How To Get Over A Bad Credit Report

By | December 2, 2018

A bad credit report can put a dampener on your spirits, but just like a bad phase, you can get over it if you keep these things in mind. Let’s take a look.

You’ve been eyeing that dream-on-wheels for a while now and have even primed yourself to get a Car Loan that will help you fund it. But just when you thought everything is in place, your abysmal credit report pops up over the horizon.

You see that your Credit Score is nowhere near the number you need to be eligible for a Car Loan. Before you resign yourself to your poor credit report and give up all hopes of owning a car, chin up! A bad credit report is not the end.

Granted, a bad credit report can cause some temporary damage to your financial standing as a borrower but it isn’t something that you can’t get over. Look at it as a phase, like the time you thought that no band that comes close to the perfection of Metallica or when you decided to run for the head of the college students’ union’s post.

Additional Reading: What Are The Components Of Your Credit Score

It might seem overwhelming, but you can get over this phase if you know how to repair your credit report. Let’s take a look how. If you’re not already in the know, you can source your credit report from any of the credit information bureaus such as CIBIL, Equifax and Experian. But what’s even better is that you can get it absolutely free of cost on the BankBazaar website and mobile app! No matter how many times you check it, it will always remain free.

  1. Analyse:

So you have a bad credit report and to eliminate chances of further rejection, you want to take necessary steps but don’t know where to start. Well, start by first reviewing your credit report thoroughly.

Your credit report will clearly spell out areas that are going to need your attention and areas that you can choose to perfectly ignore. In fact, there may even be inaccurate information on your credit report. Instances of someone’s name being spelt incorrectly or date of birth, PAN Card details being incorrectly reported are fairly common.

All these have the potential to tank your Credit Score. So, once your report is generated, you must check your credit report for any errors and report them immediately if you come across any.

Additional Reading: Why Your Credit Score Isn’t Improving

  1. Create a plan to repair your Credit Score:

Now that you know what reasons are causing a dip in your Credit Score, chalk out a plan to fix it. If you have a history of missed loan repayments and have trouble keeping a track of your debts, see if a debt consolidation plan that enables you to consolidate all your debts into one loan and lower your interest charges works for you.

Automate your payments towards loans like giving an ECS mandate so that you don’t have to set constant reminders for making payments. If you have idle credit accounts, make sure all your dues are cleared but don’t close those accounts as that may lead your Credit Score to dip further.

Additional Reading: Why Your Debt-To-Income Ratio Is As Crucial As Your Credit Score

  1. Build a good credit history:

The thumb rule to building a good credit history is not opening several new lines of credit in your name but to making your repayments on time and in full, every time. Applying for too many Credit Cards or loans makes you appear credit hungry to potential lenders and doesn’t reflect well on your credit report. While using your Credit Card, keep a lid on its use by keeping your credit utilisation ratio below 30%.

  1. Remove incorrect entries from your credit report:

While verifying your details on your credit report, if you come across inaccuracies, you should dispute them immediately. There are many reasons a report can have errors. A debt may have been paid off but the lender didn’t bother to let the credit reporting agencies know.

In fact, the debt could belong to someone else altogether with a similar name or social security numbers like yours and someone was off by a letter or number while entering your name/social security number in the database. Disputing and reporting these inaccuracies may need some work and you may even have to gather some documentation, write some letters, and follow up.

Following these steps should help:

  1. Get a copy of your credit report from each of the three big reporting agencies viz. Experian, CIBIL, Equifax. Comb through each of these reports carefully and ensure that everything is accurate.
  2. If you encounter any inaccuracy, gather documentation to prove that is so. Make copies. Never send the original document.
  3. Write a letter to the credit reporting agency pointing out the inaccuracy. Remember to attach your documentation proving that the information is correct.
  4. Once you’ve reported these inaccuracies to the concerned authority, start following up. Keep any reference number or case number handy that will help you track the status of your complaint and you don’t have to start from the beginning every time you inquire.

Additional Reading: How Does Bankruptcy Affect Your Credit Score?

A bad credit report may seem incredibly damaging to your financial prospects but it is certainly not the end. With some carefully planned moves and consistent effort, repairing a credit report should be easy and you might even be able to improve your Credit Score.

Did you miss a loan repayment recently? Your Credit Score may have dipped. Don’t worry, you can check your Credit Score for free and as many times as you want just by clicking the link below:

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