Have you ever tried getting financing and were turned down due to a poor credit score? Before you begin, it’s important to understand what a credit score is as your starting point and what it means to have a poor or good credit score. A credit score is simply a score assigned to an individual and it communicates how creditworthy the individual is perceived or their level of riskiness. The credit bureaus scientifically determined this score from your loan repayment history submitted by a lender you have borrowed from.
If you have an active loan that is performing 100% of the time then you will get a “good’’ score. Whereas, you will get a “bad’’ score when you stop paying for any loan you owe. It gets worse the longer the debt remains in default. Once you understand where you stand, you can begin to set small achievable goals to make significant progress.
Here are a few actionable steps that you can use to reverse and begin to gradually improve your score and make better financial decisions into the future.
1. Get in touch with the provider of any loan you owe that is and continues to be in arrears or overdue
Request to negotiate a new favorable payment plan that will work for you in the meantime. During this discussion, it is important to explain the cause for the default and make new pledges moving forward. Of course, that you are intending to honor! This conversation alone can, get a loan account de-listed as a non-performing account as soon as you start paying and if you keep this up, your score will start improving gradually as you start making repayments.
2. Start making payments as pledged. Easier said than done but it should be your primary focus
In the event, you are not able to make a payment, make sure to call your loan provider call center number or via the contact information provided on their websites. Doing this can result in your loan being restructured or in some cases even a “loan holiday’’ – the lender allows you a period of time that you will not make payments.
3. If you have any other loans that are performing you want to ensure those are on track
It wouldn’t hurt to call these lenders and renegotiate terms to make it bearable to service all the loans. Your reward here is; you will keep improving your credit score if you keep your payments constant.
4. Get the bad record completely removed from your credit history
All you need to do is contact and or visit the specific Credit Reference Bureau or all of them that you have been blacklisted on and submit a CRB listing clearance request. Well, you will need to have fully paid the loan obviously. The Bureau will do some due diligence and if you are seeking clearance for the first time, you will be cleared and issued with a CRB clearance certificate.
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