credit repair

Complete guide to credit repair

Practical tips to help you improve your credit score and repair your financial history.

A 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, 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.

You can 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.

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Answer these four simple questions to find out.

1. Have you had finance rejected recently?
2. Were you seeking finance for a property or home?
3. Do you have savings/deposit?
4. Is there a possibility you have a black mark on your credit file?

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How do I know if I need credit repair?

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 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 report and you will receive it within 10 business days. You can also pay a fee to receive it online within 24 hours.

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What is credit repair?

Credit repair is the process of cleaning up incorrect 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.

Using a credit repair service

Credit repair agencies 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.

If you use a credit repair service, you may need to pay a consultation fee and will be charged a fee for each listing that is removed. Make sure to get a quote from your credit repair agency before you sign up for the service.

To get started, here are the steps you can follow to improve your credit with an agency:

  1. Read your credit report. Review your report and see if there are any incorrect listings that can be removed. You can order a copy of your credit report and score for free through Finder.
  2. Apply for credit repair. Once you've compared some credit repair companies and chosen the right one for you, you can contact them to apply for credit repair. You'll need to fill out a form detailing any listings or faults that you want them to examine and potentially resolve.
  3. Pay a fee. Depending on the company, you may have to pay a fee to receive your consultation. Once they've reviewed your report, they may be able to give you a quote detailing the fees you'll have to pay. Depend on the service required, this could be hundreds or thousands of dollars.
  4. Acceptance. If the company decides it can help you, it will accept your application and start looking into your credit history.
  5. Contacting creditors. The repair company will then start contacting your creditors to determine which defaults can be removed from your file. You generally will pay a success fee for each default you want to be removed. Some credit repair agencies may also help negotiate a debt repayment plan with creditors if you have an amount owing.
  6. Listings removed. If the credit repair company is successful in its negotiations, incorrect listings will be removed from your file.

You can watch the video below with Merrilyn Mansfield, financial advocate from Princeville Credit Advocates, to find out more about the credit repair process.

DIY credit repair

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:

  • Make timely repayments. Late payments and defaults can hurt your credit score, so it's important to make the minimum payments on time each statement period. If you're using a credit card, it's ideal to pay your balance as much as you can or in full each month to reduce your interest payments.
  • Consolidate your debts. If your credit score is low because you're struggling to pay off multiple card or loan debts because of interest costs, you can consolidate your debts into one account with a 0% balance transfer offer. These cards don't charge any interest on the transferred amount for a promotional period (which can sometimes be as long as 26 months). You can start comparing balance transfer cards and understand how they work on Finder.
  • Lower your credit limit. Your credit score is also based on how much credit you have. If you have a large credit limit that you aren't using, you could consider lowering it. Not only will this curb any temptation to overspend, but it could have a positive impact on your credit score.

These are just some of the tips you can use yourself to improve your credit history, but you can check out our complete guide to DIY credit repair for more.

How to compare credit repair agencies

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:

  • Licences. Check if the credit repair service has an ABN, which you should be able to find at the bottom of the company's website.
  • Transparency. How upfront is each company about the fees you will have to pay? Look for a company that provides the full terms and conditions before you have to hand over any money.
  • Reputation. Is the company a trusted name in the industry or does it have a reputation for being a bit dodgy? Look for a company that is respected and has an impeccable service record.
  • Customer reviews. Look at online review sites to get an idea of the experiences other people have had with agencies. This gives you a good idea of how each company treats its customers.
  • Overall cost. Look for the best combination of an affordable price and quality service.

You can see our complete guide to Australian credit repair companies for more information.

The pros and cons of credit repair

Pros

  • Improve your credit score. Removing negative listings from your report and adopting positive repayment habits will increase your credit score.
  • Increase chances of credit approval. Lenders use your credit report and score to assess your risk as a borrower. If you remove any incorrect black marks from your credit report and increase your credit score, your chances of approval should also improve when you're applying for a credit card or loan in the future.

