How to remove defaults from your credit report

If you are reading this, chances are you may have already experienced what it’s like to have a default on your credit history. Lenders check what’s on your credit report when you apply for credit, and if you have a default (black mark), you may be considered a ‘bad’ credit risk and they will likely decide not to lend to you.

Can defaults be legally removed?

In Australia, you have a legal right to contest any information on your credit report that you believe is unfair or inaccurate. You can make a complaint directly to the credit reporting agency and/or to the credit provider, or hire a credit restoration company to do all the hard work for you. These companies have a thorough understanding of the Australian legislation, and because they do this on a day to day basis, they often have higher success rate than individuals.

Do it yourself credit repair

Many people believe that paying off the debt will get the default removed. Unfortunately, this is not the case. Paying a debt may only update the status of your default as ‘paid’ and you will likely still need to go through the credit restoration process. This is what you’d need to do:

• Get your credit report: Firstly, request a copy of your credit report to find out the details of your negative listing.
• Understand the law: Once you identify the listing, you need to research and gain a good understanding of the Australian legislation. The law surrounding credit reporting is quite complex and lenders don’t always adhere to it when reporting a default.
• Identify contestable reasons: Understanding the law will help you pinpoint contestable reasons why the default should be removed.
• Prepare your case: Identify the right people to contact (including each of the credit reporting agencies) and explain to them why the listing is in error. Be prepared to answer questions and present evidence that supports your case.
• Escalation: You may have to escalate your case to the appropriate bodies if the first outcome is unsuccessful.

Hiring an expert

Credit repair companies charge a fee for the services, but there are number of benefits of hiring an expert:

No hassle: Credit repair companies will manage your case from start to finish
Higher success rate: Because they specialise in removing defaults, they have a higher success rate.

Money back guarantee: Reputable credit repair agencies offer a credit restoration money back guarantee, so you can go in with nothing to lose.

Bottom line

DIY credit repair is cheaper than hiring a professional, but you may want to weigh up the cost of their fees against the value of having an expert doing it for you. Also, a clean credit report may allow you to get approved with a first tier bank at a lower interest rate, which could save you thousands of dollars in interest. The best option will depend on your individual circumstances and how much effort and time you are willing to dedicate to restore your credit history.

Do you need help with your credit report?

If you have a negative listing on your credit report, there is help to turn things around and completely restore your credit history.