Marriage date for Sandeep Tripathi’s only daughter was fixed and as is the case of most Indian weddings, a lot of arrangements were to be made. Sandeep who was averse to credit had never taken a loan and while he did possess a credit card, had never ever used it. However, situation was different this time around and he decided to utilize the credit limit available to him on his card.
But with so many things on his mind he completely forgot about paying the credit card bills on time. The payment became overdue and his account showed an outstanding debt. This brought an immediate dip in his credit score. After the D day when Sandeep was clearing his desk he found his unopened credit card bills. The payments on the 2 cards were 25 days and 95 days overdue. What steps should Sandeep take now for bad credit fix?
As we all know that the payment history directly affects a person’s credit score. Any missed payment is an indicator of credit risk. It signifies that the borrower is not able to meet his current debt obligations and warns the lender that he is a risky candidate. Sandeep had plans of taking a personal loan next year to fund his younger daughter’s higher education. But since his score was less than the minimum CIBIL score for personal loan he would find it difficult to arrange funds in future.
Here is what Sandeep did to get out of the situation.
Most credit card companies do not report overdue accounts until the next billing cycle. Delinquencies are usually reported 30, 60, 90 and 120 days past the due date. The greater the number of missed payment the more severe is the effect on the credit score. After a period of 120 days the account is sent to a collections agency which has a much more severe impact than a delinquent record.
Sandeep pulled out his credit report and saw that while credit card 2 overdue payment appeared, credit card 1 late payment was still not showing on the report. He immediately called the Credit Card 1 company to explain his situation. He requested the company not to report it to the bureau with the promise that he will make the payment within 10 days.
On contacting Credit card 2 co. he found that they were going to send it for collections. He knew that an outstanding debt that was overdue for more than 120 days will have severe consequences for his credit score. The card company agreed to wait for another 30 days provided he made the payment in full along with the interest and late payment charges.
Mr Sandeep wanted a solution for bad credit fix as he was foreseeing a loan requirement in the near future. Late payment records would only ruin his score. He needed the money to repay these overdue amounts and improve credit score. Loans for bad credit score saved him in these difficult times. He applied for a personal loan for low CIBIL score.
Though he had to pay a slightly higher rate of interest, it helped in paying off both the credit card balances. The credit card companies overlooked the short stint of late payment and did not report any delays to the credit bureau. Had Sandeep not taken the loan for bad credit to pay for his past due accounts his credit score would have taken a further hit. It would have made it difficult for him to get credit in future since history of late payments acts as a warnings sign to future lenders.
Personal Loan for CIBIL defaulters helped Sandeep pay off his delinquent account in full. He could convince the card company to remove the late payment record off his account. In this way he was able to avoid a lasting damage to his credit history. Reducing the amount owed gave an immediate boost to his credit score. Sandeep made timely payments on this new loan and within a year he was able to see a significant improvement in his credit score.