7 Things to Know About Credit Repair

Your credit score or CIBIL score does play a pivotal role in deciding whether you will get an approval for a loan or not. Your credit history including credit taken in the past and payment patterns in relation to them really come handy while generating CIBIL score.

In the event you have a high score, it will show your strong creditworthiness and on the other hand, a low score will show low creditworthiness. If you have low scores, you will be branded as a risky borrower and lenders will hesitate to approve your loan application. But, you don’t have to live with a low score for the rest of your life, you can opt for credit repair.
credit repair, know about credit repair

What Is Credit Repair?

Simply put, credit repair is a process of rebuilding your credit health to a level where you are considered eligible for the loans. Usually, credit repair services are used to improve your credit score and play an important role in restoring your credit health because of faulty financial health in the past.

Things to Know

Now, that you are aware of credit and credit repair, let us concentrate on the things you should know about credit repair. Like I have discussed above, you need credit repair only when your credit is in jeopardy and you are planning to apply for a new credit card or a new loan.

Know Your Credit Report 

credit report, know CIBIL score
When you keep a regular check on your credit report, it will make you familiar with two things that are important for your credit score. First, it will make you familiar with both the loan and credit card as where actually the problem exists that has brought down the score.

Second, it will tell you about the information your credit report is carrying. This will help you in repairing your credit because if you see any negative information, such as payment delays or any form of error in the report, you can approach the bank and CIBIL, on time, to get that errors rectified.

Watch Out For Joint Applicants 

In this particular situation, you are at risk of suffering even if you are not at fault. This is a risky situation where someone else has taken a loan and you are a joint applicant. If that person defaults on the payments, then you too will lose out in your credit score as it gets reflected in your credit report. You can avoid this situation by ensuring that both the loans & cards paid on time.

Borrow Less 

Applying for too many loans simultaneously or you are also nearing your credit card limit, in both these situations your credit score will fall down as such activities will suggest a credit hungry behavior. Make sure you have taken a loan only when it is needed and you have to ensure you don’t come near the credit limits of your cards.

Avoid Applying For the Loan Frequently  

loan frequently, apply for loan
You should avoid applying for the loans and credit cards frequently. The key reason behind this is that every time you apply for the credit, the bank will approach CIBIL for your credit report and all these inquiries get documented on your report.

These inquiries, by your bank, will bring down your score. Now, there are two disadvantages of this – first like I have mentioned earlier as well that it will project your credit hungry behavior and second your score will fall down even if you wanted to payback your loan/card on time.

Opt For A Mixed Bag Of Credit 

As far as loans are concerned, they are mainly of two types – secured and unsecured. In the event, you are opting for too many unsecured loans, your bank will see this as a negative and eventually you will be denied for a loan. You can go for both unsecured loans like secured loans such as a car or home loan and unsecured loans such as personal loans. P.S. Credit cards are also considered as unsecured credit.

Avoid Reapplying If Rejected

In the event, you have applied for a credit card or a loan, but your application was not approved, the information gets documented on your credit report. If you approach another bank immediately then that particular bank will also have a look at your low score and your rejection, this may increase the chances of your rejection once again. In such a situation, you can choose to reapply and you can wait until your score improves.

Avoid Setting Your Credit Cards and Loans 

Make sure you have avoided settling your credit card or loan. In order to do this, you will visit your bank visit and ask them if they have a deal on which you can close your debt by paying a certain amount that is lower than your actual due amount. Banks entertain such requests in special cases, moreover, the settlement also gets documented in your credit report and will affect your score negatively.

Author Bio
I am Ankita Dixit, a professional writer. I started writing from a young age and most of my writing skills and knowledge are self-taught. Currently, I am working as a professional writer at Paisa.co. I have written on various topics including travel, motivation, finance, technology, credit cards, insurance, and entrepreneurship etc.

How to read your CIBIL Credit Information Report