I recently read an article about how the Australian Retail Credit Association (ARCA) had launched a fact sheet on how people could repair their own credit files if they felt an incorrect or contestable listing has been made against them. As the director of a credit repair company, the only thought I had while reading this information was “if only it was that simple”.
While I applaud the ARCA for making this information available, I suggest it’s a very simplified view of the reality of repairing a credit file. I can assure you that the reality of this process for many can prove complicated, exhaustive and often does not end with a positive outcome.
The guide suggests that if a consumer raises a complaint with a credit provider or credit reporting agency, they will willingly conduct a detailed investigation and if appropriate volunteer to remove the offending listing with no resistance. While this approach may yield results in some situations, I can assure you for the most part it’s just not that easy.
The article went on to warn people about credit repair companies and spoke of large fees and empty promises. Over the past few years the credit repair industry has been under the spotlight and has been highly criticized by many including industry bodies such as the ACCC and the ASIC. Some have even gone as far as to say there is no place for the industry at all. It’s interesting many of these comments are coming from credit providers such as the banks and the credit reporting agencies such as Veda Advantage. Given credit repair companies cause these organisations work by demanding their clients interests are protected one wonders what their motivation really is. Do they want to protect the public or themselves?
I’m the first to admit that some of this criticism is warranted as unfortunately the industry does have its share of questionable practitioners and there is no doubt that consumers have been mislead and overcharged at the hands of unscrupulous operators. However it’s important to keep this in perspective as the same can be said for most industries; we only need to look at the legal or accountancy profession to see that.
Let’s look at the reality of credit repair…
To have a default removed from a credit file, one must first know on what basis to challenge the listing and to do this one must understand the laws around credit reporting. While few consumers understand these laws it would be fair to assume that credit providers would. Unfortunately this is not always the case. It is not uncommon for a credit provider to “dig in” and defend their position, even if it’s wrong. We have even witnessed credit reporting agencies taking this attitude. One wonders where their allegiances lie, is it with their subscribers who pay them or the public?
Credit providers can often become defensive when questioned about a default they have listed, I’m afraid that the notion that all credit providers will willingly investigate and happily correct a wrong doing is a fantasy. There are many examples of credit providers becoming openly hostile when challenged and this can often be an impossible situation for a consumer to deal with. With respect, I wonder if the author of the information published by the ARCA has ever tried to have a default removed from their credit file, I’m guessing not. I find that most people suggesting the process is as simple as contacting the creditor or credit reporting agency have themselves had little direct experience and are quoting principle rather than fact.
While I am an advocate of industry Ombudsman and endorse their efforts, the truth is their ability to motivate an unwilling credit provider to do the right thing and remove an incorrect default listing can be limited at best. Often significant pressure needs to be applied to the credit provider that listed that default and the laws that they have broken clearly pointed out. The reality is this can be beyond many consumers and often they will give up from frustration and exhaustion.
Yes, there are credit repair companies that are misleading people and making promises they are unable to deliver, however there are also companies that behave in an ethical fashion and work tirelessly to deliver their clients a positive outcome which is often after people have tried themselves and failed.
While regulation within the credit repair industry is inevitable and I for one would welcome it, there must be care given to how it is introduced as it needs to protect the companies operating in the right way while either forcing change or exit of the ones that are not.
When offered correctly credit repair offers many consumers a very valuable service and can quite literary change lives. It would be nice if this fact could be acknowledged by people from outside the industry rather than always condemning the whole sector based on the actions of a few.
John Dickinson
Clean Credit Pty Ltd