How to Repair a Bad Credit Line

Bad credit history formulates over a considerable amount of time. The reasons behind this happening are many but there is a lot that can be done to overcome these impediments as well. Being responsible towards your credit payments can go a long way in repairing and building a strong credit history.

Recession and financial crises have been the biggest contributors towards bad credit scores. A bad score can greatly affect your ability to get credit along with affecting your insurance premiums and ability to find jobs. Millions of people across the world have been victims to the same. Therefore, the best way to rebuild your credit is by responsibly managing it over time.
There are various factors that can gradually but inevitably (if neglected) cause a bad line of credit. Some of these are:
a) Increase in the cost of living
b) Credit card debt
c) Delay in credit payments
d) Unpaid past bills and loans
e) Crossover in credit limit
To rectify the influences of these causes, it is important to repair your credit history if you want to see your credit score improve. The following tips therefore can prove quite useful.
1. Fix errors mentioned in your credit report. This is the first step towards repairing your bad credit. In the report, you will find data that is used to calculate your score and it may contain errors. Check carefully for any mention of incorrect late payments and also verify that the amount owed from you is correct. In case you find errors, you can take it up with the reporting agency.
2. Work towards paying off your debts. In order to reduce the amount you owe, stop the use of your credit card. Make a list of all the accounts against which payments are due and figure out interest rate being charged. Formulate an effective payment plan thereafter to allocate your available finances towards paying off the highest debt owed.
3. Subscribe to regular payment reminders. Getting regular emails or text messages from your financer when your payment is due can help you stay on track with your credit payments. Alternatively, in case you are having troubles making payments, you can try to work out a payment plan with your creditors.
4. Try and get a secured credit card. This is a great way to build up a sound credit history. You would be required to deposit an amount that is equal to the credit limit into a savings account. This will allow your creditor to use the amount to pay off missed payments.
5. Consider opening two bank accounts. Keep one account for everyday expenses and the other for emergency expenses such as paying off credit debts. You can get yourself out of the debt crisis if you strictly use the second account for meeting unexpected circumstances.
Most often, a bad credit history can also impede the process of applying for loans. Since banks have harsher policies with respect to giving loans to people with poor credit history, licensed moneylenders on the other hand often profit from approving loans to individuals with subprime credit. For instance, non-citizens opting for foreigner loan in Singapore can easily approach these money lending institutions and find the best loan package for themselves. Even though some compromises are to be made in light of the bad credit history – a steeper interest rate on the foreigner loan as it is unaccompanied by any collateral – nonetheless, the repayment structure guarantees to save the day.
So, a bad credit doesn’t necessarily have to be that scary. All that is required from you is to recognize and understand the signs and causes of a bad credit. Be responsible towards your bills and dues and you are good to go.
Author Bio:
After graduating in economics from National University of Singapore in late 70′s Mr. Jessie Bromberg chose to work for banking and finance in Singapore only. After working with various banks, financial institutions and educating people about personal finance, I have now decided to share my knowledge related to loan in Singapore.