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How Does Credit Repair Work?
You may be wondering, “how does credit repair work?” While there are many ways to deliver effective credit repair, success is often achieved by identifying inconsistencies in the process undertaken by credit providers prior to entering a negative credit listing on a credit report. There is significant consumer protection in place via legislation that requires a credit provider to follow a strict process prior to entering a negative credit listing such as a payment default. A part of this requirement is to provide adequate written notice to the customer prior to entering a negative credit listing.
Credit Repair: Negative Listing Examples
To understand the question “how does credit repair work”, we have listed some examples of how Clean Credit may be able to help you. There are many procedures a credit provider must undertake for a negative credit listing to be made on the customer’s credit report:
- A final bill must be sent to customer
- No less than 30 days from the date of this final bill the credit provider may issue a formal demand letter or section 80 notice
- No less than 30 days from the date of formal demand letter or section 80 notice can a credit provider list a negative credit listing on the customer’s credit report
This means an account must be at less 60 days in arrears before a negative credit listing can be made by a credit provider.
In many cases credit providers will not follow the required process and will list a negative credit item inappropriately. It is not uncommon for a demand letter to state the correct notice period, being 30 days, however the credit provider will often list the negative item before this notice period has lapsed.
Credit providers can often comply with a part of the process but miss a vital aspect. The demand letter or section 80 notice must also include certain information such as the amount owed, how this amount can be paid, the time given to pay and their intention of listing a payment default if the demand is not complied with. There are many examples of demand letters that do not contain the required information.
The negative credit listing itself must be recorded correctly. Items such the amount owed, the date entered, the status and nature of the listings must be accurate. It’s very common for credit providers to enter this data incorrectly to the detriment of the consumer. Another example is accounts that were in dispute at the time of listing. Should a consumer contact a credit provider and dispute a bill, the credit provider should not enter a negative credit listing unless the dispute has been resolved prior. It is common for credit providers to list a payment default when the account is being disputed.
Should a consumer contact a credit provider and inform them they are having difficultly making payments, the credit provider is obliged to offer financial relief by way of freezing the account for a period of time, altering the payments or adjusting the term. If a credit provider does not offer financial relief they are in breach of legislation. Therefore a payment default or other negative listing should not be entered on a credit file.
In some cases extreme hardship can also be used as an effective negotiation platform to remove a negative credit listing. These cases are treated on a case by case basis, however situations such as serious illness or family tragedy can lead to having negative credit listings removed from a credit file.
These examples only scratch the surface of the question “how does credit repair work”. Clean Credit specialises in understanding the most effective methods to administer effective credit repair on behalf of its clients. We have helped many people repair their credit and increase their credit scores, allowing them to become financially independent once again.