Can credit repair companies really help?

By Vanessa Tripodi

No one wants to find out that they have bad credit. However, one in five Australians is faced with this issue every day when they apply for a new credit card, try to secure a new home loan, or face a higher interest rate on a personal loan. But what do you do if it's too late for you to simply pay your bills on time and cut back the number of credit cards you have? There are plenty of credit repair companies out there willing to help get you back in the black.

There are at least three ways you can end up with bad credit in need of repair.

• First, you have missed bill payments, have significant debt and a high number of credit cards, all of which are approaching their limits.
• The second way is through identity theft -- a fraudster has stolen your credit card details or even applied for a pre-approved credit card in your name and has accumulated a lot of debt. Their bad behaviour becomes your bad credit rating!
• The third way is a false credit report. This can occur if your bill payments or credit history are not accurate and up to date --for example, a bill you have paid shows up as long overdue, making your credit look bad.

Credit repair agencies in Australia are set up to help you ensure that your credit report is accurate and to resolve any issues that are giving you a bad credit rating. Therefore, credit repair companies can help you in the second or third instance, but there is little you can do if your bad credit is of your own making. In this case, the best thing to do is spend wisely and try to rebuild a positive credit report for the future.

As with anything to do with your money and personal details, it is important to be able to tell the difference between a legitimate and illegitimate credit repair agency. Between 20 and 40 percent of all Australians have an error on their credit report, and repairing the damage from these sorts of bad credit instances is the domain of legitimate companies.

It is also important to remember that repairing bad credit takes tact and patience, which is another reason to employ the help of a professional credit repair company that has the time and the emotional distance to achieve the desired outcome. A legitimate credit repair agency should also be willing to offer you a free consultation and advice about the best way to repair your bad credit, before you have to provide any payment.

While credit repair companies are not a "quick fix" solution for all Australians with bad credit, if you need professional help to maintain and verify the accuracy of your credit report, credit repair companies are a sound investment.

Article by Vanessa Tripodi

Published: July 27, 2009