If you find yourself stuck with bad credit record and unable to apply for a loan or credit card with any bank, keep your head up. The adage if there’s a will, there’s a way rings true even to your bad credit history. There’s no quick fix to creditworthiness, but if you’re committed to correct your past mistakes and start fresh, here are the different ways you can fix your bad credit record:
1. Settle Your Outstanding Debts
Write down the loan or credit card debt you’ve accumulated. If you have more than one outstanding bank debt, allocate a budget to pay for them every month, or prioritize one after the other. Settle the ones with high interests first and set a budget so you don’t get overwhelmed. Set a realistic timeline so you see when you will be able to complete your payment.
2. Negotiate with Your Bank or Lender
Banks may give you lighter terms, restructure your debt, or give you a fixed payment term if you show them your willingness to settle. Make sure you follow the agreement to continue building your good credit record. At the end of your term, the bank will give you a Certificate of Full Payment which you can use to apply for another credit card in the future.
3. Open a Savings Account to the Bank Where You Owe Money From
What better way to redeem your credit record but to set up a savings account to the bank where you owe money from? It’ll show them that you’re making an effort to be financially stable. While you’re paying for bank dues, make it a point to regularly deposit money to your savings account. Besides, savings and time deposit accounts in some banks let you borrow at least 90% of your total bank deposit. This may come in handy in times of emergency.
4. Apply for a Secured Credit Card
You’re capable of owning a credit card even if you’re still paying for your bank debt. The answer is to apply for a Secured Credit Card. It is “Secured” because you will be required to open a savings account within the bank, and it will stand as a form of collateral in case you won’t be able to pay your credit card bills. They will ask you to set up a specific amount on your savings account, and a certain percentage of your total deposit amount will be your credit limit, depending on bank terms.
Just make sure you can afford to pay your bills this time around. Otherwise, you’ll end up trapped in the same toxic cycle of debts again.
Even if the Philippines is still working on a centralized Credit Bureau, banks still have reliable means of keeping the credit history of their clients. In case of cash emergency in the future, you’ll now be able to apply for a bank loan because you made an effort to clear your credit record early on. Once everything is paid for, make sure you don’t incur any more debt that you can’t afford to pay, start living within your means, and continue to save money.