How Can Fix My Bad Credit History?

Posted by emma connoly on March 24th, 2021

In 2021, more and more Americans are forced to seek help from credit institutions. When considering a customer application, banks check the credit score. The likelihood of loan approval depends on the client’s reliability. Knowing how to fix your credit history is useful for all categories of borrowers.

What is credit history?

Credit history is a record of a borrower's responsible repayment of debts.

It contains information about the size, maturity dates, delays that have taken place. The analysis of these data is carried out by banks to determine the reliability of a potential borrower.

The credit score can be:

• good - the borrower did not commit violations when repaying debt;
• zero - the borrower has not taken loans before;
• bad - the borrower has delays and outstanding debts.

Credit history consists of 4 parts:

• title - it contains a borrower’s full name, ID, SSN;
• main - data on the size of loans and maturities, the frequency of payments, information from government agencies and financial companies about the solvency of a person;
• closed - information about credit companies that provided loans and about organizations that requested a person's credit history;
• informational - a list of organizations to which the borrower contacted, and information about the decisions they made, data on the client's failure to fulfill his/her obligations.

Credit history is stored in special organizations - credit bureaus. There are 3 major credit bureaus in the USA - Equifax, Experian, and TransUnion.

The bank or MFI independently decides which credit bureau it will cooperate with. It is not uncommon for financial institutions to send data to several companies at the same time.

Why do you need to fix your credit history?

To get a bank loan, you need to have a high credit score. If you have a low credit score, it is more difficult to borrow money. Banks either reject the application or offer loans on unfavorable terms. If you a low credit score, you will not be able to get a large loan or mortgage.

Also, credit history is often checked by employers. This is especially important for persons associated with finances or responsibility for material assets. It is believed that a bad credit history indicates an inability to competently manage their own money, and the presence of debts can push a person to commit illegal actions.

How to fix bad credit history

Restoring a financial rating takes a lot of time and effort. However, there are ways to help improve credit history.

Take a payday loan

A quick and effective way to improve a credit history is to get and repay a bad credit personal loan from moneysolutionsuk.com. The referral service has relaxed borrower requirements; therefore, people with a low credit score can often get a loan. The entire process only takes a few minutes. If approved, you should expect to get your funds deposited into your account as soon as the same day. The disadvantage of this method is high interest rates. It is recommended to use this method if other options for improving credit history are not available for any reason.

Correct erroneous data

Credit history often deteriorates as a result of mistakes made by bank employees. This may be a misspelling of the name or a technical failure when updating information about a repaid debt. In this case, it is necessary to submit a written request with the requirement to restore the credit reputation. On average, it takes up to 14 days to correct the data in the credit bureau.

Pay off open loans or refinance

It is not possible to upgrade your credit score if you have outstanding debts. The repayment of all loans will have a positive effect on credit history. You’d better not hide from creditors. It is recommended to independently contact the bank and ask for debt restructuring.

If a person has many delays in various organizations, it is recommended to proceed as follows:

1. First of all, it is necessary to repay payday loans in MFI and credit card debts. This must be done in order to avoid the accrual of high interest and large penalties;
2. Try to restructure the remaining debt. Even if the bank declines such a request, you will have documents confirming that you made an effort to resolve the problem;
3. Try to reduce regular payments. If you have long delays, penalties will make up the majority of the debt. A professional lawyer can challenge the forfeit issued by the creditor.

Get a credit card

You can improve your credit score by using credit cards. It is necessary to actively use the bank's borrowed money for several months, without going beyond the established limit. Debts should be carefully repaid during the grace period. These records will be added to the credit history, which will have a beneficial effect on the overall financial rating of the borrower.

Purchase goods on credit or by installments

Stores offer more loyal terms for the client than banks. This can be used to correct the credit history. You will need to purchase goods on credit or by installments directly through the seller. The method is effective if the client's reputation is slightly damaged. In situations where credit score is very poor, the store will not approve the deal.

Make fewer requests

Information about loan denials is transmitted to the credit bureau. The abundance of negative answers can alert the bank. If it turns out that recently you have repeatedly applied to various organizations and received a refusal everywhere, the decision will not be made in your favor.

Justify financial difficulties

If you are in a difficult life situation and need money, it is necessary to collect the appropriate package of documents. These can be certificates of disability, extracts from the medical records.

Attract a guarantor with good credit history

Borrowers who have attracted guarantors with a good credit history can increase the chances of loan approval. Thus, banks minimize their risks. If the main borrower violates the terms of the agreement, the burden of loan repayment falls on the persons who acted as guarantors.

Improve reputation in a specific bank

Good results are obtained by a gradual improvement of the reputation in an individual bank. To do this, you need to actively use its products. You can open a bank account, get a credit card. Buying additional insurance improves your credit history. But you shouldn't expect the positive effect right away.

Repay non-bank debts

To improve credit score and increase the chances for loan approval, it is necessary to pay off not only delays in financial companies. It is necessary to pay off the existing unpaid fines from the traffic police, alimony arrears, housing and communal service debts.