Worried About Your Creditworthiness? Here Are 5 Effective Ways To Improve Credit Score

Banks  and non banking financing companies provide indiviuals credit facilitie that helps borrowers in making those high-end purchases using a revolving line of credit or via a loan in case your needs are buying a house or even renovating one. However, if  you end up defaulting on those due credit card payments or easy monthly installments, it makes it all the more difficult to avail a new loan or have your new credit card application get accepeted sooner than others. Despite this, there are certain way by which you can make your three digit credit score is back on track.

How does a deafulter status affect your credit score?

After an indiviual defaults which is bound to happen post a number of late payments this sticks to yyour record to as long as seven years, and adversely impacts your credit score, a signal to your lender about your creditworthiness. When you dont't pay your dues on time it downgrades your credit score.

Effective ways to attain a good credit score after defaulting

Review your entire credit report: This means reviewing your credit report from all the major bureaus- your first step in the recovery process. Look for default entries for status, payment delays, any inaccuracies or errors. Once you notice errors, dispute them with the credit bureau and request an update.

Settle unpaid debts: Speak with your lender and see if you can:

• Reach a settlement or repayment plan.
• Seek a one-time settlement (OTS).
• Next, request a “letter of closure.”
• Settled accounts show your intent to pay off the debt and whichis a positive indicator regardless of it not impacting your credit score instantly. 

Prepping your budget: Start preparing to plan your budget and repayment plan. After default, you must draw a reasonable budgetary plan each month. You will have to prioritise:

• Paying down your current EMIs.
• Not acquiring more substantial debts.
• Creating an emergency funds.
• Following a strict budget is positive behaviour in terms of your financial future, and will help prevent further defaults.

Choose a secured credit product: Tools for secured credit, such as:

• Credit card secured by fixed deposit (FD).
• Credit builder loan.

This all helps you in rebuilding your credibility with the credit bureaus. If you expect score slowly rise, make sure you pay your repayments on time, and carry a small balance on your credit.

Check your credit score vigilantly: 
Reworking on credit score requires patience, time and equal  effort. One should keep a track of your credit score at least once a month. It's the key for:

Observing progress.
Figure out bad items as early as possible.
Keep you imspired to look at the larger picture.