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merrilyn mansfield

Why I love doing credit repair

merrilyn mansfield
Merrilyn Mansfield 6 minute read

The other day I was thinking about why I love doing credit repair and got to the nub of it by talking it over with my partner. I love doing credit repair because it helps one consumer or company at a time get back on a good financial track. There is a bank of stories in my mind about lives improved that keeps me loving this job.

One of the earliest stories is about one of my first clients six years ago, who as a refugee did not understand how consumer credit worked in Australia and got a telco default that was stopping him getting a loan to achieve his dream of opening a restaurant in a NSW country town. Today, he has three restaurants in that same country town because he got that wrongly placed telco listing erased, got a loan, and now employs people from his community. It’s a great story.

Or like a recent client who had a child die of cancer, and a wife subsequently die of grief, who had several black marks put on his credit file during this time. With the help of credit repair, he was able to move forward with his financial life, which was some small assistance at a very difficult time. And there are other reasons why I love this job that I want to tell you about now.

1. Credit repair is needed by many Australians

Veda Advantage says there are currently 16.38 million credit active consumers in Australia. This means there are 16.38 million credit files in existence in Australia. Now here is an amazing statistic: on these 16.38 million credit files, there are listed 3.8 million defaults and 477,324 court actions. That’s a lot of ‘black marks’. And there’s more. On commercial (that is, company) credit files in Australia, there are listed 158,025 defaults and 105,000 judgments. The numbers are huge. It is therefore safe to say that at least one in 10 Australians are affected by an adverse listing or black mark on their credit file but the figure is probably closer to one in five.

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So what is the consequence of all these adverse listings? Well, if your client has a black mark on their credit file, this may prevent them from getting finance at all (even for something as small as a mobile phone) or it may mean they have to pay between 2-5 per cent more in interest rates over the life of their loan. On an average property value of $350,000, this would mean paying up to $17,500 more in interest per year.

And because these black marks can stay on a credit file for up to seven years – even if the outstanding debt is paid – there is a huge financial consequence for consumers and companies over a long period of time. Did you know that repayment history information – that is, information showing whether monthly credit contract payments are up to date – will stay on a credit file for two years? And that writs and summons stay on a credit file for four years? Credit enquiries, payment defaults, clearouts and court judgments stay on a credit file for five years. Serious credit infringements stay on a credit file for seven years.

That’s a lot of adverse information held for a long period of time. Particularly given that our historical data indicates that 83 per cent of the adverse listings we work to remove were placed in error in the first place. It is therefore an entirely true statement that credit repair is needed by many Australians. Credit repair companies specialise in removing negative credit listings (defaults and court actions) that are placed on credit files against the credit reporting legislation. It is therefore a good time to build a relationship with a credible and respected credit repair company to assist your clients with their credit repair needs.

2. Credit providers are thankful for credit repair

Yes, credit providers do have a heart – we speak to that beating heart every day. Each week we receive letters from credit providers that thank us for getting the facts straight in relation to removing adverse listings that were placed in error. Because there is a defined process that credit providers must follow prior to placing a listing on a credit file, they are often thankful when we alert them that one of their processes has failed. They are often keen to rectify this situation as quickly as possible because they understand the consequences of having an adverse listing on your credit report – high interest rates or not being able to get finance at all… for years.

Reputable credit repair companies therefore work closely with credit providers and build good relationships with them based on the rules that relate to credit reporting. Credit providers understand that credit repair companies are advocating on behalf of consumers because they have a legitimate right to a correct credit report.

3. Credit repair helps people get low interest finance

This is a big one for me because it is really about the hip pocket.

It does not make a lot of sense to me, but if a consumer or company has a bad credit score they will be offered high-interest finance. This finance comes with a high application fee and a higher possibility that the client will have difficulty servicing the loan. This can lead to a cycle of poverty among consumers and can assist in the downfall of companies, which is never good for the Australian economy.

But if a poor credit score is incorrect, because adverse listings were placed on a credit file against the rules, consumers and companies usually think they have to wear the five to seven years of punishment which can cost them dearly. One of the largest costs to consumers and companies is the high interest rates they will pay to second-tier lenders if they need finance during this period.

Therefore, instead of recommending a high-interest loan to your credit-impaired client, it is far better to refer them to a reputable credit repair company who will work to remove any incorrect listings. Even the removal of a single black mark can improve a client’s score and improve their prospects of getting lower interest finance.

Many of our referrers Australia wide, when they see a credit impaired client, immediately refer them for credit repair. One group wrote $60 million more in low-interest loans because they referred their credit-impaired clients for credit repair rather than referring them to second-tier lenders. This was an ethical choice – one based on the best interests of the client in the long term. And as it turned out, over 83 per cent of these clients should never have been labelled as credit-impaired in the first place (because the listing was in error), thus highlighting that recommending these clients to second-tier lenders was – simply put – poor financial advice.


Dr Merrilyn Mansfield, lead adjudicator and researcher, Princeville Credit Advocates

Merrilyn Mansfield Dr Merrilyn Mansfield is a consumer advocate and the lead adjudicator and researcher for Princeville Credit Advocates, a Sydney- and  London-based credit repair company. She is fascinated with consumer laws that relate to credit reporting and in advocating for a  consumer’s right to a correct credit report. For more information, please visit www.wemend.com.au or  email This email address is being protected from spambots. You need JavaScript enabled to view it..

 

 

Why I love doing credit repair
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