Having a bad credit score is not the end of the world for those who seek loans. You can actually improve your credit score and credit history. Here are tips for repairing your credit score and credit history.
Hello and welcome to FundooMoney, your 24X7 buddy for all your money matters.
Today, a good credit history or good loan repayment track record is more important for borrowers than ever before. For one, your repayment track record is being recorded by credit rating agencies. A good credit history gives you access to loan which you may need from time to time for needs like buying a home or a car. A good credit history means a higher credit score which in turn, gives you better access to loans from lending institutions which attach great importance to it. A good credit score can also help you get low cost loans. In short, a good credit history and a high credit score are important for your financial well-being in more ways than one.
But what happens when life events go off the perfect script? What if, for some reason, you couldn’t pay a loan on time or messed up your credit card payments? This could restrict or deprive you from access to loan products. Here, we tell you how to repair your credit history and take steps towards building a good credit score in the future. So, stay tuned.
Settle all outstanding dues
First step in repairing your credit history is to get your credit report. Get in touch with all lenders with whom you have pending dues. Explain your position and negotiate a settlement and repayment plan with them to clear all dues.
Liquidate some investments to clear your debt
If your outstanding amount is too high, try to have an arrangement of a regular repayment plan. To make an initial high repayment consider liquidation of some investments like some gold, land or any other valuable assets. Remember, having a good credit score by is itself is an asset which will help you in the future, especially during emergencies.
Stick to repayment discipline
Once you agree to a repayment plan, ensure that you are extremely disciplined in repayments and stick to the repayment schedule. You might not get another chance to fix this troubled area of your financial world.
Take small value secured loans
To establish a new and credible track record, over time, you need to seek small ticket secured loans. These could be loans against fixed deposit (FD) or gold. You could also take a credit card against your FD. There are some specialised firms which help you with credit improvement and they can help you get access to such small secured credit.
Check your credit score regularly
Even as you repay regularly to clear off old dues, keep checking your credit score regularly after every six months. It will give you an idea about improvement taking place.
Apply for a loan after credit repair
It may take 1-3 years for you to repair your bad credit and reach a good score that can get you a regular loan. Once your credit score improves, apply for a regular loan.
We hope you found this useful. Do share with us and others on the channel your tips for repairing credit history by writing in the comments section. For more such actionable personal finance information and regular uploads, subscribe to our channel. Also, visit our website, download our mobile app and stay connected with us on Instagram, Pinterest and Slideshare.
