Are credit repair companies effective? Here’s what you need to know about credible credit repair
Chances are you’re at your wits’ end and don’t know what to do. It feels unfair that your old defaults are holding you back.
Credit repair is possible (well, sometimes). But beware of the credit repair industry. Unfortunately businesses always arise to prey on human misery and credit repair agencies are one such genre.
Their services to offer to wipe defaults from your record look impressive, but not everyone who uses them is happy. “Thieves liars fraudsters,” wrote one unhappy client in an online review, who paid $1100, then found that the company couldn’t do what it promised. “Once they get the money they don’t contact you anymore.” “Paid $2200 with no luck from these people,” another wrote. (To be fair, the online review also featured some positive comments.)
Of course there are also happy customers, who don’t mind spending a few thousand if they can clear black marks from their credit records.
But beware: Credit repair companies come and go in New Zealand. MyCRA and WeFixCredit were companies that set up in New Zealand to do credit repair, but have since closed up shop.
New Zealand has no specific rules for credit repair agencies. However, under the Fair Trading Act, credit repair agencies must be truthful and not misleading about what they can and can’t do for their customers, the Ministry of Business Information and Employment says. They are also prohibited from misrepresenting the costs of their services.
DIY credit repair
“The repair agencies can’t do anything more than an individual can,” says Credit Simple CEO David Scognamiglio. “They make promises that they really can’t keep.” That’s because there really has to be something wrong for a default to be removed. It’s not magic.
The Credit Reporting Privacy Code says that if the entries on your file can be proven to be wrong they must be removed. “Everyone can request a copy of their credit report and dispute information directly with the credit bureaus,” says David.
How to repair your credit
Your three amigos (friends) when it comes to credit repair are:
Pay all your bills on time. Thanks to positive credit reporting in New Zealand it’s actually relatively fast to improve your credit. Your credit score will start to rise after three months of diligent payments.
Clear your debts. Sometimes paying off the debts means the default can be removed. It may remain on your credit file, but your positive action of paying it back will be reflected in your score.
Fight if it’s unfair. Black marks on your credit record can knock hundreds of points from your credit score. If you’re sure there is an error involved the agencies are duty bound to correct those errors. (Remember you can dispute something directly from your Credit Simple dashboard.)
How to clean up your credit file
Credit reporting agencies are required to take reasonable steps to ensure the accuracy of the credit information they hold about Kiwis. If you suspect errors in your credit record apply for your credit file from all three credit reporting agencies: Dun & Bradstreet, Equifax (formerly Veda) and Centrix. (Remember, you can get a free full credit report from any the credit reporting agencies, and you can check your credit score with Credit Simple as often as you want and it’s always free. Also Dun & Bradstreet, our parent company, doesn’t charge for credit reports, and also doesn’t limit how many you can get each year.)
First make your case to the original credit provider or debt collection agency that loaded the default. If you aren’t happy with their response move onto the credit reporting agency. Complain in writing. Make sure you include all relevant emails, letters, statements and any other evidence you have.
If the information on your file isn’t yours and you believe it’s a case of identity theft you need to report it to the police and to each of the credit providers. Be persistent with this.
If all else fails
If you’re not happy with the dispute processes you can complain to the Privacy Commissioner, who has statutory powers to investigate the matter and can if need be escalate the case to the Human Rights Review Tribunal.
Francis is Credit Simple's resident content writer and social media guru. He's passionate about saving money, so we pay him 5 cents to go out and fetch the team coffees every morning. Thanks Frankie.All stories by: Francis Church