Rebuilding your credit may seem harder than starting from scratch. You want lenders and credit card issuers to see that you were not responsible for accidents or disasters that resulted in poor credit history, so you will make future payments as agreed. It is important to know where you stand before beginning to rebuild your credit history. Your credit score might be better than you think.
Your credit score is an essential part of your financial history. It’s a number that reflects how likely you are to repay a loan, and can have a big impact on your life.
1. Review Your Credit Report
A credit report is a record of your credit history. It shows how you’ve borrowed money in the past, as well as whether you’ve repaid those debts. Credit scores are determined by a variety of factors, so knowing what’s on your credit report will help you better assess where you stand. Your credit score can give you an idea of how creditworthy you are, but your credit report can provide more specifics. Make sure to check your credit report for errors at least once a year.
2. Pay your bills in time
If you have any outstanding debts, try your best to pay them off as quickly as possible. Use a debt-repayment calculator to determine your repayment plan and stick to it. If there are any accounts with late payments, make sure to stay on top of the payments. The best way to improve your credit score is to pay off your debts completely, including any credit card bills. If you have credit card debt, try your best to pay it off as quickly as possible.
3. Catch up on overdue bills
If you’ve fallen behind on payments, catch up on them as soon as possible. You want to make sure that you’re paying what you owe. Having an account with a late payment or a collections account can hurt your credit score. Paying off your debts will help you improve your score. If you have a collections account on your credit report, you may be able to have it removed from your credit report.
You could also consider contacting your lenders if you’re struggling to keep up with your bills. They might be able to help you with a payment plan.
4. Get a credit builder loan or a secured loan
A credit builder loan is a loan in which a lender deposits money into a savings account in your name. The account is held in your name, but the lender is the account holder. At the same time, you are the borrower and will pay the lender back with interest.
You may be able to use this money to pay off your current debt. Once you’ve paid off the credit builder loan, it should be reported to the credit bureau. The account may not boost your score right away, but over the next few months, it should show up on your credit report. This shows lenders that you’ve demonstrated the ability to make payments on time.
5. Become an authorized user
If you have a family member or friend who has a good credit history, you may be able to become an authorized user on one of their accounts. This could help improve your credit score. The main thing to remember if you’re thinking about becoming an authorized user is that it does not change your credit history. You will not get the benefits of having your account on your credit report. It does not show lenders that you can pay back a loan.
6. Get help with debt
If you’re struggling to pay your debt, you have options for help, including:
- Credit counseling — A certified credit counselor can help you create a financial plan to better manage your debt.
- Debt management plan — A debt management plan focuses on eliminating your debt. You’ll have to deposit money each month with a credit counselor who will then use the money to pay your unsecured bills according to a payment schedule the counselor works out with you and your creditors. Creditors may agree to lower interest rates or waive certain fees, but they’re not obligated to do so.
- Debt consolidation — If you’re struggling with many high-interest unsecured debts, like multiple credit card balances, a debt consolidation plan can help you reduce the amount of interest you pay each month. In this way, you might be able to trim the total amount you pay every month, simplify your life by paying just one bill instead of multiple ones, and even pay down your debt faster.
If you have a lot of debt and you’re having trouble paying it off, you may want to consider getting help.
7. Establish new habits with a good behavior extension
If you’ve been struggling to improve your credit score, you may want to try changing your habits. One way to do this is to get a credit-builder loan. If you have bad credit, this is the best way to improve your score. Credit-builder loans are designed to help people with bad credit improve their credit scores. The best part is that you don’t have to put in a lot of money.
You don’t have to pay back the loan, ever. All you have to do is make timely payments to maintain your account in good standing. When you make on-time payments, it adds positive information to your credit report. This is what helps lenders determine how likely you are to repay a loan. It shows you’re responsible and can manage your finances. When you’ve made a few payments on time, it will show up on your credit report. You may even be able to refinance your loan into a lower-interest payment.
Can I Get A Loan While Blacklisted In Kenya?
If you have been blacklisted in Kenya for bad credit, you might be wondering whether it is possible to get a loan. The short answer is yes, you can get a loan while blacklisted in Kenya.
The long answer is that it depends on the type of loan you want and your reasons for being blacklisted in the first place. If you are trying to get a personal loan from a bank, then chances are that lenders will deny your application because they will want to know why you were blacklisted in the first place. In this case, it’s best to apply for an unsecured online personal loan from another lender like Mwananchi Credit, who doesn’t require CRB checks
can i get a loan without CRB clearance
Mwananchi Credit doesn’t ask for CRB checks and you can get a loan even if you are on the blacklist.
You can find out more about these lenders in our guide to unsecured personal loans in Kenya.
How Do CRBs Work?
CRBs have been around for a long time and they are used to calculate your credit score. CRBs help loan providers decide whether or not to offer loans to applicants who have applied based on the CRB scores which range from 501- 850.
Your CRB score is calculated using all the information available in your credit report. Your credit report tells you about your current finances, payment history, and any debts you may have had in the past.
What Happens If You Have No Credit Report?
If you have no CRB, lenders will be able to do a search of your credit report through special databases. This database will tell the lender about any financial trouble you might have had in the past.
If you have never taken out a loan before, your credit score may not be as high as someone who has taken out many loans and paid them on time. This is because if you take out a loan and pay it on time, that counts as one good thing on your report.
However, if you don’t have any financial information on file to show lenders, they will usually ask for collateral such as property or stocks. The more collateral you offer up, the more likely it is that lenders will approve your request for a loan without CRB
How long will it take to rebuild my credit?
Credit missteps and misfortunes do eventually fade into the past. The impact on your credit score and the time it takes to recover depends partly on how big the mistake was and how recent. Late and missed payments, judgments, and collections stay on your credit reports for seven years. Bankruptcy can linger for up to 10 years.
However, you can begin repairing things right away. You should begin to see improvement as soon as you start accumulating positive credit information to help counter the big negatives. In time and as your credit score grows, you’ll be able to consider new credit offerings that offer rewards and incentives to users.