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5 things to consider when choosing a credit repair agency

by CharlesInfoxQV5 minute read

Credit repair and debt management have been going through an overhaul recently. But how do you choose a company to partner with? Peter Cole, director of Clear Credit Solutions, sets out five considerations for brokers. 

“There’s nothing more frustrating than putting in lots of time, work and effort into a client’s application – only to fail at the last hurdle when you discover they have a poor credit score,” Nectar Mortgages general manager Stephen Harris said in July of this year after announcing that it had signed a partnership with Clear Credit Solutions; its first ever partnership with a credit repair agency. 

Many brokers have been burned by unethical credit repair agencies in the past – which is why Nectar said it had been reluctant to partner with credit repair agencies previously. 

Unfortunately, a lot of brokers have had bad experiences with credit repair agencies, which has made them think twice about referring clients. 

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In fact, the number one reason brokers are reluctant to use credit repair services or refer their clients to these services, is that it could risk their “brand”. 

To help clean up the industry, ASIC now requires all credit repair agencies to have (or, at least, to have applied for) an Australian Credit Licence, as of 1 July 2021. 

Generally, there are five big things brokers need to be wary about when choosing a credit repair agency. Brokers should be wary of agencies that: 

  1. Charge hidden fees and
  2. Charge variable fees 

Brokers should be careful about referring clients to a credit repair agency that charges hidden fees or variable fees. The agency’s fee structure should be transparent, so your client doesn’t get any nasty surprises. 

Also, the agency should charge just one fixed fee – there should be no add-on fees, because, again, that can lead to bill shock. 

Having a transparent fee structure with a FULL refund no admin charges or per default charges ultimately protects your brand. 

  1. Have poor communication 

Brokers should be wary of partnering with a credit repair agency that communicates poorly. 

When a broker sends a client to a credit repair agency, the broker needs to be regularly updated about the client’s progress. That way, the broker will know when the client’s credit has been repaired and the client is ready to return to their loan application.

But if the broker doesn’t get updated, the client might wonder why the broker isn’t calling and take their business elsewhere. 

  1. Steal the broker’s clients 

Brokers should think twice about sending referrals to a credit repair agency that has an in-house broker. Otherwise, the agency might steal the client. 

  1. Have no reviews or bad/dodgy reviews

Brokers should pay close attention to a credit repair agency’s reviews. If the agency doesn’t have any reviews on sites like ProductReview and Google Reviews, that should be a red flag. 

Other red flags are when a credit repair agency does have reviews, and they’re either bad or so ridiculously good they’ve clearly been purchased.

Finally, the main thing brokers need to know is that if a client is unable to get a loan because they have a problematic credit file, a credit repair agency can only remove incorrect listings from that credit file – the agency can’t remove information that is accurate and legitimate.

So, beware of referring your clients to agencies that seem to suggest otherwise.

peter cole

CharlesInfoxQV

CharlesInfoxQV

AUTHOR

Peter Cole is the director of Clear Credit Solutions, a credit repair agency that has won the ‘Credit Score/Credit Repair Services’ category in the annual ProductReview Awards for three consecutive years.

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