The Aftermath of a Poor Credit History

By: Ajeet Khurana

There are many reasons why your credit history might be in danger. It could be that you have been shopping like nobody's business and running up a huge debt. Or it could be that you are falling behind on your loan repayments. Assuming you've managed to nip the problem in the bud and are slowly getting your finances back on track, there's always that uncomfortable moment when your previous credit record can crop up. Now, this might not cripple you.

But if you want to prove to the world that you are a reliable borrower, you are going to need to make regular repayments and start rebuilding your credit score.

The good news is, even if you do have a less than sparkling record, you should still have enough opportunities to clear your name and get back on track for having no problem applying for credit cards in the future. What is the best way to start rebuilding your credit scores? You will need to do away with all the debts that are pulling down your scores. A poor credit history is there for a reason, and it won't improve until you pay off the debts that dragged you there in the first place.

All the debt that you run up, all the bills that you default on are going to make your credit ratings suffer. Get rid of the debt, and you reduce the load you'll have to lift each month as well as showing that you're taking action to potential creditors.

Minimum repayments can be a major drain on your credit history if you keep failing to meet them, which would only make your situation worse. It would help a great deal if you had a discussion with your creditors instead of avoiding them. Honestly explain what your financial problems are and seek a solution. There are enough ways of trying to cut out the late payments that you'll find one (or more) that will work for you, but until you've paid them all off, there's still that blemish on your record.

You will be perceived as a high risk candidate if you have adverse credit. Getting loans in the future will be tough. What can you do about that?

Now that you credit is already low, it would not hurt to borrow more. If your available credit is already low then creditors won't necessarily have too much to quarrel about loaning you money, and tidying up all the itty-bitty payments. Again, talk to your creditor directly about ways of doing this, as they're often more than happy to offer advice on ways of getting their money back.

This is a highly recommended step as having few payments to make every month, even if they are slightly larger, generally looks better on your credit history. Why? It shows you can manage your money and debts better than someone who owes the same amount, pays the same per month, but has it spread over twice the number of creditors. Creditors are always happy to see borrowers who are proactive.

Recovering from a spurt of overdue bills that have tarnished your credit record is by no means impossible. So stop moping and start working. Those credit scores need to be rebuilt right away.

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