ASIC and COSL are waging a war on credit repair agencies, claiming that many are not acting with integrity towards thw consumer, and essentially putting out a “consumer beware” message with respect to professional credit repair services.
However in reality much of what is on offer is common sense. Do not be overly trusting and make sure that there is value in what you are paying for.
So what are some of the most common mistakes consumers make with credit repair?
Not performing some basic credit report checks first
Why would you trust the first credit repair agency that you find? We would recommend that you contact several agencies and compare their offers. Make sure that they have a good reputation online. If someone has already been burned with a particular service provider, why would you want to chance them yourself. Research first and this will prevent obvious mistakes.
Similarly, have a clear understanding of your own credit report issues. If you identify a mistake, there is no need to pay others to clean up your report. All that is needed is for you to contact the credit provider and offer them proof of the mistake. You may need to chase them up quite a few times – however this will cost you nothing at all, only time.
Paying upfront
One of the most obvious mistakes that you could make is to agree to pay a credit repair agency upfront. Some agencies will expect a payment of thousands of dollars before they will take your business on. There are people however, who are happy to work on the basis of no win no fee. So why would anyone agree to pay a company thousands of dollars before they see any results? Doing so is bound to end badly.
Believing in fairytales
We have all been guilty of this at one time or another. Simply take this pill or wear this belt and you will lose all your excess kilos! How about the one that suggests that drinking Coca Cola is a guarantee of a great life. One should never confuse marketing with reality. If you have in fact been bankrupt or in a Part 9 Debt Agreement, do not expect to pay a fee and come out blemish free.
Credit repair is not a miracle. All that happens is that when a creditor places a default on your credit report in error or without following the required legal procedure, those defaults may be removed. Many defaults, arrears and judgements can not be erased just because you have paid someone handsomely to do so. Understanding what is realistically possible will help you from being taken advantage of. You owe it to yourself to do the groundwork first.