Watchdog warns on ‘bad credit’ solution services

Don’t pay to fix your bad credit rating, warns ASIC.

The one credit fix you don’t need

If you have had a utility company relentlessly on your tail about an unpaid bill or been refused a credit card, chances are you may unwittingly have earned a ‘bad credit score’.

The corporate watchdog is using June to warn consumers not to reach out to so-called credit repair companies, regardless of whether the assessment is accurate or not.

As tempting as it is to take up offers from organisations advertising online that they can “delete bad credit”, “repair your credit score fast” and “fix your credit rating from $99”, you must avoid falling for their spin, according to the Australian Securities and Investments Commission (ASIC).

People need to understand that by using credit repair and debt management firms they may end up paying high fees, ASIC said.

“Consumers should be aware these companies often fail to fix credit and debt issues, which can leave people in a worse financial situation,” the watchdog said.

ASIC deputy chairman Peter Kell said there were free services consumers could access to help them fix credit reports or resolve their debt problems, such as the National Debt Helpline.

“Consumers experiencing money or debt problems don’t need to put themselves under further financial stress by paying high fees to firms providing credit repair and debt solution services,” Mr Kell said.

“If people are having difficulty obtaining loans because of an incorrect default listing on their credit report, there are actions they can take that are free of charge to have it corrected.

“If you think you have had a credit default wrongly listed against you, contact the creditor and ask for it to be removed.  If you en’t satisfied with the response you receive, you can contact the relevant dispute resolution service for help,” he said.

People experiencing debt problems can seek free help and guidance from financial counsellors and the National Debt Helpline on 1800 007 007 or go to ndh.org.au.

In 2016, an ASIC report found debt management firms:

  • were offering services where fees and costs were not well explained
  • often required payments be made before services were provided
  • sometimes used high-pressure sales techniques.

Consumers should be aware that lenders will review their credit report when they apply for credit or a loan and they should check their credit history details are correct.  Consumers are entitled to obtain one free copy of their credit report each year from a credit reporting agency. To find out how to do this, visit the Office of the Australian Information Commissioner.

For more information and guidance on credit repair, free financial counselling services, and managing debt, visit ASIC’s MoneySmart website.

Have you ever been denied credit even though you have always paid your debts on time? Have you ever used a credit repair firm and if so, what was the experience like?

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    COMMENTS

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    Rae
    7th Jun 2018
    1:59pm
    The Government has just implemented policies of change into credit ratings reporting that will almost guarantee scams and data selling can be easily done.

    If they are so worried then why have they made the changes with no real security or regulations to back it up?

    Under the new system it will be very easy to get a bad credit assessment and there is nothing stopping the private agencies from unsealing your information as far as I can see.
    Old Geezer
    7th Jun 2018
    2:59pm
    I agree Rae. When one can apply and get a credit card online with nothing more than a copy of their driver's licence there is not much checking going on whether than person even has the ability to pay any debts they may have.
    Rae
    7th Jun 2018
    6:18pm
    I gather from my bank that this is a tightening up of credit data and will effect those who don't pay on time etc. The problem is the data collector is a private organisation.

    I was assured that legislation protects us under consumer privacy protections but everything is now to be reported by the banks to these private credit rating businesses.
    Kathleen
    7th Jun 2018
    11:56pm
    OG, you can’t automatically get a credit card because once you state your income no matter how good your credit rating it will be denied on the basis of insidficient income unless you have an income that is more than the pension. So low income workers cannot any more.
    Kathleen
    7th Jun 2018
    11:57pm
    Ha ha, insidficient is not a new word, it should be insufficient.

    7th Jun 2018
    5:31pm
    Always pay your bills on time and you need never have to worry about a bad credit rating
    Rae
    7th Jun 2018
    6:22pm
    I'm not worried about my credit rating Raphael but with whom the information is going to be shared and whether that is secured or will it be unsold as time goes by.

    I know you expect trust but I don't trust any money making business any more.

    There is little evidence of honesty or respect for customers and clients and a Government fixated on $$$$ and business is everything who are producing some very dodgy legislation.
    Olga
    7th Jun 2018
    8:43pm
    Chill peeps. The rules on the horizon are about to revamp credit ratings to reflect better on those who do pay bills on time consistently. Watch this space...Olga


    Tags: finance, money, credit,