What are your options to remove a bad credit mark?
Most people are completely unaware they can request a bad credit mark to be removed off their file. This article explains some useful points on how to challenge your bad credit mark.
So, you’ve made a mistake e.g. you didn’t pay a direct debit on time. This happens quite a lot, and you would assume your creditor/lender wouldn’t entertain your dispute. Well, you have a few options which are worth trying, and as the saying goes if you don’t ask you don’t get.
1. Ask for a waiver of a late payment for being a loyal customer
Are you aware that most creditors/direct lenders are willing to waiver some missed/late repayments? If you have a good loyalty base with the lender they will usually look into adjusting your account and any notes.
The process for this normally works in the form of a letter explaining the issue. It’s best to advise as many points on this letter to build your case. The tenure you hold with the lender (show me something for my loyalty). Also, i have never missed any payments before, and this hiccup was due to e.g. a medical problem.
Obviously this will depend on your account activity. If your account activity is fine you would expect them to notice these points and honor your request. If your account activity isn’t great then they would most probably reject your request.
2. Negotiate to have any negative information removed
If you want to remove any negative information on your account you could suggest some sort of a payment to the lender. You could offer a different repayment plan e.g. direct debit (FYI – your account needs to be open). Again, this could be an option if you have a positive relationship with the lender. Also, we would only suggest you look into this if you can afford to do it.
If you’re looking into this option always call your lender first. When you do, make sure you speak to a manager then ask him/her what your options are. You might find that they have another option which will suit you better. Always remember that whatever you agree on its important you request it all in writing.
FYI – If you’ve got bad credit from a closed account, opening it up to make any negotiated repayments could affect your rating further. For instance, if you decided on a reduced settlement, this would mean you’re agreeing to settle the debt for less than the original value. Therefore, the full debt hasn’t been paid so this will impact your credit score by bringing it down.
3. Don’t pay into any old charge-offs
We would advise to always deal with your active debts first. Try to pay off the total amount of any unpaid debts, this would give your credit score a push in the right direction. It is then up to you to decide what you want to do with any older debts.
If you’re looking to pay into an old charge-off we would suggest that you don’t do this. This might not improve your score, in fact, it could do the complete opposite. If you make a payment this could bring the charge off to the surface again, appearing on your report for a further seven years.
When negotiating any charge-offs, the only real beneficial option would be to have the account completely wiped by the lender. If you manage to achieve this, make sure you get it in writing. Charge-offs will be removed from your credit file after a period of seven years anyway. So, before you do anything see how long is left on the term and decide what’s best for you.
4. What happens if I’m unsuccessful?
You can always visit moneyadviseservice.org, it’s free and you can find out lot’s of information on their website.
If all of the suggested points in this article don’t work for you, waiting until your bad credit term finishes might be the only option. If you are worried about obtaining credit there are options which can still give you what you need. There are more and more companies becoming receptive to lending with poor credit e.g. loan lenders now offer products specifically for bad credit..
Most poor credit marks will be removed from your file in 7 – 10 years. Once this passes you can start building a good credit future by keeping up with repayments and being smart with using your credit. Check out our article on what factors affect your credit score. In this article you can find some tips on the negative influences on your overall score.
5. Late repayments
A couple of late repayments that are within 60 days probably won’t have as much of an effect on your score as you’d think. It’s when this becomes a continuous pattern that it can tarnish your score.
We would always advise that you stay on top of all repayments. This will retain the best possible credit score and avoid you a 90-day late payment fee. If you are 90 days late this could cause your score to suffer for up to seven years.
Are you waiting for your bad credit term to finish and need financial assistance? As you’ve just understood from the above, not using credit for seven years is difficult in this day and age. Why not fill in one of our application forms to see what loanbird can do to assist with bad credit. Our panel of lenders consider bad credit loans for larger and smaller financial needs.