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Poor credit history can have a significant impact on your finances and your chance of being approved for future lines of credit. If you have bad credit or filed for bankruptcy, you can follow a few simple steps to increase your credit score and get your finances back on track. You can either tackle the issues yourself or enlist the help of a credit repair agency.
Use this guide to compare professional and DIY credit repair tactics, understand the steps you'll have to take and learn how to compare credit repair agencies.
Your credit file is a detailed record of your financial history and is used by lenders to judge your ability to manage loans and repayments. Your file contains your personal information as well as any details of loans and credit cards you have held. This includes utility accounts and store cards.
If your credit score is between 0 and 550, you likely have a weak or below average credit history. This means that your credit report may include evidence of late payments or defaults, several credit enquiries in a short period, overdue accounts, bankruptcy (including discharged bankruptcy) and other negative listings. If you have poor credit, you'll struggle to get approved for a credit card and may be given higher interest rates when you apply for a loan.
Don't know your credit score? You can order a free copy of your credit score through finder and you will receive it instantly in your dashboard.
Credit repair is the process of cleaning up incorrect or negative listings on your credit file and adopting positive financial behaviours to increase your credit score. The specific steps you'll take will vary depending on whether you use a professional agency or try to do it yourself.
Credit repair companies use credit legislation to determine whether negative listings on your file were put there without a credit provider adhering to the relevant laws. As they're experts, these agencies know what to look for and who to contact to have any incorrect listings removed from your report. The specific fees will differ between credit repair agencies, but you are likely to pay between $500 and $1,500 dollars in total to have a listing removed from your file. You normally pay per listing removed.
The process may be different between different services, but it will usually include:
There are a few credit repair agencies that offer their services to Australian consumers. However, in order to determine whether or not an agency is reputable, there are a few important factors you need to consider:
You can watch the video below with Merrilyn Mansfield, financial advocate from Princeville Credit Advocates, to find out more about the credit repair process.
If you find incorrect listings on your credit report, you can try to fix them yourself for free. You can contact the credit reporting bureau that issued your report (such as Equifax or Experian) and ask them to remove the listing directly. If they refuse, you can contact Ombudsman external dispute resolution service to help resolve your case.
If you have valid negative listings such as bankruptcy or defaults, these can last on your report for two to seven years depending on the exact listing. However, you can still improve your score by adopting some positive money habits:
The value of credit repair will depend on your situation. If you've found an incorrect listing that could remain on your report for a few years, it may be worth paying a credit repair service to have it removed. If the listing is valid, even a professional can't remove it from your report. In this case, it wouldn't be worth seeking the help of a credit repair service.
Credit repair can be a great way to improve your credit score and get your finances back on track. If you decide to get help from a credit repair agency, make sure to compare your options and weigh up the costs with the benefits before you commit.
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My credit score had dropped to 477. I have nothing on my credit report. The only thing is I applied through a mortgage broker for a home loan. Now my credit score has dropped by 177 ! I dont understand this ? Thanks
Hey Jenny,
Thanks for reaching out to Finder.
I’m sorry to hear about your credit score situation.
Your credit report should have several details regarding your credit activities. Our guide to comprehensive credit reporting explains that.
You may try to order your free credit report again to review if this is still the case and if it is then it would be best to seek professional or legal opinion on how to go about it.
I hope this helps.
Best,
Maria
Hi Kevin,
Thanks for your comment.
Credit scores can be negatively impacted by multiple enquiries from potential financiers. Any credit enquiries will be listed and held on your file for 5 years and payment history information will be held for 2 years. If you’re interested, please read more about credit enquiries. On the same page, you’ll read as well how to remove credit enquiries from your credit file.
Hope this helps.
Regards,
Jhezelyn
Hi,
I have a credit default on my account from 2014 which is stopping me from getting credit. It was a small amount-think $300 or less and the debt has been paid and the account closed years ago. I earn approximately $100,000 and have some other debts I would like to balance transfer to a 0% card to pay off quicker but my credit rating is buggered. I want to buy a house in the coming 12 months and the black mark won’t expire until 2019. Is it worth paying the approx $2,000 I have been quoted to have the black mark removed? I know it is not a mistake, I missed the payment. Is there another way for the credit repair company to fix my credit or is it a waste of time?
Hi Meg!
We know dealing with previous bad credit can really be stressful. :(
Most credit repairs may not be able to remove a valid negative listing as what’s been outlined in this article. We recommend that you take a thorough background check of the agency you will passing on this task. As for applying a loan, this is where this might be a worthy shot only if you are successful in taking it off from your credit and as a result getting a cheaper repayment. Take note that your options could also be just wait until 2019, get a loan with potential higher rates but have it refinanced in the future, or get a guarantor of that sort.
We recommend you talk to a credit expert or a mortgage specialist to have a personalized review of your situation.
Hope this helps.
Cheers,
Jonathan
I went bankrupt and 3 years later was discharged. Can I remove this from my file?
Hi LizzieO,
Thanks for your question.
Your bankruptcy being removed from your credit file will depend on the following circumstances:
1. Debtors petition bankrupts – if you became bankrupt by presenting your own petition, you’ll be due for discharge three years and one day after filing your petition with the AFSA.
2. Sequestration order bankrupts – if you were made bankrupt by an order of the court, you are due for discharge three years and one day after your complete statement of affairs was accepted by the AFSA.
3. Exceptions for all bankrupts – in some cases, bankruptcy can be extended to five or eight years if your trustee lodges an objection to your discharge.
Please read our bankruptcy guide to learn more how bankruptcy works.
Cheers,
May
Hi
I already got one year subscription from veda and got regular updates. But in 2014 i applied for a car loan and got declined. The reason they gave me was from veda.
I called veda and asked the reason , they told me that your credit history is absolutely ok and gave me there business number to give them to the lender and asked them to call on that number because only they are allowed to call that number. But still it didn’t went through. Again after few calls to veda they told me that my credit file is absolutely fine but the problem is that few of my details matches to another person and that’s where the problem is coming. But veda said they can’t take that file away but again gave me the same explanation that tell your lender to call us and we will tell them that it’s not your credit file(default one)
It was so frustrating and I couldn’t got my loan approved. So I decided to withdraw.
I have no credit defaults at all.
All my bills and credit card repayments are on time. I don’t owe a single dollar to any bank or to any lender.
Please help me with this as it’s really frustrating.
Hi Gaurav,
Thanks for your comment.
Just to confirm that finder.com.au – a financial comparison website and general information service designed to help consumers make better decisions. We do not represent any lender/company we feature on our pages.
Since the lender will surely conduct a credit check on your file, before you submit a final application for the loan, best to contact the lender first and discuss your chances of approval with them and let them know about what Veda has advised (since Veda said they will explain it to the lender once the lender will call them). I think that’s the best option for you at the moment given that Veda cannot rectify what’s in your file due to complications mentioned with someone else’s information.
Hope this helps.
Cheers,
May