Bad Credit History? Here are 5 Ways on How to Fix It

Nobody wants to be in debt. Surely, no one wants to borrow money and not be able to pay it, especially now that you are earning in dollars. Unfortunately, financial difficulties happen and there are expenses you won’t be able to pay on time, which prompts you to borrow money.

You might ask, “What if I am unable to pay?” 

In that case, late or non-payment of financial obligations could affect your credit score, thereby reducing your chances of getting approved when you apply for a loan. The same goes if you have little credit history, which means you haven’t tried applying for a loan or credit card.

Is there a way to fix this? The answer is yes. Here’s what you can do to fix your bad or no credit history:

1) Start building your credit history. 

This is applicable if you don’t have financial obligations under your name.

Take note that credit history is among the most important factors lenders like Balikbayad look into. If there is none, then don’t worry. Now is the best time to build your credit history, starting with getting a credit card.

Credit card companies are more lenient in giving credit card to consumers. This is because this plastic card serves as your entry in the Consumer Lending market. Despite the convenience, make sure you are a responsible credit card holder by paying your bill on time and in full every time you use it for your pasalubong purchases.

If you happen to have bad credit, paying off your credit card debts could reduce your chances of being put in a bad light. In other words, don’t underestimate your credit card.

2) Don’t apply for another credit card. 

If you have existing financial obligations, getting a new credit is a big no-no. You will be tempted to use the card to pay for your purchases even if you cannot pay for the bill in full. Lenders also take this as a red flag because borrowers with too much credit cards in his name often indicates that you are financially troubled.

Resist every temptation to apply for a new credit card and avoid using cards newly issued to you, which leads you to this next tip.

3) Pay off existing loans and bills. 

Online cash loan, personal loan, salary loan, auto loan, car loan, credit card debt, and even utility bills – all of this have an effect on your credit history. Any late or non-payment could affect your overall credit score, which means getting a loan approval can be difficult as well.

Here’s what you can do:

• List all existing debts and financial obligations. Indicate the amount, interest rate, and due date for each expense.
• Identify which loans have either higher interest rate or earliest due date. Prioritize these loans when making a payment.
• Look for ways where you can earn extra. You can try selling items you no longer need or getting a side job.
• Make little sacrifices. If possible, walk on your way to work, avoid buying material things for your family back home, skip the weekly drinks with colleagues. You need to save money so you can pay off your loans.

Every payment made goes a long way. Lenders would like to see borrowers who have existing debts yet are making efforts to slowly pay off their loans.

4) Try negotiating with lenders. 

This may not work since it depends on your previous credit standing. If you were able to pay on time before, then explain the roadblocks you experienced, which led to delay in payment. Your lender would be willing to help you on this based on the type of borrower you were.

You can also suggest debt consolidation so you will only worry about just one loan. Try negotiating for lower but reasonable interest rate to make loan repayment easier for you.

5) Make sure that your family is working with you. 

All of these efforts won’t be possible if your family back home is not backing you up. It is imperative that you explain the financial situation with your family and collectively, look for ways on how you can pay off your loans and improve your credit score. Encourage your family to save and make little sacrifices as well to improve your financial condition.