The Misunderstood World of Credit Repair

The Misunderstood World of Credit Repair

How is it that a small blemish on an otherwise perfect credit report can have the same potential penalty as a serious default to a major bank? 

How is it that a small blemish on an otherwise perfect credit report can have the same potential penalty as a serious default to a major bank?  The answer is in the way most credit providers assess risk.  You see the days of someone reviewing an application and reaching an informed and logical decision are long gone.  Most of this process is now fully automated; some would say the logic has been removed from the process.

In a world where we have become completely reliant on technology, it’s now the computer that decides to approve or decline an application and one of the first places the computer will look when assessing an application is the credit file.  The computer does not have the ability to separate good from bad, serious from minor or right from wrong, it simply reacts to the existence of a listing regardless of the severity and more often than not a decline is the outcome.

It gets worse, you see the information contained in a credit file is only as accurate as who is entering and updating the content.  Much of this process relies on the listing company manually entering details with a credit reporting agency such a Veda Advantage or Dun & Bradstreet.  If you think this always happens correctly think again.  Let’s say a credit file shows a small amount owing to a phone carrier and the status of the default is noted as unpaid; the client then pays the outstanding amount.  You would assume the listing would be updated to show paid, but let me assure you this doesn’t always happen.  In many cases the consumer then thinks all is forgiven however most credit providers automated assessment systems are triggered to react to the very existence of a negative listing, so don’t think that the fact the item is now paid will make any real difference in the eyes of the lender.

With credit policies of most lenders becoming tighter and tighter, even multiple enquiries on a credit report is enough to trigger a decline to an application.  One of the reasons for this is the potential credit provider reviewing the multiple listings has no way of knowing what enquiries resulted in credit being provided; our credit reporting system does not currently contain this data.  Often the lender will think that the applicant has been declined by the other credit providers who entered the enquiries on the credit report and on that presumption decline the application.

Finally some good news; let’s say the consumer has applied for credit and been refused due to a negative listing on their credit file.  They don’t feel the listing is correct and want to sort it out but what do they do and where do they go?  Most would start by calling the credit provider that made the listing.  This can be a good start however in many cases the consumer will end up talking to a call centre and after being passed from person to person will be told there is nothing they can do.

The truth is there is no documented process to rectify an incorrect listing.  Customers are free to contact the reporting agency, the appropriate ombudsman etc., but this often leads to wasted time and even more frustration.

The great news for the client is when the credit item is removed from their credit file it is completely deleted, like it never existed.  To many people this seems like magic, after all how is it that something that has been causing so much trouble for so long can be gone, just like that!  In reality there’s no magic involved, it’s all about an in-depth knowledge of the relevant laws and a lot of hard work.

There are many situations that can lead to the successful removal of a credit item, here are some common examples:

  • The credit provider did not record the listing correctly or maintain the status of the listing
  • The listing party did not follow the correct procedure prior to making the listing
  • The client was not given adequate notice of the listing
  • The default was listed well after the event
  • The client was not served correctly in the case of a judgment
  • The item was in dispute prior to listing
  • The client was in a payment plan arrangement prior to listing
  • The client had called the credit provider and told them they were having trouble making payments prior to listing

Don’t underestimate the power of effective credit repair.  In many cases restoring someone’s credit rating restores their financial dignity.  It can literally change lives and we are thrilled to be a part of this process!

Unfortunately it’s not a perfect world and the credit reporting industry is no exception.  The most important thing is offering the general public the information, tools and contacts to effectively deal with the situation should things not go to plan.

John Dickinson

Clean Credit

For more information about credit repair call clean credit on 1300 015 210 or email info@cleancredit.com.au

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