Your credit profile plays an important role in your entire credit journey. A good credit history can make you get approved for the best credit cards and loans. But, what if there are some payment defaults in your credit report, which are leading to a poor credit score? A bad credit score doesn’t only lead to rejection of your credit/loan applications, but it also tells that you might be having really poor financial behavior. Your credit reports, which are prepared by the major credit bureaus, are the most important document when it comes to your credit journey. But people often tend to ignore these reports and they believe in checking their credit scores only. However, that should not be done. If you have a really bad credit score and you are trying to improve it, we will help you out with some tips to clean up your credit. Continue reading for further information:
Steps To Clean Up Your Credit
If you are willing to rebuild a good credit history again from scratch, you must follow the below-mentioned steps carefully and remain consistent with them throughout your life:
Check Your Credit Reports Thoroughly and Regularly
One of the biggest mistakes that credit card users make during their credit journey is not to check their credit reports deeply. Even if they download their reports, they just look at some major things and then ignore them. But, this is something that you should never do if you want to build a good credit history. If you are in the world of credit cards, you might be aware of the four major credit bureaus, including Transunion CIBIL, Experian, Equifax, and CRIF Highmark. All these bureaus generally have subscription plans that you need to buy in order to check your detailed credit reports, but you can get one report for free every ear from each of the four companies. In short, you can get one free report every three months. You can easily download your credit reports and check your scores by entering your basic details on their official websites. You must go through these reports deeply so that you can understand all the mistakes that you are making in your credit journey or what factors you need to work on.
Get The Errors Corrected
There might be some wrong information in your credit report, but you will not be able to know it if you don’t check your credit reports regularly. As mentioned earlier, it is very important to check your detailed credit reports regularly. This doesn’t only help you understand your progress or mistakes, but you can also identify errors if there are any. It is rare, but sometimes there might be some errors in your report. You can get them corrected only by checking your reports.
Make a Plan To Clear All Your Debt
If you are trapped under a huge credit card/loan debt, you might be finding a way to get out of this outstanding balance. Debt can be the biggest enemy of your credit profile as your payment history is the most important factor that is considered by credit bureaus while calculating your credit score. So, clearing this debt should be your first priority. If you are finding it difficult to pay the full amount at once, you can go with some alternate methods, such as balance transfer, conversion of credit card bills into EMIs, or taking a personal loan with a lower interest rate. Just make sure that you make a wise plan to clear your dues as soon as possible and with minimal additional charges.
Try To Get Payment Defaults Removed From your Credit History
Though it may be difficult to get anything removed from your credit report until it’s an error, you can try to get it done by requesting your lender/card issuers. However, it can not be removed if you frequently default your payments, but you can request them if you were not able to make timely payments only once or twice. It is because even these one or two payment defaults remain on your credit report for several years, and this doesn’t give a good sign to the banks/card issuers when you apply for any credit/loan in the future.
Keep All Important Factors in Mind To Increase Your Credit Score
Once you have cleared your past dues, you should do thorough research on what are all the factors that affect your credit score. there are five factors, including your payments history, credit utilization ratio, credit mix, the average age of accounts, and the number of hard inquiries on your credit profile. You don’t only need to focus on timely bill payments, but pay attention to all these factors.
Credit Reports should never be ignored as this helps you understand your mistakes and learning from mistakes is the best thing to improve. You must download and check your reports deeply at least twice every year so that you don’t miss out on any points to maintain a good credit profile. Building an excellent credit score becomes a much easier task when you are consistent with bill payments and keep all the other factors in mind. We hope that the above tips would help you in cleaning up your credit and build a great credit profile. If you still have any doubts, you can freely ask us in the comment section below!