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How to Fix a Negative Credit Report

Points to Remember While Fixing a Negative Credit Report

Last Updated 28th Nov 2021

A negative or wrong entry on your credit report can result in a low credit score and difficulty in getting a loan when required.

To fix your credit report, follow the below-mentioned steps:

  • Negotiate with the bank within 180 days, after that the bank will write it off.
  • A negative in a credit report will adversely affect your credit score.
  • You should pay your debts on time to avoid any discrepancies.
  • Make regular credit report checks.
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Tips to Fix Negative Entries in Credit Report

A negative or wrong entry on your credit report can be one of the most adverse events that can result in a low credit score and difficulty getting a loan when required. These entries could be delayed payment, multiple entries on overdue payments and unsettled loan accounts with the banks. In such cases, creditors may put negative remarks on your credit report, which will stay for a long time and make you appear riskier to future lenders. Hence, we have listed a few steps to remove negative or wrong entries from your credit report to help you.

Negotiate with the bank: There are times when you cannot make payments against the outstanding loan or credit card for more than 180 days due to unforeseen circumstances. In such cases, banks report this on your credit report as ‘written off’. This status will not only hurt your credit score but can also adversely affect your loan or credit card applications.

You can request your lender to remove the ‘written off’ status from your credit report by paying the outstanding amount. If you cannot make the full payment, you can write to the creditor offering to pay a settlement amount. This amount is lower than the amount you owe. Once the bank agrees, wait for a written agreement before making the payment.

Note: Settlement will still reduce your credit score and reflect on your credit report, but it’s better than your report’s written off status.

Dispute incorrect information: There may be incorrect information errors in your credit report. There could be mistakes in your personal details such as your PAN number, name, etc. or your current balance is not updated. In such situations, you can file a dispute with the bank or credit bureau and submit relevant proofs to support it.

Ask for a goodwill deletion: You can request your current lender for a goodwill deletion. In a goodwill letter, you ask the creditor to remove a record of late payment from your credit report. You can explain the reasons for the delay in payment and request the creditor to remove this negative remark from the report. However, there’s no guarantee whether your request will be accepted or not, but it’s worth a try.

Pay off your debt: If you cannot remove a negative entry from your credit report, the best option is to make the full payment. After making a payment, wait for it to reflect in your credit report. This will show future lenders that you are financially responsible, and it will increase your chances of getting a loan or credit card in the future.

Spend as per your credit limit: If you use credit cards more often for making payments, keep a check on the amount you spend using it. Make sure you don’t spend more than 30-40% of your credit limit as it shows a lack of discipline and raises suspicion on your financial ability. Hence, it negatively impacts your credit score. While a high level of credit spends will not show as a negative entry anywhere in the credit report, it is a factor that reduces or impacts your credit score. Therefore, you must avoid spending too much on your credit card.

Take loans one at a time: Never apply for multiple loans simultaneously as it shows that you are in desperate need of funds. When lenders see numerous applications within a short period, they see you as credit-hungry, which negatively affects your credit score. This is why it makes sense to apply through fintech lenders to zero in on the best loan and credit cards across multiple banks without compromising your credit score. Be very cautious and firm with your loan agents not to submit your applications to multiple banks to avoid this risk.

Check for Days Past Due (DPD): Days Past Due or DPD indicates the loan applicant’s financial habit. It shows how many days payment on a loan account has been delayed. For every loan, a DPD is generated, provided to the credit bureau by the bank or financial institution which grants the loan to the applicant. If the DPD section shows anything other than ‘000’ and ‘XXX’ it means that you have missed payments on your loan or credit card account. In case you default on an EMI for a month, you will have to wait for 36 months for it to go off your visible DPD records. There is no way to change values in the DPD report. Thus, you should always pay off EMIs on time without defaulting on the payment as one small mistake can cost you huge for years to come. Most of the lenders do not lend money to borrowers with DPDs in the last six months even if the borrower’s credit score is above the minimum required as per the bank’s policy. In case your loan application gets rejected on account of reported DPDs in the last six months, continue making timely payments for the next 6-8 months to reduce the impact of this negative entry on your credit score

Keep a check on bank's delayed updates: Sometimes a DPD is not the account of delayed payment by you, but because of a late cheque deposit by a bank official. In this case, keep a record of your cheque submission date to the bank as a proof to reverse any such negative entries generated in your credit report.Managing and maintaining a healthy credit score is a continuous exercise, which requires close monitoring and proactively taking corrective actions, wherever required. Never shy away from reporting any wrong entries or working with bank representatives to remove or reduce the impact of erroneous or negative credit entries.

FAQs

How can you remove negatives from your credit report?

If you notice the wrong information, you should contact the organisation who provided it to the credit bureau to delete the credit records with supporting documents. You will have to show documentation that the details were not correctly reported, so once the application is made successful, the company will update it to the credit bureaus.

What are the easiest methods to fix your credit?

Easiest ways to fix credit are paying on time with the payments, making timely payments for electricity and mobile phones, paying debts, and keeping your credit card balance low. Do not close unused credit cards.

Does bad credit clear after seven years?

Defaults on payments remain on your credit report for seven years, and the bankruptcy stays for ten years on the credit report.


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