Tips To Clean Up Your Credit Report

Your credit report is an important indicator when you are seeking loans. The report shows your credit history which indicates your credit worthiness to the lender. If the credit score is 700 or more than 700 it is considered good. A good score helps you get loans easily and also negotiate the interest rate charged by the lender. A bad score, on the other hand, is bad for borrowing. Not only it increases the interest rate, but lenders might also even reject your loan application if your score is bad. But what if you have a bad score? Can your credit report be cleaned?

Yes, there are ways to clean your credit report. Here’s how –

Pay your Debts on Time

One of the best ways to improve your score and clean your report is to pay your debts on the date that they are due. Debt repayments feature prominently in your credit report and contribute majorly to your credit score. If you take care of your repayments and do them timely your score would improve and your report would be cleaned.

Do not Charge off or Settle any Loan

When you consistently default on repayments of your debts, the lender might charge off your debt account and classify it as a non-performing asset (NPA) in its financial statements. Settling off the loan means paying an agreed value (which is lower than the outstanding liability) towards the loan and terminating it. Both charging off and settling of the loan are considered to be very bad moves which reflect poorly on your credit report and take a long time to get off of the report. So, avoid these two instances at all costs.

Review your Report Regularly

One very common mistake which most of you make is ignoring your credit report. You should not. You should review your report regularly so that you can take corrective measures to clean the report at the earliest.

Have a Healthy Credit Mix

Having a healthy credit mix is also important for a clean credit report. Have too much of unsecured loans and your credit report would have an unfavourable score. You should, therefore, have both secured and unsecured loans in your portfolio to have a clean report.

Be Patient     

Cleaning a bad credit report requires time. You cannot wish to see the report cleaned instantly. Be patient and take the above-mentioned steps to clean your report. It would take some time but if you are disciplined with your credit your report would be cleaned.

These steps would help you clean your credit report and improve your score to avail a loan easily. When cleaning your report takes note of important aspects of your credit score. Besides the above-mentioned factors, your credit score is also affected by your credit vintage. If you are a new borrower your credit report would be as good as non-existent and you might not have a very good credit score. Having a stable credit history actually builds up a positive report and consequently, the score. So, know the factors affecting the score and make sure to take care of them if you want a good report.

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