A credit history can become bad even through no fault of the borrower, but through the fault of an employee of a bank transferring information to a credit history bureau (CRB). For example, if among bank customers there is your full namesake with the same date of birth and with a bad history. This is also due to an error in the data or due to a delay in the financial transfer service.
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For example, you make the last payment on time at the end of the month, and it reaches the bank only in a few days. As a result, you think that you have paid the loan on time, and the bank will consider the last payment overdue. In this case, if the bank makes sure that you are not involved in the delay in repaying the loan, you will have a good history.
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The error may be due to the fault of the bureau, which has united your data with another person or attributed other people’s delays.
If your namesake with the same personal data will change the name or surname, then you will get a negative story ready, even if you don’t accept loans.
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If you are sure that you didn’t allow payment delays, or take a loan for the first time, but you get permanent refusals of banks. If after checking in the submitted materials you see an error, you need to challenge it.
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If you can, come to the bureau and fill out the form. If not, then so:
Fill out a request to dispute credit history.
Assure the notary.
Send to the address, which contains correct information.
The CII sends the request to the bank that provided the information and conducts an internal audit.
Verification takes place within 30 days, after the applicant must report the results in writing.
Important! As a rule, banks cooperate with several credit bureaus. Therefore, in order to rectify the situation everywhere, it is necessary to make a request not only in the bank of your district, but also in the American organizations (list of credit bureaus that have passed state registration).
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If the bank does not detect the transfer of incorrect information on its part, but the borrower will still be confident in the purity of its history, then the situation will be resolved only through the court.
How can you fix a bad credit history
If your credit history is bad because of your fault, you cannot clean it (erase negative data) (at least for the period of its existence – 15 years), but you can improve it by taking 1-2 small credits ($3 000 – $5 000) and in time to repay. Banks are studying the borrower’s history for the last 1–3 years (some for 5 years), so for this period you need to pay all bills on time, including utility bills and all other monthly payments.
You will ask, “How do you get a small loan if banks do not give it?”. Some banks may give small loans. It is not necessary to contact the bank: you can buy goods on credit in the store.
If you gradually improve the history for at least a year this way, banks will be able to trust you again.
Refinancing consumer loans (refinancing)
What is the best way to refinance and in which banks this can be done? Consumer loan financing is getting a new loan to fully repay the existing one. It is required if under the current loan the borrower does not have time to make repayments on time so as not to spoil his credit history. We will describe the nuances of refinancing and the banks providing it in this article.
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If the borrower has a positive credit history up to this point, then, most likely, he will be given a loan. With a bad credit score can meet, if the delay is minor.
Refinancing with a conventional loan
It is not necessary to take a target loan to restructure the current one: you can take a regular consumer loan for urgent needs. Such a loan is inappropriate and is suitable for solving any not particularly large financial problems or purchases.
In fact, refinancing (refinancing) of loans is nothing more than a marketing ploy. In fact, this is the same consumer loan (legally it is issued the same).
Of course, when checking the bank finds out about your current loan, but what will be its final decision, do not know in advance.
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The banking program of restructuring existing debt in another bank is associated with the risk for which a reserve should be formed. Therefore, it is not profitable for all banks to give one loan to pay off another.
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However, there are special credit programs with fairly favorable (or at least acceptable) conditions that allow you to calmly repay the existing consumer loan and loan issued. Of course, as a result, the total maturity and overpayment increase, but what to do if you want to maintain a positive credit history.
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Recall that when applying to another bank for refinancing, you need to submit approximately the same set of documents as when you received a valid loan.
When choosing a new loan in another bank, it is important to relate the costs of its execution to the savings from the reduced rate on a new loan. For example, if the former bank charges a penalty for early repayment, and the new one takes a commission for processing, then the savings may be too small. So, if the difference is less than 2%, it is better not to refinance.