Last week, I had a revealing discussion with a broker about assisting a client with a default on his credit file.
The broker said, “I don’t believe you can do this”, to which I replied “Do you believe it can’t be done or do you think we shouldn’t be doing this for people?”
The broker answered: “Both.”
A fairly robust discussion ensued, and the broker then revealed that he had a problem with his own credit file and thought we not only could not help him but that we should not be interrupting the process that records credit information “because that is how the system [meaning, credit reporting] works”. Whether or not the listing was correct did not seem to enter his mind.
This raises the question: is credit repair ethical in that it aims to remove incorrectly placed listings from credit reports?
In answering this it is important to first note that there are consumer protections written into legislation that concern how credit reporting is conducted in Australia. In other words, there are clear guidelines given to credit providers about the rules they must follow before they place adverse information on credit files.
It may therefore come as a surprise that in a 2013 survey conducted by the Australian Information Commissioner, 30 per cent of Australians who ordered their credit report found mistakes on it, and only 60 per cent of respondents who found mistakes got them sorted out.
It has to be said at this point that there are ‘small M’ mistakes and ‘capital M’ mistakes on credit reports. ‘Small M’ mistakes include information that is included on your credit report like an incorrect date of birth, name spelling or address, or a credit listing that is not yours.
Credit repair companies do not correct these ‘small M’ mistakes for a fee because, frankly, you can do that yourself. No one ever contacts a credit repair company to get the spelling correct in their name, or to fix up an incorrect address.
Credit repair companies are contacted about ‘capital M’ mistakes. The client has usually gone to a broker to organise finance for a home or other property and when the credit file is assessed the broker cannot move forward with applying for a loan at the best interest rate because the adverse listings (defaults, judgments, writs, etc.) are blocking that process. This is when the client is referred for credit repair.
The client may have a listing they were not aware of, or they knew about it but thought that the process seemed unfair leading up to the listing. Credit repair companies ask the client and the credit provider for information about the circumstances leading up to adverse listings and ask credit providers to prove they have followed the legislation when the listing was made.
So with so many mistakes on credit reports being revealed by the Information Commissioner Survey, why would some brokers still think that credit repair is unethical and a disturbance of the credit reporting regime? Perhaps they should instead be applying the label ‘unethical’ to those who place listings on credit reports that are placed against the legislation.
Credit repair companies therefore cannot remove correctly placed information on credit files. It’s as simple as that. The recording of such information is essential and important to credit providers in their assessment of potential clients and the loan products they will offer them.
No one is attempting to disturb correctly conducted credit reporting. What credit repair companies do is remove incorrectly placed information. Remember: in eight out of 10 cases I work on the listing is incorrect and therefore erased.
Dr Merrilyn Mansfield, lead adjudicator and researcher, Princeville Credit Advocates
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