Cons

  • Fees and charges. If you use a credit repair agency, the credit repair process can be expensive. However, the benefits may outweigh the costs if you get your finances back in order.
  • No guarantees. There are no guarantees the credit repair company will be able to remove your negative listings. If the black marks are legitimate, you'll have to wait until the set period (such as five years) until they're removed from your report.

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.

Frequently asked questions

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17 Responses

  1. Default Gravatar
    JenniferOctober 2, 2017

    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

    • Default Gravatar
      MariaOctober 3, 2017

      Hey Jenny,

      I’m sorry to hear about your credit score situation.

      Your credit report should have several details regarding your credit activities. This page on What Goes on Your Personal Credit Report 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

  2. finder Customer Care
    JhezelynAugust 19, 2017Staff

    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. Kindly refer to this page for more details about credit enquiries.

    This page might be helpful for you about removing enquiries from your credit file.

    Hope this helps.

    Regards,
    Jhezelyn

  3. Default Gravatar
    MegJune 24, 2017

    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?

    • Default Gravatar
      JonathanJune 24, 2017

      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

  4. Default Gravatar
    LizzieOJanuary 10, 2017

    I went bankrupt and 3 years later was discharged. Can I remove this from my file?

    • finder Customer Care
      MayJanuary 10, 2017Staff

      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 refer to this page if you want to know more about bankruptcy.

      Cheers,
      May

  5. Default Gravatar
    GauravJanuary 2, 2017

    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.

    • finder Customer Care
      MayJanuary 2, 2017Staff

      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

  6. Default Gravatar
    e81November 18, 2016

    What does overdue mean on credit report? I have one overdue but when I look at it ; it says paid?
    Also I asked if my default could be removed by default company they said if I pay 100 they will take default off. Should I trust this?

    • finder Customer Care
      LouNovember 18, 2016Staff

      Hi e81,

      Thanks for your question.

      Please note that generally, you can’t remove a legitimate enquiry from your credit file. In most cases, you will simply have to wait until five years has passed and they are taken off from your history.

      Once you pay your lender what’s due, the same default will still be mentioned on your credit file and stays on file for five years. If your default company said they can remove it, I’m not sure how they will do it so I can’t give advice on whether you should or should not trust them.

      Cheers,
      Anndy

  7. Default Gravatar
    NidaMay 5, 2016

    Did not receive a lay bill from my phone company and got defaulted on by credit history. How can I remove this?

    • finder Customer Care
      MayMay 5, 2016Staff

      Hi Nida,

      Thanks for you inquiry.

      Credit enquiries, overdue accounts as clearouts and defaults and also court judgements will be held on your credit file for five years. Unless there is an error in your record/report, a credit repair can help remove default listings from your credit file. But please keep in mind though that credit repair agencies will investigate a listing but they can’t guarantee the listing will be removed.

      You might like to find more invaluable information on our guide here about credit file.

      I hope this is helpful.

      Cheers,
      May

  8. Default Gravatar
    AdelaideJuly 2, 2015

    If a paid default for a credit card has been listed incorrectly as a personal loan can anything be done about this?

    • finder Customer Care
      ElizabethJuly 3, 2015Staff

      Hi Adelaide girl,

      Thanks for your question.

      If a default has been incorrectly listed on your file then you might want to get in contact with the lender who is responsible for placing the listing on there in order to rectify it. If you’re interested in credit repair, you have the option of getting in touch with one of the providers listed on the side of this page.

      I hope this has helped.

      Thanks,

      Elizabeth

  9. Default Gravatar
    oceangirlJanuary 27, 2015

    If a debt has been paid over 3 years ago, why is this not been lifted from the black list?

    • finder Customer Care
      ShirleyJanuary 27, 2015Staff

      Hi Oceangirl,

      Thanks for your question.

      Overdue accounts listed as a payment default or clearout generally stay on your credit history for five years.

      Overdue accounts listed as a serious credit infringement tend to stay on your credit history for seven years.

      Cheers,
      Shirley

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