How Long Does it Take to Remove a Bad Credit History?

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Even the most responsible borrowers can missCredit Card payments or loan instalments during financial emergencies. Having said that, are these mistakes going to reflect on your credit report forever or can you improve your credit score?

it Take to Remove a Bad Credit History

Let’s find out!

For How Long DoesBad Credit Information Stay On Your Credit Report?

A negative account history stays in your report for maximumof seven years.

If you close the account, the information will reflect in your credit report for the above duration. If you don’t, then the negative information will be deleted after seven years, but the rest of the information will stay in the report.

If you have missed or defaulted any loan or Credit Card payment, and your credit score has been deteriorated, here are some ways you can improve your score:

How Can You Repair The Damage?

1. Clear Dues

If you have any outstanding dues, clear them immediately. Check all your outstanding Credit Card accounts and see whether you are running late on any of the payments. If you have paid the minimum amount and the accumulated interest is high, creditors will consider you irresponsible with credit management.

2. Reduce Utilisation of Credit

The ideal credit utilisation ratio (CUR) is 20% to 30% for any person. For instance, if your Credit Cardlimit is Rs. 40,000, then your utilisation should not exceed Rs. 12,000. If your CUR is more than 30% of your credit limit, it is best to minimise it. Over utilisation means you are bad at managing credit or you have too much debt.

The 30% utilisation rule is not absolute. There are some situations when someone could end up having to utilise more than 30% of the credit, but the important thing is to clear it on time.

3. Don’t Settle

If you have any outstanding Credit Card amount which has accumulated a lot of interest due to late payment, avoid settling the sum and pay the amount in full. If worse comes to worst, request the creditor to allow you to pay in instalments. The settlement reflects in your credit history negatively, and you will find it hard to take loans or credits in the future.

4. Open a New Credit Line

Your credit score will receive an instant boost with a new credit line. This might be hard, but try to Get a New Credit Card with no yearly fees from a creditor. You can apply for a Credit Card in the bank in which you have your oldest account. You can also keep a fixed deposit to acquire a card on this amount.

Tip: You can also contact your provider to increase the credit limit of your existing card. This shows that you are creditworthy because of which your creditor has increased your limit.

5. Use Your Oldest Card

Never close your oldest Credit Card. It might have a low credit limit, fewer benefits, and yearly fees, but this card has a significant impact on your credit history. If you close this account, the history related to this card will be lost. Instead, use your oldest card regularly to increase your credit score.

6. Pay Bills on Time

Once you have delayed your payment, it will be reflected in your credit history, and your credit score will decrease. Hence, if you do not wish to hurt your credit score, set a reminder or use auto-pay to clear your Credit Card dues on time every month.

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