Should I use a credit repair company?

Having a credit report in bad shape can seriously hinder your chances of getting approved for finance, like a car or personal loan. Many people think that they can repair their credit report by paying off the default, but unfortunately that’s not always the case –paying the default may only change its status to ‘paid’, but it can still stay on your credit report for 5 years.

Fortunately, you don’t have to put your dreams on hold for such a long period of time. The credit restoration process consists of removing unfair, disputable and contestable listings from credit reports. A lender must follow the regulations, otherwise there may be a contestable reason to have a default removed.

If you need to remove a black mark from your credit report, you can choose between:

• Do it yourself credit repair, or
• Hiring an expert to do all the work for you

Both options have their pros and cons.

DIY credit repair

You have a legal right to contest a default on your credit report. The main advantage of DIY credit repair is the cost, which is a very important factor, especially is money is tight. If you choose do-it-yourself credit repair, you will have to:

• Research and gain a good understanding of the Australian legislation
• Identify strong, contestable reasons why the listing should be removed
• Develop your case to get the default removed
• Identify the right people to contact
• Submit your case with each credit reporting agency, where the default is listed
• Enter further negotiations if the initial decision is not successful

Before jumping into fixing your credit report by yourself, you need to be sure that:

• You are prepared to do all the research
• You have the time and commitment needed to go through the process, and
• You are comfortable negotiating with creditors.

Hiring an expert

• Because the process is complex and time consuming, many people give up half way and decide to hire a specialist credit restoration company to do the work for them. The main disadvantage of hiring an expert is that you’ll have to pay a fee to get the default(s) removed. However, using a credit repair company offers many advantages, including:
• They have a strong understanding of the Australian laws, which enables them to identify contestable reasons to get your default removed more effectively
• They have a higher success rate than individuals because they have the know-how
• It can take some of the stress off, as you won’t have to research and understand the law, find out whom to contact, when and what to say
• The leading companies offer an end to end, which saves you time, as all the hard work will be done for you.

How to choose a company

Not all credit repair companies are the same. Unfortunately, the industry is not properly regulated, so it can be hard to know whom to trust. To avoid a bad experience, it’s important to make sure you are dealing with a reputable credit repair company. You should consider:

• Reputation: Find out how long the company has been operating and how many people they’ve helped. If the company is new and they only have a few customers, they won’t necessarily have the know-how required to maximise your chances of success

• Your eligibility for credit restoration: A good credit repair company should explain any listings on your credit report and do a complete assessment of your financial situation to assess your eligibility for their services. This should be done free of charge and before you pay any fees.

• Consumer reviews: Check what other customers say about the credit repair company. What’s their overall score? Is it based on 1 review, 10 reviews or 100? Google reviews and Product Reviews cannot be changed by the companies, so they are reliable.

• Services included: Not all companies offer the same level of service. Usually, the cheaper providers require that you do most of the work. Choosing one that offers an end to end service could be more expensive, but it will be less stressful

• Money back guarantee: Although credit repair providers may have high success rates, not all black marks can be removed. Some companies offer a money back guarantee in case they are not successful in removing a default, so you can sign up with nothing to lose.

There are many benefits of repairing your credit report, including increased chances of getting your loan application approved and paying a lower interest rate on your loans. Remember that the best option will depend on your individual circumstances.