit score today

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If you have ever had a credit card, taken out a postpaid internet service, or rented property then you will have a credit score.

Your credit score is a number that reflects your entire financial history that lenders use to gauge your risk profile. Depending on the type of information, listings on a credit report can remain on your file from anywhere between 2 to 7 years.

Since your credit history stays with you for a long period of time, it may impact your ability to get a line of credit and a bad credit score may limit your access to a favourable loan. A bad credit score is often the result of a history of poor financial management such as not paying your bills on time or not paying them at all.

Can a credit repair fix this? It depends.

Starting from a few hundred dollars to over $1,000 per listing, credit repair is not a cheap fix. If you’re thinking about engaging a credit repair company to clean your credit history, read on to learn more about the process and whether it is right for you.

Credit repair is the act of going through a credit report with the goal of finding mistakes and correcting them. In doing so, your credit score should improve as negative information has been removed from your credit report.

For example, you may discover that a previous mobile phone service provider did not notify you of an unpaid debt. As such, they have notified a credit reporting agency of this default and as a result, this unpaid debt has lowered your credit score.

In this instance, the mobile phone service provider is the credit provider and Equifax is the credit reporting agency.

Many credit repair companies offer this as a paid service, however, you can access your credit report and correct any errors yourself - for free!

You can either engage a credit repair agency to work on your behalf or do it yourself. Whether you hire a credit repair company or choose to do it yourself, the mechanics of credit repair are exactly the same. That is, finding errors on your credit report and contacting the credit provider to remove them.

This is how you can do it yourself:

1. Check your credit score and get a copy of your credit report

You can get a free credit report with ClearScore. Once you have signed up, check that all loans and debts listed are yours and that your full name, date of birth and address are correct.

In addition to this, you may also want to request a copy of your credit report from each of the three credit reporting bodies in Australia. Doing this will allow you to compare differences between each reporting agency.

Identify correct information in your credit report

Here is a list of common errors to look for:

  • Incorrect spelling of your name
  • Incorrect or incomplete phone number or postal address
  • Seeing information belonging to another person with the same or similar name to you
  • Unfamiliar accounts in your name
  • Unknown transactions in your name
  • Closed account reported as being open
  • Incorrect balance and credit limits
  • Debt listed as late when they are being disputed
  • Debt listed when a payment plan is in place
  • Incorrect date listed when you first defaulted on payments
  • Same debt being listed more than once
  • Incorrect debt amount
  • The same debt being listed with multiple creditors.

3. Contact the credit provider or credit reporting body to have the errors corrected

If you discover that something is wrong or out of date, contact Equifax, Illion or Experian and ask them to fix it.

All 3 reporting bodies offer this free-of-charge:

As per the OAIC website:

If the credit provider or credit reporting body you asked to correct information is satisfied that the information is incorrect, then they must take reasonable steps to correct it within 30 days. They must also send a written notice about the correction to you, and any parties they have disclosed the information to, within a reasonable period.

If the credit provider or credit reporting body isn’t satisfied that the information is incorrect, then they must write to you to explain their reasons and let you know that you can access an external dispute resolution scheme or make a complaint.

Credit repair can remove reporting errors made by the credit provider and credit reporting agency.

These can include:

  • Incorrect amounts assigned to listed debts by the credit reporting agency.
  • The same debt being reported more than once by the credit reporting agency.
  • The credit reporting agency has the wrong personal information on file (your name, date of birth, current address).
  • A credit provider failing to notify you of an unpaid debt.
  • A credit provider has incorrect information about payments - for example, not showing that a payment plan has been agreed upon, or stating that a payment of $300 was overdue for more than 60 days when it was not.
  • A credit provider listing an overdue debt when it is being disputed. The result of identity theft.

However, credit repair cannot change or remove any of the following:

  • Payments made during the last 24 months - this is because these stay on file irrespective of whether or not they were paid on time or not.
  • Payments of $150 or more that are overdue by 60 days or more - these stay on file for 5 years.
  • Applications for loans or line of credit - these stay on your credit report for 5 years.

It can take four to six weeks for new information to appear on your credit report. Therefore, after going through the process described above, it may take a few days for it to be actioned then another few weeks for these changes to be reported and reflected on your credit report and credit score.

The benefit of using a credit repair agency is that they have experience on what to look for, who to contact, and can get things done quicker. However, credit repair services cannot remove all negative listings on your credit report. They can only remove information that is incorrect.

For example, a credit repair agency cannot remove unpaid debts that took place in the last 2 years. However, if your credit report shows a late payment that took place more than 24 months ago, they can ask for it to be removed. Similarly, a credit repair service is unable to remove past loan applications that took place within the last 5 years as these must stay on your file for the allotted time.

If, however, you discover that you are a victim of identity theft, a credit repair agency can reduce the amount of stress you may experience to resolve the issue.

In conclusion, unless you are severely time poor, there is nothing you cannot do that a credit repair agency can do on your behalf.

If you can find instances where a credit provider or credit reporting agency has made a mistake and they agree with you, removing the listing(s) can move your credit score in the right direction.

If, however, you want to remove negative information that reflects your financial history, credit repair will not work. This is because you cannot change or remove any information on your credit report that is correct - even if you pay a credit report company a hefty fee to try.

In most circumstances, paying a credit repair agency will not improve your credit score when your bad credit is the result of poor financial management or the listing falls under one of the things that cannot be changed or removed from your credit report.

The best thing you can do is to improve your credit score by doing the following:

  1. Pay your existing loans and debts on time. If this means consolidating your debts and moving them into a balance transfer, speak to an AFS licensed professional for financial advice.

  2. Pay your utility bills on time. You do not want another negative listing added to your credit report.

  3. Pay your credit card on time each month. Pay the balance in full or at the very least pay more than the minimum repayment.

  4. Reduce your reliance on credit cards.

If you find yourself getting into more debt, talk to a free financial counsellor.

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