The key to improving your credit score lies in your credit report.
Ever heard of the phrase ‘the past catches up with you’, it really does especially in the case of your credit history. Don’t get me wrong, the past comes with its own charms but what if there were mistakes in the past and the consequences of which must be borne by you, in the present.
What if these mistakes could prevent you from getting a loan when you need it the most, think about it for a moment. Yes sometimes, the situation could be that severe.
By mistakes here I mean the ones on your credit report which could make a dent on your credit score and hamper your chances of getting a much-needed loan.
The key to improving your credit score lies in your credit report. Imagine the credit report to be a case file and like a seasoned investigator, we will go through the report in search of clues and make sense of it all and find resolutions. After all, who doesn’t like to play detective.
What are the things that you should be looking for?
Once you obtain a credit report from any of the four bureaus in India (CIBIL, Equifax, Experian and CRIF Highmark) you should look for:
Payments Past Due Date: Look for open credit accounts, the delay in making payments is one of the major reasons which will affect your credit score.
Written Off/ Settled Accounts: Similarly look for ‘written off’ or ‘settled’ accounts on your credit report, these are statuses updated by your lender; while these loan accounts have attained some level of closure between you and the lender, you must ideally look to completely close these problem accounts.
Incorrect Information: While this is technically not your fault, it is one of the most common occurrences on your credit report, where loan accounts or information of others get mapped to your credit profile. There have been instances where even misreported information has led to loan rejection.
How to Rebuild Your Credit Score
From the credit report we have now identified mistakes that could cost your credit score, but there are always remedies that can be followed to bring your score to high levels, after all a high credit score (generally a credit score above 700) immediately signals to the lender that you are creditworthy.
The biggest challenge would be to obtain the total amount payable for your payments past due and these would be for old accounts from various lenders, we have also seen occasions where customers have moved to different cities and not aware of the exact amount to be paid.
For settled and written off accounts too, the total outstanding amount needs to be paid after reaching common ground with your lender. While this as a process might seem tiring, there are specific credit improvement services that create an interface between you and your lender to resolve these issues.
The method to resolve issues of incorrect information is more direct and can be done by raising your dispute with the credit bureau and after due process the changes will reflect on your credit report. A key takeaway from this exercise would be to keep monitoring your credit score and report at regular intervals.
All of the above-mentioned remedies will surely help in resolving past mistakes and thereby result in an increase in your credit score but do keep in mind that the time taken to resolve depends on many factors and is not instantaneous. In the meanwhile, you would do well in maintaining your credit health by making regular payments.The writer is CEO & Co-Founder, Creditmantri.com