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?

Related articles:
Beware dangers of a credit fix
Fraud on the rise
Crafty credit card switches

Written by Olga Galacho

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