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Credit history is an official record maintained by the credit history agencies. This record has details of how well an individual manages his debts. His ability to repay his loans on time gives him a good credit history while any kind of default on his part will have a negative effect on his credit scores.
When a debtor fails to clear his credits or loans at the right time or misses his monthly repayments then he is bound to earn a bad credit history with very low credit scores. A bad credit history will create problems in the future when an individual might look for other credit lines.
A bad credit history can be repaired if some substantial steps are taken.
- The most common reason for getting a bad credit history is a missed payment. This situation can be avoided if the debtor informs his creditor beforehand and avoids getting reported to the credit history agency.
- A person having a large number of opened credit lines will have a bad credit history. This can be avoided by closing some of the credit accounts and ensuring that this information reaches the credit history agencies.
- To ensure lower credit limits on the credit card, a written application can be submitted with the credit company. This develops a better credit impression.
- Any kind of defaults like bankruptcy or tax evasion should be avoided. These defaults remain mentioned in the credit history report for a minimum tenure of ten years.
- Take the help of a friend with good credit history to co-sign on your credit account to restart your credit lines. Be sure to pay these loan amounts on time.
- Obtain a yearly report of your credit history to ensure that there are no discrepancies in the report.
- Ensure that you have a separate account with the required money to meet the credit card charges. The credit companies will feel secured on seeing this account and will give you a better credit rating.
- Ensure that the credit card bills are paid long before the grace period. This not only saves the interest amount but also adds on a positive credit score.
- Contact a credit repair agency who will work for you to reduce the negative credit points in your credit history.
- Finally it should be ensured that the contact address as well as job does not get changed too frequently. In case of a transferable job a debtor must ensure that the credit bureaus have been informed accordingly.