People do undergo financial downturns or there are times when on account of exigencies the money gets sucks and one is not left with funds to serve the loan obligations. As people try to recover from the losses and try to get back their financial life on track, the credit profile definitely goes for a toss. The credit report gets updated with negative flags and the credit score nose dives. Here are a few common questions that will help you understand what to do while trying to go for bad credit fix.
One needs to be very clear that the liability to pay continues to stand even at times of crisis. While going through a financial crisis, it is advisable that you connect with the bank and update them on the situation. Even the bank does not want the account to flow into delayed payments. You can work out an amount that you may be able to serve as EMI and then request the bank to increase the term of loan or rebook the loan with the EMI that you can pay every month.
In case of a credit card, you can continue to pay the minimum amount due every month. You can also connect with the credit card company and request them to convert the outstanding into fixed EMI (loan on card). This will facilitate a lower interest rate being charged on the account and will also help you getting to know the fixed amount to be paid every month.
In case you get a call from the collectors, please explain them your situation and ask for their help in getting what we discussed in earlier question. You should also request the collector to connect you with the senior manager so that you can explain your situation and intent to pay. Connecting with the senior person may help you in working around payment of dues.
This is something that you should never do. Always take the calls from bank or their collectors. Non contactability will only lead to increased collection efforts that can be painful. Even personal visits may start if the collectors are not able to get through you over phone.
While there is no harm in negotiating, you need to be cognizant of the fact that it has been your unpaid liability and the charges and penal interests were not only legally agreed by you, these are also rightfully charged by the lender. What you should take care of while negotiating is that the account should not be flagged off as settled account. The lender may be willing to give you a concession on some interest or charges, do not ever haggle for discount on principal outstanding. Settlement is a negative flag and can severely hurt your credit score.
The lending institution will be more than willing to accept a genuine request on a delinquent account. Please speak with the banker or the collector on this and they shall be able to work out a deal on this. However, if there is an issue of non-payment according to the agreed schedule further charges will get attracted on the outstanding amounts.
Yes, defaulting once is not the end of the road. You can definitely improve CIBIL score if it has dipped. You need to work on it at two fronts. First pay off all outstanding amounts to the banks and second approach a professional who can guide you on how to work on improving your credit profile.