I don’t want to blow my own trumpet, but...

Take Sam for example, who was referred to us over a month ago with four overdue accounts on his credit file. They had all been sold to debt collectors. They were a personal loan with Bankwest (sold to Pioneer) for $39,000; a NAB credit card (sold to Credit Corp) for $4,700; another personal loan with Great Western Asset Management (sold to Panthera) for $7,865 and finally a CBA credit card (sold to Credit Corp) for $36,000.

The previous credit repair company had charged a large sum and had achieved one removal out of the four, which was now back on his credit file because the outstanding debt had not been resolved and so the company re-listed him. So, basically they had done nothing except take Sam’s money. He was in exactly the same position as when he approached that company.

The client emailed me the paperwork from the credit repair company showing what had transpired on default removals which appeared to be no more than a cut and paste of the outcome of a Veda complaint which had been popped into a ‘listings cannot be removed’ letter to the client. Yet, from the information provided by the client, I immediately saw how a case could be successfully won, based on breaches of the legislation.

So this is how the removals transpired:

On 10 September 2015 the CBA/ Credit Corp default listing was removed because of an error. The debt was reduced from $35,860 to $28,700, to be paid over time.

Four days later, the NAB/ Credit Corp default listing was removed because of an error and the debt was reduced from $4,700 to $3,800 (paid on removal).

Two days later, the GWAM/Panthera default listing was removed because of an error and the debt of $7,865.68 was paid on removal (no reduction).

And on 30 September, the Bankwest/Pioneer default listing was removed because of an error and the debt was reduced from $39,000 to $23,000, payable over time.

We received a Veda and a Dun and Bradstreet report confirming all listings were erased (as the client had told us that some listings were on both reports). The broker, who had been kept in the loop throughout the process was over the moon, as was the client.

I’m blowing this trumpet not to pat myself and my team on the back but to give a shout out to brokers who refer clients to credit repair companies that are not doing their job. It is unfair on the client to expose them to low-quality operators who simply take their money and no nothing.

Other poor practices we see are where a credit repair company sells the client a pack of template letters for over $1,000 and tells them to do the work themselves. The client sends the letters to the credit provider, as instructed, and the credit provider says “No, there is no error”. We won't remove the listing/s. The client tries to contact the credit repair company for assistance, but they won’t return their calls. Bad news.

Another is credit repair companies putting clients into Part 9 debt agreements (effectively, bankruptcy) when this is not the best solution for the client. Or into high interest loans when they haven’t done a proper investigation of the listings on the credit file. They tell the client that there was no error (how could they know?) and say the only options open to the client are a Part 9, or alternatively, a high-interest loan. A Part 9 stays on the National Personal Insolvency Index for life. This is credit repair as click bait at its worst.

Other credit repair companies use a ‘no win, no fee’ model to cherry pick what they regard as easy listings to erase and leave the difficult ones (those that affect the credit score most dramatically) on the credit file, which means the client still potentially can’t get a low-interest loan. Of course, they tell the client that their investigation has proved the hard listings were correct and couldn’t be removed. This can’t be right as we eventually get to work on these cases and often get the hard listings removed through a proper investigation and application of the legislation.

Then there are the companies that say they can get a listing erased in two days, or five days, or two weeks, when the legislation allows a credit provider 30 to 45 days to respond to a complaint. The client jumps in and buys that service, and their dreams are shattered shortly afterwards when they have already put a deposit on a house based on these false promises (sometimes the client loses the deposit).

Hint: when sourcing a credit repair company, Google is not your client’s best friend. As a general rule, the companies that advertise on Google tend to spend a small fortune on AdWords and have fees that reflect this, often up to 50 per cent higher than other companies charge. I met someone at a PD day recently who spent $2,000 with a credit repair company who advertises online extensively. Our fees in comparison: $1,300, most of which is refundable if we are unsuccessful. At least part of the difference: costly advertising.

My advice: develop a relationship with a trusted credit repair advocate and refer to them (try them out first if you are not convinced), rather than throwing your client to the proverbial credit repair wolves. Your clients will thank you and so will their hip pocket.

Dr Merrilyn Mansfield, consumer advocate, Princeville Credit Advocates

Dr Merrilyn Mansfield is a consumer advocate with Princeville Credit Advocates, and a theologian and historian. She is currently studying law. Dr Mansfield is fascinated with the credit reporting laws in Australia and the UK and works in both countries to implement these laws for the benefit of credit-impaired consumers and companies. Please call the Princeville team on 1300 936 363 or inquire at www.wemend.com.au for confidential assistance.