If you’ve ever applied for credit or a loan, there will have a credit report. If you have a poor credit score or an error in your credit report, it may affect loans or credit you apply for, so it pays to try to fix it as soon as possible to reduce its potential side effects on your life.
Many individuals with bad credit scores and credit reports frequently ask about the time it takes to fix bad credit. You might want to apply for a new loan for funding your large purchases, so knowing the duration of the credit repair process will allow you to plan accordingly. Depending on the nature and number of negative credit listings on your credit report, the credit repair process can take a minimum of a week. However, the process can also take up to six months or longer if you have major problems with your credit report.
In this post, we will summarise how much time is usually required to fix different types of defects in your credit score.
Fixing errors and mistakes
Credit repair typically begins by identifying errors and mistakes in your credit reports. There is more than one credit reporting bureau, and the different bureaus can hold different information. There are 3 credit reporting bureaus
You can obtain a free copy of your credit report from each of the credit reporting bureaus every 3 months. The law states that you should receive your report within 10 working days, but it is often a lot faster if you apply online.
If the information in your credit report is wrong or misleading, you can make a complaint or dispute it. Credit reporting bureaus are required by law to make sure the information on your credit report is accurate, up-to-date, complete relevant and not misleading. The disputes process may take a number of months to resolve. It is a good idea to get a copy of your credit report before you start applying for loans to give you a chance to correct any errors and mistakes first.
Common Errors
The credit reporting bureau may have reported your information wrongly. For example:
- your name, date of birth or address needs updating
- the amount of a debt is wrong
- a debt is listed twice.
To get this kind of error fixed, contact the credit reporting bureau. Some credit reporting bureaus, like Equifax, has correction portals on their website, which allow you to file disputes and correct mistakes in your credit reports.
If it is problem with one of your debts, the quickest way to correct a mistake in your credit report is to dispute it directly with the credit provider. Examples of information that a credit provider may have reported wrongly include:
- did not notify you about an unpaid debt
- incorrectly listed that a payment of $150 or more was overdue by 60 days or more
- listed a default (an overdue debt) while you were in dispute about it
- created an account by mistake or as a result of identity theft
- didn’t show that they had agreed to put a financial hardship plan in place or changed the contract terms
If the credit provider agrees it’s wrong, they’ll ask the credit reporting bureau to correct it or remove it from your credit report.
If you have minor errors in your credit report, the credit reporting bureau will acknowledge the receipt of your request. Credit reporting bureaus usually take 30 days to investigate correction requests. During the period, the agency investigates your correction request and, if required, contacts the credit providers. After the conclusion of the investigation, the bureau informs you about the outcome of your request within 30 days from the date it receives your request. You’ll have to contact each credit reporting bureau separately to rectify errors in your credit report. While credit reporting bureau usually resolve your issues in 30 days, they could take longer, depending on the issue you want to fix. In any case, they will notify you within 30 days whether they need additional time for fixing the error in your credit report.
If you have many or complex disputes to resolve with your credit provider, it could take longer. If possible, attach information that supports your dispute with your dispute letter, so make sure you keep good financial records. If you do not, you might lose plenty of time gathering and submitted requested records, which can lengthen the credit repair process. Credit providers are also legislatively required to respond to an enquiry within 30 days, and every time you provide further information the 30-day clock resets.
If the credit provider:
- Fails to respond in 30 days; or
- Refuses to amend or remove your disputed listing.
The next step would be to raise the dispute in an external dispute resolution scheme (EDR) like the Australian Financial Complaints Authority (AFCA), or the relevant Ombudsman.
Rebuilding your credit score
If you have a bad credit score, rebuilding it can take longer than fixing errors and mistakes in your credit report. So, while you apply to fix errors on your credit report, you should also work on building a good credit history to improve your credit score. Since implementing the Comprehensive Credit Reporting (CCR) system, the credit reporting bureaus are required to include positive information about your credit history as well, which allows prospective lenders to get a complete picture of the borrower. This means that if you demonstrate financial discipline and pay your bills on time, it will be reported on your credit report, enabling you to gradually improve your credit score.
The best way to rebuild your credit score is to pay all your bills on time, every time. You should also avoid applying for more credit, especially several times over a short period of time.
Time required to remove negative items
If you don’t want to actively attempt to improve your credit score, the time that negative information stays on your credit report varies, depending on the type of listing:
- Bankruptcy. is listed on your credit report for two years from the date your bankruptcy finishes, or five years from the date you were declared bankrupt. In some cases, it can stay on your file for even longer. Your name and details will also be included forever on a publicly accessible database known as the National Personal Insolvency Index (NPII).
- Debt agreements. Debt agreements are listed on your credit file for five years, or potentially longer in some circumstances. Your name and details will also be entered in the NPII for five years from the date of the agreement or two years after it ends, whichever occurs later.
- Defaults. Credit defaults are listed on your report for five years, or seven years in the case of a clear out (this is when your creditor can’t contact you).
- Court judgements. This information remains on your credit report for five years. Late and missed payments. Late and missed payments on loans and credit cards are recorded on your credit report for two years.
- Multiple credit enquiries. Applications for credit including loans, credit cards and more, are listed on your credit report for five years. These listings are included regardless of whether or not your application was approved.
So, you’ll have to wait for the negative items to fall off your credit report while building a new credit history. Meanwhile, you can work on cleaning your credit record to gradually improve your credit score.
Final thoughts
The credit repair process involves fixing errors and mistakes in your credit report while rebuilding your credit score through positive repayment behaviors. Small errors and mistakes can be fixed relatively easily and quickly, usually within one to three months. However, removing negative items from your credit report can take two to seven years, depending on the type of item. It is important that while you are waiting for the incorrect information and negative items to go off your credit report, you take care to build a positive repayment history to improve your credit score along the way.
