About the Author

Makenzie has worked for two of the largest credit repair companies in Australia, explaining credit legislation to clients, analysing possible breaches and acting as an operations manager.

She has also worked alongside mortgage brokers to assist in decreasing loss due to bad credit cases.

What is Credit repair? 

Credit repair is a term used to describe the improvement of an individual’s credit report through the removal of disputable negative listings I.e Defaults and Judgements. These services are generally sought out when you get declined for finance such as mortgages or business loans due to negative listings such as defaults and judgments.  

A credit default has often been described as a ‘black mark’ on a credit report. It is when you don’t pay a bill for longer than 60 days and the outstanding about is over $150. Credit defaults will remain on your file for 5 years – regardless whether you pay the debt or not. Having a default on your credit file is a powerful indicator of risks. Equifax states “Items such as number of defaults, status, amount and recency all contribute to your credit risk” (Equifax, 2021). This is why defaulted individuals often get declined for mortgages, phone plans or even electricity. 

Younger Australians are more likely to default on payments. (Source: Illion - Credit Card Nation Report, 2018)

Younger Australians are more likely to default on payments. (Source: Illion – Credit Card Nation Report, 2018)

How is bad credit removed? 

Before a creditor can list a default or judgement on a credit file, there are a number of rules and procedures under the Privacy Act and Credit Reporting Code of Conduct that must be followed. If even one is breached, the company legally must remove the listing permanently. Here are some examples of possible breaches: 

  1. You did not receive warning lettersPrivacy Act Section 21D  
  2. You were eligible for a financial hardship application at time of defaultCredit Reporting Code of ConductSection 9.1 

If you were experiencing financial hardship and you were not offered a hardship application, you may wish to include this in your complaint. Many of the clients I used to work with would often regard that if they had known a hardship application were an option at the time, they would have filed one to avoid being defaulted. We would often make the case managers aware of this to aid in their disputes. 

Can I remove a default myself? 

Yes, anyone can dispute a litsting against their name. Disputing it involves requesting an investigation to be opened through an ‘information request’ or lodging  a complaint.  

It is important to understand what the possible breaches are prior to disputing the listing to give yourself the best chance at obtaining a result. In your complaint (e.g. email complaint) you’ll want to include a short description of your side of the story (moved address, never received warning letters) and request information proving the creditor supplied these notices. In some cases, a creditor may have to remove a default listing for something as simple as warning letters being sent to an unconfirmed address. 

I personally disputed my own default which resulted in removal. This was the template I used when emailing the creditor:

The reply I recieved after confirming my ID and waiting for 2 weeks:

As you can see, as my warning letters were sent to an unconfirmed address – I had no way of knowing I was about to be defaulted – thus, the default had to be removed. Going through the process myself meant that I was able to get it done for free. However, although it may seem cost effective, if you aren’t familiar with credit law and legislation, it may be difficult for you to go through the dispute process independently and achieve a positive outcome. 

How do Credit Repair companies help? 

Credit Repair companies specialise in disputes and have established relationships with the creditors, this means good credit repair companies often have specific procedures of removal that can provide a much faster turnaround time. They analyse where possible breaches may be present and act on behalf of the client to attempt removal. They liaise with credit reporting agencies, creditors, and negotiate court proceedings where necessary. It is important that you do not speak with the creditors during this process.  

The first step of moving forward with a credit repair company is signing the ‘LOA’, this is the Letter of Authorization. This allows the case managers to speak and dispute possible breaches on your behalf. During this time, if you speak to creditors, you may accidentally admit liability in a situation where you may not be at fault. Paying for this service means trusting your whole dispute on the abilities of their case management department. Case managers remove defaults and court judgements all day, they are hailed as experts in credit law & legislation and have been specifically trained to achieve the best possible outcome. 

Good questions to ask before proceeding: 

  1. Once I pay the fee, when will the dispute be lodged?
  2. Do I have to pay any additional fees if I want it lodged today? 
  3. What is the average turnaround time?
  4. Is there any information I can provide to speed up the process? 
  5. What is the removal rate? Do you have any google reviews? 
  6. Do you conduct all dispute resolution via written correspondence or do you make follow up calls to the creditors as well? 

What happens to the debt if the default is removed? 

It’s important to note that removal of a default will not remove the debt. It will remove the ‘black-mark’ from your credit file; however, the debt will remain. It is a legal obligation to repay debts rightfully owed. If you remove a default, without paying the debt, the original creditor has the right on-sell the debt to a third party, who has the right to relist the default for an additional 5 years. A good Credit Repair company will encourage the client to settle the debt and negotiate a reduced settlement figure or affordable payment arrangement.  

How do I check my credit file? Can I check my credit files for free? 

It is important that all three credit reports are checked. Equifax, Illion and Experian are all separate credit reporting bodies with different information. You may have a perfect score with Illion, and a default on Equifax. If you have been declined for any financial application and advised to check your credit file, have a free health check on all three by following the links below: 

  1. Equifax – https://registration.my.equifax.com.au/eligibility-reason
  2. Illion – https://www.creditcheck.illion.com.au/
  3. Experian – https://www.creditsavvy.com.au/

Many credit repair companies will do your initial assessment for free but charge an admin fee to obtain the credit files (fees usually ranging from $50-$100). This is because the Credit Reporting Bodies charge them to pull the information on your behalf. Reputable Credit Repair companies will waive the fee if you can provide a recent copy of your reports. You can either request one directly from the provider or – if declined for a mortgage, sometimes you may request a free copy from your broker. 

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