A credit report gives a glimpse of an individual’s history of paying and borrowing money. Glancing through it, you can get the information regarding a person’s history of late payment, outstanding debt and bankruptcy. While applying for loans, creditors seek these reports to assess the financial condition of the borrower and also to assess their own risk, in terms of repayment of their loan. Even if you are approved of a loan, often people with low credit score ends up paying more rate of interest in comparison to those having high a good credit history. While hiring, employers also seek for credit report, to gage their financial condition.
Causes of poor credit
If you are thinking of adopting steps for bad credit repair, it is important to understand the causes that lead to this situation. A host of reasons is responsible for this. Few of these are external factors. The major causes of poor credit score are
- During the phases of unemployment, generally individuals struggle to meet their expenses and this causes a dip in the credit score.
- Late and irregular payments reflect your financial difficulty and tend to low your score.
- If you are applying for loan or credit cards in a short period of time, it shows that you are in a dire need of money and affects the credit score.
- Your credit card balance is equally important. If your credit card balance is high, it will be reflected in your credit score.
- If you have a history of bankruptcy, then it will tarnish the score. According to the law, the history of bankruptcy is displayed on the credit report for 10 years.
Review the report minutely
When you are facing financial difficulty and want to revamp your condition, you need to take few realistic steps. Start by reviewing the credit report. In case your application of loan has been rejected by a lender, you can seek a credit report within the 60 days of receiving the notice. If you are not employed or you are to seek employment within next 60 days, then you can get these reports for free. Theses credit scores reflects the payment history and the outstanding debt. For bad credit repair, reviewing the credit is of utmost importance. In case there are any error or dispute, can contact your creditor and improve them.
Steps to be taken
A number of steps need to be taken to get rid of poor credit scores. Your payments, expenses, budgets all are important factors in this aspect. Few steps that you can take are.
- Set reminder and pay your dues and bills on time.
- Minimize the use of credit cards and use cash instead.
- If you intend to use credit card, then use a secured one as it serves as a debit card.
- Monitor your different expenses and track those for a month.
- Plan your budget accordingly.
- Segregate your expenses.
- Make provision of monthly payment of bills.
- Contact the lenders and negotiate regarding monthly payment.
- Decide on the method that you intend to follow to pay off your debt.
- After your debt has been settled, make sure that you have the declaration in writing.
Hire professional services
You can hire professional services for bad credit repair. A gamut of companies and counseling agencies provide these services. They help in managing your debt, follow up with the creditors and the bureaus. Many legalities and complexities are associated with these procedures. These professionals have the expertise to provide seamless services to their clients. These agencies and professional comes under the ambit of the Federal Law. This law also preserves the right of clients. It is important to choose an authentic one.
Credit score is integral to improve your financial condition. It is important first to identify the reason of the poor score and then take necessary actions to improve those. If you are seeking professional help, you will be guided well through the entire process. They will track and monitor the process on your behalf.
Author Bio: Bob Taylor is a financial consultant and has the experience of working more than a decade in this field. He has helped many of his clients in bad credit repair.
Leave a Reply