Stay Positive! Adding History to Your Credit Report
Maintaining a positive credit history has become paramount in today’s world where every lender out there wants to check your history before issuing a loan, credit card or even renting out an apartment. As time progresses, the relevance of positive credit history is only going to rise considering the rise in defaulters and non-performing assets of banks. So how can you add positive history to your credit report?
It’s Not As Hard As You Think
Before delving into that, let’s see how your credit score system work? What does the Credit Rating Agency (CRA) base your credit score on? As you are aware, all financial transactions including requests and enquiries leave a financial trail. There is always a bank or financial institution involved that is invariably linked to a Credit Rating Agency. Your financial activities like repayment of a loan, application for a new credit card etc. ends up as reports in your credit rating and based on the overall performance, a credit score is assigned.
From the above, it is quite clear that it is your financial activity that determines your credit. Is there something that you can do to boost these scores? Let’s find out;
Start With These
- Typically, there is more than one nationwide credit rating agency operating at any given time. And it is certainly possible that the financial institution or bank that you deal with may send its reports only to one of them. Therefore, a positive financial activity like repaying a loan ahead of time may get reflected in one agency’s credit report while may be missing from another. The individual can rectify this by forwarding the updated credit report to the other credit agency along with a cover letter requesting to update their report as well.
- Cases have been reported where individuals have been repaying their loan for years and strangely, it hasn’t had any impact on their credit report. This is possible when your bank fails to send its report to the credit rating agency at all. As a customer concerned about your credit score, you can either take it up with the bank directly requesting them to send the report to the agency or alternatively, you can write directly to the credit rating agency along with proof of your transaction requesting them to include it in your report. Whether these actions are going to have an impact cannot be guaranteed, but it certainly doesn’t hurt to try.
Figuring it out
- Found some unreasonable negative information in your credit report? Not to worry, you can submit a ‘Statement of Explanation’ explaining why you defaulted on a loan payment or missed a credit card bill. These need not necessarily change your credit score, but they will be accessible for someone who requests to see your report.
- Update your profile with your latest personal information; be it your telephone number, residential address or new job. They need not boost your credit score immediately, but some lenders took them into consideration as they try to ascertain the credibility or stability of an individual. To update your profile, you need to send a letter along with supporting documents proving your claims.
- Finally, the most effective way to build a positive credit history is to follow best practices. You already know what they are; paying credit card bills and loans on time, refraining from submitting too many credit card applications, maintaining sufficient balance in your credit card etc.
The importance of building a positive credit history cannot be stressed enough and by being responsible in your financial dealings, you can build one in the long term.
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