All About Credit Repair Agencies
You might have heard about services to repair your credit. But are they worth the cost?
I’m a big fan of credit repair agencies. For the right person in the right circumstances, they can be a financial life-saver. But for your financial safety, it’s important to understand when you may need to call on one, and how to find a reputable agency.
Why would you want to use a credit repair agency?
Your ability to borrow and the rate you borrow at are determined by your credit score.
It’s imperative to find out your credit score. I always suggest people get hold of their credit score at least once a year to see what’s on their file. You can do that, and it’s completely free. You can look it up through Equifax.
You may look at your credit report, or you may be rejected for credit and realise that you’ve got a bad credit score.
Your poor score may be because you’ve had phone payments, car payments, multiple credit card payments, or a store card payment that you missed. Maybe your bill was late. Perhaps you moved house, and somebody was chasing you for payment at the wrong address. You might not even know you have outstanding debts. Life happens.
Sometimes these lending agencies throw everything up against that report, and you’ll see things appearing once or twice that should only be there once. Something that should only be one adverse credit event may come up as two or three events. Once you’re aware that these double-ups have happened, you can challenge them.
But repair agencies are experts at cleaning up credit reports. The important thing is, you want to go to someone reputable. There are many charlatans in the industry, so you need to do your research.
Credit repair agencies play a significant function in society, but you have to be very careful. You can find a lot out there that are just scamming consumers who are in financial trouble.
How do you find a reputable credit repair agency?
There are a few steps to ensure you aren’t giving money to agencies for no returns.
Licensing
Find out if they’re licensed. Check out the agency’s ABN. Their ABN should be listed on their website. Check it on the registry. Sometimes you’ll find that an ABN has nothing to do with the agency you’re looking at. That’s a huge red flag.
Transparency
How upfront is the company with you when talking about fees? Do they instantly want money? A good agency will have its first meeting for free.
They will talk to you, engage with you, and say, hey, is this something you really need? A good agency will tell you if you don’t need them.
Look at their fees and the way they charge. They should be totally upfront and transparent.
Reputation
We live in a day of social media and Google reviews. You should be able to find a lot of information on the agency that you’re looking at.
Even a small amount of research will help you find the company’s reputation.
Cost
Is it worth the money for you? These agencies aren’t cheap. Yes, they can be very worthwhile if you can benefit from the service, but you may find that the cost isn’t worth it in your circumstance.
What results should you expect?
If you engage a reputable and effective credit repair agency, you should see some results.
Even if only some of your harmful listings are removed, it will massively improve your credit score. The rates that you pay to borrow money based on that improved credit score should go down.
When considering a credit repair agency, remember…
- Check your credit score every year — you can find your credit score for free through Equifax.
- Accessing your credit file can help you uncover missed bills — overdue debts can have a massive impact on your credit score, so pay them down if you find them.
- Check your file for double-ups — lenders may accidentally record adverse events more than once, which can reduce your score unnecessarily.
- Be careful when finding a credit repair agency — there are many charlatans in this industry, and you need to do your research to make sure that they are legitimate and worth the fees.
- Adverse events won’t stick around forever — you may be better off waiting for adverse credit events to drop out of your file.
For more advice on repairing and improving your credit score, contact my team today.
This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.
