Your CIBIL score has great power and makes a significant difference to your ability to avail of credit. The closer your score is to 900 the greater are your chances of availing a line of credit you need at competitive rates of interest. If your score dips below the satisfactory level of 750, you may find it difficult to access. At such times, repair your credit. However not easy task. A newbie must avoid the following mistakes while trying to repair his credit.
If you know that your score has dipped for some mistakes you have made in the past, the worst thing to do is to be in denial of the same. If your low CIBIL score is bothering you, the first thing you need to do is to acknowledge the same.
The other rookie mistake to avoid when trying to repair credit score, is not checking your CIBIL report. Your CIBIL report is pretty much a report card of the state of your financial health. You need to examine your CIBIL report to see where you have gone wrong. Sometimes your cibil score may be low because of some errors or discrepancies that may have crept into it.
One tactic used by newbies trying to repair their cibil score is disputing everything on the CIBIL report. If you try to dispute everything on your CIBIL report you may be enhancing your trouble with lenders as they will dismiss your claims as frivolous when the credit bureau cross checks with them. Further you may end up on their blacklist that may prevent your chances of getting a loan or a credit card in the future.
If you have defaulted on your payments on credit card or a loan, do not make the mistake of ignoring your bank or card issuer. The best thing to do is to be proactive and approach the credit issuer and acknowledge your mistake. If your reasons are genuine, your bank may even be convinced to give you some temporary leeway. However, if you avoid their call or try absconding after having defaulted on a few payments, you will only invite trouble for yourself.
If you have defaulted on credit card payments, simply cancelling or cutting up your cards will not make it any better nor make your debt go away or will it improve your CIBIL score. You will still owe the amount to your card issuer. The best way to handle the situation is to look for a proper credit resolution solution such as taking a personal loan for a low CIBIL score, with which you can clear your outstanding balance all at once.
When you are already stressed about a low credit score, it is easy to fall into a debt trap offered. You may think that taking a new credit card or transferring your balance into a new credit card may be the easy way out. But you need to carry out adequate research before making any such decision and ensure that the new credit card account you are opting for is indeed reducing your debt burden and not enhancing it. Taking on additional debt will be further detrimental to your cibil score.
Sometimes when their credit habits have gone out of hand, people try to resort to tricks such as balance transfer for all loans and credit cards that they have defaulted on. Even if you do manage to transfer your personal loan or credit card, you will end up paying balance transfer fees and other charges. In effect thus, the amount of money you owe will grow instead of shrinking, thus increasing your debt burden and lowering your CIBIL score.
Often times, taking a loan for a bad CIBIL score is suggested as a solution to improve CIBIL score. A loan for a low credit score serves to consolidate debt if credit card accounts have pulled down your score. While this is a good credit resolution you must be disciplined in making repayments towards this loan account. Defaulting on a personal loan for a low CIBIL score may have an irreparable impact on your score.
Opting for the services a fake credit repair company
With credit usage becoming omnipresent, the unfortunate truth is that there are many crooks who are out to take advantage of vulnerable customers who have made some credit mistakes. There are many fake credit repair agencies who make tall claims about being able to provide perfect solutions for those who are in a debt trap. If you must opt for a credit repair agency or a credit health company, check its credentials before opting for its services.
Some people make the mistake of writing off loans, when things go out of hand and they are unable to find a plausible credit repair solution. While you may think that you become debt free by writing off loans and declaring to your credit issuer that you will not be able to make repayments under any circumstances, the truth is it remains as a black mark on your credit report for the next 7 years. With such a black mark on your credit report, you will find it impossible to get any line of credit for the next 7 to 10 years.
Repairing debt is like shedding off excess weight. You haven't piled it on overnight and thus there are no quick fix solutions. A disciplined approach and regular efforts will help you repair your credit eventually.