Your credit history is the determining factor that affects whether you can acquire a mortgage for that new home, a loan for a new car or even a store account. Your credit history is calculated throughout your banking and credit history and tells the story of how healthy your credit actually is. The credit report is there to determine the amount of “risk” a creditor is taking on by loaning you money. Obviously, the healthier your credit report, the more likely they would loan you the money.
If you have a poor credit history, there are free ways to help you manage this. This article will explain what credit repair companies can and can’t help you with, how to save money by fixing your own credit and how a free financial counsellor can help you if you are struggling.
How Do I Get My Credit Record?
You have the right to obtain a copy of your credit record from each registered credit agency once a year at no cost or charge.
To get your credit records you must contact the credit reporting agencies who may require a copy of your passport or driver’s licence. You may also be required to fill out a form giving the agency permission to release the information to you.
What are the Benefits of Improving my Credit Score?
- Borrowing money at a competitive rate of interest.
- Being able to open trade accounts.
- Having your credit report reflect your true credit position.
- Not having to apply for bad credit or non-conforming loans.
- Not having to offer explanations as to why defaults or judgments appear on your credit report.
Fix Your Credit History
Only disputable, incorrect or inaccurate listings may be disputed and therefore improving your credit file. Please note any and all listings which relate to bankruptcy are not removable. However, apart from bankruptcies, all your defaults, judgements, credit infringements and repayment records can be repaired by a credit repair firm.
With the amount of inaccuracy occurring in credit reports, a credit repair organisation can effectively improve your credit rating.
How Credit Repair Companies Work
There are also a number of companies that offer to repair your credit report on your behalf for a fee. These companies are generally known as credit repair agencies. Some work with attorneys and employ people with a good understanding of how the system and process works.
While there are many legitimate companies that offer a useful service for a fair fee, there are many that tend to make unrealistic promises and seldom deliver what you expect. In the case of these less than reputable companies, the money paid to them would be much better spent paying towards your debt. Make sure to do your homework and research the credit repair agency’s reputation before proceeding.
Be aware when evaluating the fees that the company isn’t
charging you a consultancy fee for free services offered by the Ombudsman.
How Long Does it Take to Repair a Credit Report?
Each case is different so there are many differing timeframes, depending on your circumstances. Some complicated cases require extra attention and an extended duration in order to process the errors and correct them adequately.
Things to Consider Before Engaging a Credit Repair Company
Before you engage a credit repair company, make sure you fully understand what services they are offering, their fees, and the terms of their contract.
If they cannot clearly explain what they will do to help you, this could be a warning sign, and you might be better off trying to repair your credit report yourself.
Fees Charged by Credit Repair Companies
Credit repair agencies generally charge large fees to fix your credit report. In some circumstances, engaging a credit repair company could make your financial circumstances worse, rather than fixing it. Getting professional assistance can be costly. However, if you can remove any incorrect black marks from your file, the positive impacts on your credit score could be worth the cost. You will need to understand what will positively impact your credit score.
Be aware when evaluating the fees that the company isn’t charging you a consultancy fee for free services offered by the Ombudsman.
It is important to remember that credit repair agencies can only remove incorrect listings.
How to Fix Your Own Credit Record
You have the option to contact an Ombudsman’s external dispute resolution (EDR) service to resolve your case for free. Moneysmart, the Australian Government’s financial guide, is able to provide free templates and sample letters of complaint to act as a guide.
Free Debt Help From Debt Counsellors
Trained individuals, called Financial Counsellors, may be able to help you to deal with your debt. They are able to negotiate with your creditors on your behalf to come to an agreement that allows you to cover your living expenses and allocate the remainder of your available funds to your creditors.
Financial Counsellors will conduct an independent enquiry into your financial circumstances and make recommendations to credit providers on your behalf. A Financial Counsellor may be able to assist you to work out a plan to enable you to repay your debts effectively.
We all would have like if the process was as simple as it seems to be. It is of utmost importance that you know that this process will take time. Patience is key factor when it comes to repairing your credit.
*This article is opinion only and should not be taken as financial advice. The information is general and has not taken into account your objectives, financial situation, or needs. Check with a financial professional before making any decisions.