Blogs > Credit repair: What is it and how can you repair your credit score
Credit repair: What is it and how can you repair your credit score
In India, lenders and financial institutions place a high value on an applicant’s credit report and history. They lend to borrowers with good credit scores, usually 700 or higher to reduce the risk of default. Credit scores help lenders determine your repayment capabilities and assure the bank or the lender that you are a responsible borrower.
However, there can be various errors in credit reports which can have a negative impact on your overall credit score. If you have a poor credit history and want to improve your credit score or CIBIL score, it is critical to understand your options and how to repair your credit score.
This is where you look for the best credit repair company to remove incorrect information and improve your credit score.
What does credit repair mean?
Credit repair is the process of removing any errors and correcting your credit score by credit repair agencies. Credit repair companies can assist such consumers in filing their disputes to rectify any error or discrepancy in their credit reports. For this, you must provide a detailed explanation along with relevant details about the error to credit repair experts.
That being said, it is advised to always check the legitimacy of credit repair companies before entrusting them with your personal information.
IndiaLends is a leading credit repair company that helps consumers repair their credit and increase their creditworthiness.
What can cause errors in your credit information report?
There are two types of errors that commonly occur in your credit report:
● Incorrect or inaccurate information may be stored in your credit report
● A missed EMI or credit repayment due to financial difficulties, missed credit card payments, disputes with lenders, or fraud.
How can you repair your credit score?
Your credit score might take a hit due to a range of reasons. Here is a brief list of what these errors may be and how you can avoid them to maintain a stellar credit score:
1. Contacting credit agencies regarding incorrect information on your credit report
Once you have identified incorrect information or errors on your credit report, you can file a dispute on the official website of the credit agency. Clarify the situation with the lender and communicate the same to the credit agency to rectify any errors. Resolving such errors can help repair your credit score in an efficient manner.
2. Contacting the lender regarding disputes
If you missed payments due to a dispute with the lender or the credit card issuing authority, you may be levied late fees, interest, or penalty charges. Not repaying these charges can also have a negative impact on your credit report. However, such disputed transactions must be reported to the authorities in due time to avoid getting into a legal battle which can lead to discrepancies in your credit report.
3. Raising complaints related to credit card fraud in due time
If you discover a fraudulent transaction mentioned on your credit card, it is recommended that you inform the lender about it immediately. The lender will investigate your complaint and provide a solution. Such disputes should be resolved as soon as possible so that your credit score does not take a hit for non-repayment of dues.
4. Raising complaints about non-delivery of credit card statements on time
If you have missed your payment because you did not receive the credit card statement or received it late, it will still impact your credit score. If you do not pay the dues on time, you will be charged an overdue payment fee, and it will reflect on your credit report. Contact your lender and try to resolve the problem as soon as possible so that it does not affect your credit score.
5. Managing your credit utilization ratio
If you are making huge expenses on your credit card and your credit score is demonstrating a dip, chances are that your expenses are breaching the credit utilization ratio. Try to bring your expenses down and keep your credit card expenditure under 30% of the card’s limit. To further repair your credit score, request the card-issuing company to increase your credit limit so that your future expenditures don’t breach the 30% mark of your credit utilization ratio.
How do credit repair companies work?
Many people hire credit repair companies to improve or restore a low or poor credit score. A credit repair company usually charges a certain fee for getting in touch with the credit bureau and raising disputes regarding any errors in the report. The credit repair company works on your behalf and simply argues your case. It is important to remember that a credit repair company has no authority to correct or edit the information in your credit report.
● They begin the process by requesting information like all your debts, and a copy of your credit report from major credit bureaus like CIBIL, Equifax, Experian, and TransUnion.
● The company will check your credit report for negative remarks such as charge-offs, liens on property, and bankruptcies.
● The credit score experts in the credit repair company will then devise a strategy for clearing disputing errors and negotiating with lenders and creditors to have those remarks removed from the credit history.
● They can send information with valid requests, letters disputing incorrect negative remarks, and send cease-and-desist letters to debt collectors on your behalf.
● If there are any modifications or corrections, the lending or banking institution must approve them before the credit bureau considers them.
The bottom line
Credit report errors are very common, and they can negatively impact your overall credit score. Since your credit information report is extremely important in your loan application process, a low or poor credit score can affect your chances of loan approval. If you have a bad credit history and want to repair your overall credit score, it is important to understand all the options that are best suited for your situation. This is where you should take steps to repair your credit score yourself or hire one of the best credit repair companies to remove any incorrect information or rectify any remark that affects your credit or CIBIL score.
