Credit repair is the act of restoring or correcting a poor credit score. It can also involve paying a company to contact the credit bureau and point out anything on your report that is incorrect or untrue, then asking for it to be removed. However, there is a cost to this and doing it yourself can help save you money.

If you’ve had a history of being late with bill payments, credit card payments, or loan payments, then you may have a bad credit rating. A credit repair can help to improve your score and make you more attractive to lenders when you need to borrow money.
 
If your identity was stolen and other people started taking out loans in your name, you may suffer from a poor credit rating. If you’ve been declined for a loan or credit card application, checking your credit report should be your priority. Many Australians have reported problems with their credit reports. You can dispute some information on your report and help clear up any errors from financial lenders.
 
Other reasons for a bad credit rating can include overdue payments on a loan. Having all your payments up to date is an excellent way to get started when you’re looking to fix your credit score. A credit report is often considered an assessment of your ability to pay out a loan, and having overdue payments can negatively affect your chances of getting a loan with favourable terms. If you have a default recorded against your name, these defaults remain on your credit report for up to 5 years. A credit default removal may occur but only in very limited circumstances. However, it is better to start improving your credit history and look to have the default paid off as soon as possible. Once paid off, the status of the default is updated to ‘paid’ which can be looked upon more favourably by lenders but it will remain as part of your credit history. After five years, the default will automatically be removed from your report. 

A credit repair is when you make changes to your finances with the aim of improving your credit rating. When you’re considering applying for a loan, it is a good idea to check your current credit rating by ordering a credit report from Equifax. This report will tell you your current score or score rating, and then you can determine if you need to improve it. If you’re planning to apply for a large loan, it is highly advisable to order a credit report and see where you stand. If your credit rating is not as high as you prefer, you’ll need to consider making some changes to your financial situation to improve it.
 

How do I know if I need credit repair?

You can order your credit report from Equifax, which will include your current credit score depending on your subscription level (or your credit rating if it is a free credit report). In your credit report, you’ll find a score or rating from 0 to 1200 (other credit reporting agencies may use a different scale). The higher this number, the better your credit score. Lenders will check your credit score as a way of deciding if you are a suitable candidate for a loan or line of credit. If you’ve been refused a loan, your credit score was likely too low for the lender to approve you.
 
Ideally, it is best to check your credit report before applying for a loan. If you are refused a loan, this will be noted on your credit report as a ‘credit enquiry’ and may affect your score negatively. When you check your credit report before applying, you’ll have a reasonably good idea if you’ll be approved or not. For example, if your score is between 735 and 1200, this is considered a very good to an excellent score. A good credit score is from 661 to 734, an average score is 460 to 660 and a below-average is 0 to 459. All lenders will also have their specific guides and lending criteria as to who they approve, but generally anything that’s above a very good score has a reasonable chance of securing a loan with good terms.
 
Many factors contribute to your credit score. 

These can include whether you have any default judgments and outstanding payments, have been denied loans, or have unpaid debts. In some instances, these can be caused by ID theft. If there are any discrepancies or incorrect data on your credit report, you should contact the reporting agency, and they can provide further details. If you are sure you’re a victim of identity theft (e.g., you believe loans were taken out in your name that you were not aware), it may be easier to to contact the lender immediately and confirm what is needed to report the fraud or request a corrections request via our website and we will reach out to the lenders to confirm if this fraudulent, request Equifax to place a ban on your credit file, report to the police as needed, and take steps to begin a credit repair.

How long does credit repair take?

If your credit report has incorrect information, you can request a correction from Equifax or another credit reporting agency. Once Equifax receives a correction request, our Customer Resolutions team will investigate within 30 days and provide a response in writing. Equifax may notify you  if there is a delay and seek to extend this time if we have not concluded our investigation. If you have a bad credit score due to defaults on existing loans or credit cards, these can take longer and may require some work on your behalf. If a stolen identity has resulted in a low credit score, it will take additional time to conduct a credit clean-up.
 
If you need to complete a credit repair, it is best to get started by finalising any outstanding loans and closing any unnecessary credit cards. Ensure all of your current debt is up to date with payments and make changes so you can consistently pay these out on time. If you have a credit card, be sure that it stays under its current limit and keep making regular payments. f you have a credit card on a high limit, you can request your lender to reduce this to a more manageable level.
 
You can check your credit history for free once every three months, within 90 days of being refused a loan, or if you’ve been notified that your credit report has been corrected based on your request. If you’re going through a credit repair, you can also subscribe to our paid subscription service and be alerted of any changes to your credit report. Depending on the subscription you choose, it may also offer you Norton™ dark web and social media monitoring, as well as Identity Guard^ insurance against privacy breach resulting in identity theft.

^Terms, conditions, exclusions and limitations apply. Click here to view the Identity Guard Insurance Policy Information Booklet.

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.