After Angela Borghetti's bank rejected her application for a $2000 credit card, she kept applying to other financial institutions, unaware that each inquiry was a black mark on her credit report.
After a ''good dozen attempts in a year'' - and an equal number of rejections - Ms Borghetti of Pyrmont hit Google, where there was no shortage of credit fix (sometimes called credit repair or restoration) companies offering to help.
Gerard Brody, the chief executive of the Consumer Action Law Centre, said they were ''symptomatic of a growing number of businesses seeking to profit from people in financial difficulty''.
He said they often promised to improve a customer's credit rating by removing inquiries or defaults from a credit report, when often they were justifiable or couldn't be removed. ''We've acted on behalf of consumers who have decided to dispute contracts with credit repair [agencies], and there can be problems with those contracts. They can be misleading, saying they will get rid of defaults when that is not possible, or there are onerous fees and charges.''
In Ms Borghetti's case, Credit Repair Australia promised to remove three credit inquiries from Ms Borghetti's credit report, and charged her $990 to do so in weekly instalments of $80 a week. The company said it promised to refund her money if unsuccessful.
''They [the credit repair agency] said, 'Oh yes, we can help you,''' Ms Borghetti said.
When two months passed without a result, she sought help from a solicitor at the Consumer Credit Legal Centre in Sydney. The centre's lawyer found that two of the three credit inquiries that Ms Borghetti had made were legitimate and couldn't be removed.
The solicitor fixed the third, and also got Ms Borghetti a refund from the credit fix agency.
The centre's solicitor told her that the banks and financial institutions didn't like to see more than six credit applications for credit a year.
''That's all I needed to know. If I had known that, I wouldn't have made any inquiries [about getting credit] and I'd be right now,'' Ms Borghetti said.
In Sydney, Consumer Credit Legal Centre's spokeswoman and principal solicitor, Kat Lane, said cases like Ms Borghetti's were the absolute worst because it was clear the companies couldn't help. ''They shouldn't have ever taken her on. They couldn't fix the problem,'' she said.
Consumer groups are arguing for more regulation and obligations on credit providers. They want cooling-off periods, enhanced disclosure of free services, and a ban on upfront payments.
Ms Lane says every organisation - including the Australian Law Reform Commission - agreed that the credit repair agency industry needed reform and regulation, yet nothing had happened.
One in 10 Australians had a black mark on their credit reports, said Mitch Symes, an executive with Credit Repair Australia, which Ms Borghetti used. And like Ms Borghetti, many people didn't know they had a problem until they sought credit. He welcomed legislation to weed out the bad apples.
But in Ms Borghetti's case, the company argued that it had a track record of successfully resolving her type of credit listings.
When asked why consumers should use a credit fix company when nearly every industry has an ombudsman and free legal services are available, Mr Symes said that there were roles for both, but that many people did not have the time, resources or expertise to resolve their credit issues.
''We make improvements to over 90 per cent of cases,'' he said, adding that his company was often faster than the ombudsmen and it could address a broad range of issues stopping a consumer from getting credit.
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